Starbucks on Tuesday reported mixed results for its latest quarter as higher costs weighed on profits, but U.S. cafes saw strong demand during the holiday season.
Shares of the company fell more than 4% in extended trading.
Here’s what the company reported for the quarter ended Jan. 2 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
Earnings per share: 72 cents adjusted vs. 80 cents expected
Revenue: $8.05 billion vs. $7.95 billion expected
The coffee giant reported fiscal first-quarter net income of $815.9 million, or 69 cents per share, up from $622.2 million, or 53 cents per share, a year earlier.
Excluding items, Starbucks earned 72 cents per share, falling short of the 80 cents per share expected by analysts surveyed by Refinitiv. The company cited higher-than-expected costs throughout its supply chain and more employees using sick leave. Those problems are hitting the rest of the industry as well.
Net sales rose 19% to $8.05 billion, topping expectations of $7.95 billion. Its global same-store sales climbed 13% in the quarter.
Despite staffing issues, the company reported U.S. same-store sales growth of 18% from a year earlier and 12% on a two-year basis. Active 90-day users of its Starbucks Rewards program rose 21% to 26.4 million people.
The holiday season typically brings consumers back to its cafes for gift cards. During the quarter, shoppers spent more than $3 billion adding or reloading money to gift cards.
Outside the U.S., Starbucks saw weaker demand for its coffee. International same-store sales fell 3%, dragged down by China’s sluggish performance. Wall Street analysts surveyed by StreetAccount were forecasting international same-store sales growth of 3.3%.
In China, its second-largest market, same-store sales shrank by 14% in the quarter. The country reimposed travel restrictions on some cities as it faced another wave of Covid cases.
China’s recovery could be further delayed. Unlike the United Kingdom and U.S., China didn’t see cases of the omicron variant until early January, and its surge is just now starting. On top of that, the Winter Olympics, which are hosted in Beijing this year, mean the country is being particularly cautious to curb the spread.
Starbucks didn’t include an update its forecast for fiscal 2022 in its earnings release. Last quarter, it said it was anticipating GAAP earnings per share to fall by 4% and adjusted earnings per share to rise by at least 10%. Starbucks is expecting global same-store sales growth in the high single digits and net sales of $32.5 billion to $33 billion.