Starbucks Corp.’s quarterly sales fell short of analysts’ estimates as traffic growth slowed in the US. Higher prices and add-ons to beverages helped bolster profit.
The chain’s comparable sales, a key gauge of how existing stores are performing, rose 10% in three months through July 2 from the prior year, trailing the average estimate of analysts polled by Bloomberg. Sales by that metric rose 7% in North America as transactions advanced 1%, slower than last quarter.
Revenue in the company’s fiscal third quarter was a record $9.2 billion, Starbucks said, but that still fell just short of expectations. Meanwhile, adjusted earnings per share of $1 beat the 95-cent average analyst estimate. The company said improved productivity and higher prices helped to boost operating margin to 17.3%, above market estimates.
Starbucks on Tuesday said it expects earnings per share to expand by 16% to 17% in its fiscal 2023 year, while it had previously forecast growth on the low end of its 15% to 20% long-term goal. It maintained its outlook for revenue-growth and same-store sales.
The company said it still expects China comparable-sales growth in the low- to mid-single digits. Chief Financial Officer Rachel Ruggeri said on a call with analysts that Starbucks is “pleased with the consistency of demand” in that market, fueled by new products, more stores and other factors.
Starbucks stock slipped 1.10% in late trading after the release of results. The shares have risen 2.1% in 2023 through Tuesday’s market close in New York, trailing the S&P 500 Index’s 19% advance.
International same-store sales grew 24% in the quarter, in line with estimates, powered by higher traffic. That included higher-than-anticipated growth in China, which is still recovering after extended Covid-19 restrictions.
(Updates shares and adds outlook, China comments)
Author: Daniela Sirtori-Cortina
