Starbucks beats earnings and revenue estimates, despite lockdowns in China

Starbucks on Tuesday reported better-than-expected quarterly earnings and revenue, despite lockdowns in China weighing on its performance.

Shares of the company rose more than 1% in extended trading.

Here’s what the company reported for the quarter ended July 3 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:

• Earnings per share: 84 cents adjusted vs. 75 cents expected
• Revenue: $8.15 billion vs. $8.11 billion expected

The coffee giant reported fiscal third-quarter net income attributable to Starbucks of $912.9 million, or 79 cents per share, down from $1.15 billion, or 97 cents per share, a year earlier. The company said that inflation and higher wages for baristas weighed on its margins this quarter.

Net sales rose 9% to $8.15 billion. The company reported global same-store sales growth of 3%, fueled by a strong performance in the United States.

In Starbucks’ home market, same-store sales increased 9%, driven largely by higher average order totals. Traffic also ticked up 1%, even as some chains say low-income consumers are visiting less often.

Outside the U.S., same-store sales fell 18%, weighed down by plummeting demand in China. The country, which is Starbucks’ second-largest market, spent two-thirds of the quarter under restrictions to curb the spread of Covid. As a result, China’s same-store sales plunged 44%. The company is still seeing periodic short-term closures in China. 

Last quarter, Starbucks pulled its outlook for fiscal 2022, citing the uncertainty caused by Covid outbreaks in China. The company did not issue a new forecast this quarter.

Starbucks opened 318 net new locations worldwide during the quarter, bringing its global restaurant count to 34,948.

Read the full earnings report here.

Correction: An earlier version of this story misstated Refinitiv estimates for Starbucks’ quarterly revenue.