AP – Starbucks reported record revenue in its fiscal third quarter as its China business roared back to life.
Still, the company’s results were mixed for the 13 weeks ending on July 2. While its earnings surpassed Wall Street’s forecast, its revenue and same-store sales were lower than expected as North American store traffic slowed.
Starbucks shares were down one per cent in after-market trading on Tuesday. Same-store sales – or sales at stores open at least a year – jumped 46 per cent in China, reversing last year’s declines due to COVID restrictions. At Chinese stores opened in 2019 or earlier, morning routines are fully back to 2019 levels, the company said.
Starbucks CEO Laxman Nara-simhan, who spent part of the quarter visiting stores in China, noted that the company now has a record 20 million active Starbucks Rewards users in the country. And he said he’s convinced there’s a long runway ahead. Narasimhan noted that Chinese consumers drink an average of 12 cups of coffee per year; United States (US) customers drink 380.
“We are still in our early days in China,” Narasimhan said during a conference call with investors.
But North American same-store sales growth slowed to seven per cent after three quarters of double-digit gains. Customers paid more for their drinks and food, and revenue rose 11 per cent to a record USD6.7 billion for the region. But customer traffic was up just one per cent. Narasimhan said new equipment, including warming ovens and cold foam blenders, have now rolled out to all US company-operated stores and are improving service times.
Cold drinks now make up 75 per cent of Starbucks’ US beverage sales, he said, and cold foam is the fastest-growing add-on.
The Seattle-based coffee giant said its overall revenue rose 12 per cent to USD9.2 billion in the quarter. Analysts expected revenue of USD9.3 billion, according to FactSet.
