© Reuters. FILE PHOTO: A Starbucks sign is displayed on one of the company’s stores in Los Angeles, California, U.S. October 19, 2018. REUTERS/Mike Blake GLOBAL BUSINESS WEEK
By Deborah Mary Sophia and Hilary Russ
(Reuters) -Starbucks Corp beat Wall Street estimates for quarterly profit on Tuesday as higher prices and strong demand for its coffee in the United States helped offset business in the United States. China from COVID-19 lockdown extended.
While record inflation in the U.S. has eaten into Starbucks’ (NASDAQ:) operating margins, the chain “is not currently seeing any measurable decline in customer spending or any evidence there’s been a drop in customer trading,” Interim Chief Executive Officer Howard Schultz told investors on a conference call.
The Seattle-based chain earned 84 cents per share on an adjusted basis, beating estimates of 75 cents. The company’s shares rose nearly 2% in extended trading.
However, comparable sales globally rose 3% in the fiscal third quarter ended July 3, compared with the median analyst estimate of a 3.76% increase, according to Refinitiv. IBEs.
U.S. sales have been boosted by Starbucks’ ability to raise prices without objections from wealthy customers, and its booming sales of cold drinks, which now account for about 75% of total beverage sales. at company-run cafes in the US.
The number of active US members in the rewards program also increased 13% to 27.4 million members.
Higher raw material costs and enhanced benefits for some US employees impacted operating margins, falling 400 basis points to 15.9%. Same-store sales increased 9% in North America.
In April, Schultz said the company would boost benefits and wages — but only for workers at non-currency stores — starting this week.
Belinda Wong, President of Starbucks China, said China has been hit by “the most severe COVID disruption since the pandemic began”, with comparable sales in the company’s fastest-growing market. down 44% in the quarter, Belinda Wong, President of Starbucks China, said on the call.
A new closure in Shanghai and a resurgence of COVID-19 in Beijing and other Chinese cities have forced Starbucks stores to close their seating areas, allowing the company to only supply offer delivery or mobile ordering for most of the quarter.
Total net sales rose to $8.15 billion from $7.5 billion a year earlier, well ahead of past analysts’ median estimate of $8.11 billion.
