Starbucks on Thursday reported record quarterly sales thanks to robust US business that helped offset weakness in China and other markets.
The Seattle-based coffee giant said its sales at the same stores in the U.S. – or sales at locations that have been open for at least a year – jumped 22% between July and September. Stores saw an increase in traffic, with shoppers spending more on more expensive soft drinks, which accounted for 75% of US sales, and food, which grew 35% in the fourth fiscal quarter.
“The routines are starting to normalize,” said John Culver, COO of Starbucks, during a conference call with investors on Thursday.
Now that the kids have returned to school in person, Starbucks’ peak hours have shifted to morning and early afternoon, Culver said. Stores in business districts hit hardest by the pandemic have returned to positive sales growth, he said.
But some pandemic habits persist. Travel orders and mobile orders accounted for 70% of transactions in Starbucks’ fiscal fourth quarter, up 15% from before the pandemic.
The situation is different in China, where sales in the same stores fell by 7% due to renewed cases of COVID. The company said that at its peak in August, 80% of Starbucks stores in China were affected by viral restrictions.
“Our recovery in China will not be linear,” said Starbucks President and CEO Kevin Johnson. Starbucks remains optimistic about China __ its second largest market after the United States __ and opened 654 new stores there in fiscal 2021.
Earlier this week, McDonald’s also reported declining sales at the same stores in China due to COVID cases and a weakening economy.
Globally, Starbucks sales in the same stores grew 17%, according to analysts surveyed by FactSet, which is not in line with Wall Street’s forecast of 18.2% growth.
Starbucks said its revenue for the quarter rose 31% to $ 8.1 billion, a record high. But that still fell short of Wall Street’s $ 8.2 billion forecast.
Starbucks announced its earnings a day after announcing a wage increase for American workers. The company said that by next summer, workers in its U.S. stores will be earning $ 15 to $ 23 an hour an hour. Starbucks is also raising salaries for employees who have been with the company for at least two years.
Johnson said the pay hike – along with the previously announced increase – would add $ 1 billion to the company in fiscal 2021 and 2022. The company said its staffing investment would temporarily reduce its operating margin to about 17% in fiscal 2022, compared with an adjusted operating margin of 18% in fiscal 2021.
Johnson said the spending will ensure Starbucks remains the “preferred employer” in a tight job market.
“Now is the right time to invest, and we are confident that it will bring significant returns to shareholders,” he said.
The company said its net income more than quadrupled to $ 1.76 billion in the fourth quarter to $ 1.49 per share. Adjusted for one-off items, Starbucks earned $ 1 per share. That beat Wall Street’s forecast of 99 cents.
Starbucks shares fell 4% in OTC trading.