Starbucks earnings disappoint as U.S. boycott, ‘cautious’ China weaken sales

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A Starbucks coffee cup sits on a table at one of the coffee chain’s locations in Miami, Florida, on June 11, 2021.
Joe Raedle | Getty Images News | Getty Images

Starbucks on Tuesday reported quarterly earnings and revenue that missed Wall Street’s expectations as both domestic and international sales fell short of estimates.

CEO Laxman Narasimhan said in a statement that the chain faced “headwinds,” but the brand remains strong.

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Shares initially fell in extended trading but recovered, rising about 3%.

Here’s what the company reported for its fiscal first quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG, formerly known as Refinitiv:

  • Earnings per share: 90 cents, adjusted vs. 93 cents expected.
  • Revenue: $9.43 billion vs. $9.59 billion expected.

The coffee giant reported fiscal first-quarter net income of $1.02 billion, or 90 cents per share, up from $855.2 million, or 74 cents per share, a year earlier.

Excluding restructuring costs and other items, Starbucks earned 90 cents per share.

Net sales rose 8% to $9.43 billion. Global same-store sales increased 5%, falling short of StreetAccount estimates of 7.2%.

In North America, same-store sales also rose 5%, driven largely by customers spending more on their drinks and food.

Starbucks’ fiscal first quarter encompasses the all-important holiday season. The chain usually nets billions of dollars in gift card sales, plus higher traffic fueled by its seasonal drink offerings and thirsty shoppers.

Outside of Starbucks’ home market, the coffee chain reported international same-store sales growth of 7%, missing expectations of 13.2%.

China, the company’s second-largest market, reported same-store sales growth of 10%. However, the average ticket at its Chinese stores fell 9%.

The chain has seen increased competition from lower-priced rivals such as Luckin Coffee, which have won over consumers as China’s economic recovery continues to lag.

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