Starbucks Misses Sales, Revenue Forecasts

Starbucks reported lower-than-expected sales in its fiscal first quarter, with COVID store shutdowns in China overshadowing stronger results elsewhere, Dee-Ann Durbin reported for the Associated Press (AP).

Photo Insert: The company's store transactions were down 2%.

Global same-store sales — or sales at stores open at least a year — were up 5% in the October-December period, but that was partly due to higher prices. Store transactions were down 2%. Analysts polled by FactSet had forecast a 6.7% increase in same-store sales.

During a conference call with investors, Starbucks’ interim CEO Howard Schultz said China’s decision to end its zero-COVID policy in December caused a spike in infections that closed nearly 30% of Starbucks’ 6,000 stores at its peak. Same-store sales plunged 29%.

But Schultz said Starbucks remains optimistic about China, its second-largest market outside the U.S. As of this week, all of Starbucks’ stores in China are open without restrictions for the first time since March 2020.

Schultz said the company remains on track to have 9,000 stores in China by the end of 2025. In the US, same-store sales were up 10% as customers spent more per order.

And Starbucks noted that its Holiday Red Cup day in November was its highest single sales day of all time despite strikes at more than 100 US stores by employees who are pressing to unionize.

But overall US transactions rose just 1%, and Starbucks said transactions per store remain below pre-COVID levels.

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