Starbucks Corp (NASDAQ:SBUX)’s latest earnings report has left investors with a bitter taste in their mouths with the coffee giant’s shares falling 3% on an earnings miss despite record fiscal first-quarter revenue.
For the period ended January 1, 2023, Starbucks posted revenue of $8.71 billion, up 8% year-over-year but coming in below the Street’s expectation of $8.78 billion.
First-quarter profits were $855.2 million or $0.74 per share, up from $815.9 million or $0.69 per share posted in the year-ago quarter. However, adjusted earnings per share that excluded restructuring and impairment costs and other items were $0.75, below the consensus expectation of $0.77.
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Starbucks sales in China were negatively impacted by the surge in COVID-19 cases during the quarter, with the company noting a $0.06 dilutive impact on its adjusted earnings per share.
Its China comparable store sales decreased by 29%, driven by a 28% decline in comparable transactions and a 1% decline in average ticket - the amount spent by each customer.
Comparable store sales globally increased 5%, driven by a 7% increase in average ticket and partially offset by a 2% decline in comparable transactions, while US comparable store sales were up 10% driven by a 9% increase in average ticket and a 1% increase in comparable transactions.
Starbucks interim CEO Howard Schultz highlighted the company’s performance “despite challenging global consumer and inflationary environments, a soft quarter for retail overall and the unprecedented, COVID-related headwinds that unfolded in China in 1Q.”
“I’m pleased to share that our fiscal 2023 guidance remains unchanged, despite the headwinds from China,” added Starbucks CFO Rachel Ruggeri.
Starbucks shares were down 3%, trading at US$105.90 on Friday morning.
Contact the author at emily.jarvie@proactiveinvestors.com
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