Starbucks demand strong in Q1; costs higher-than-expected

Starbucks Corp. reported mixed first-quarter results as higher-than-expected inflationary pressures and increased costs due to Omicron weighed on its profits.

The coffee giant reported net income of $815.9 million, or $0.69 per share for the quarter ended Jan.2, up from $622.2 million, or $0.53 per share, in the year-ago period. Excluding items, Starbucks earned $0.72 per share, missing analysts’ estimates

Consolidated net sales rose 19% to $8.1 billion, beating expectations of $7.95 billion. Global same-store sales climbed 13% in the quarter.

Same-store sales in the United States increased 18% from a year earlier and 12% on a two-year basis. Sales were primarily driven by a 12% increase in comparable transactions and a 6% increase in average ticket. Active Starbucks Rewards U.S. membership rose 21% year-over-year to 26.4 million.

Same-store sales in China, the company’s second-largest market, fell 14% amid travel restrictions and rising COVID cases.

“This holiday quarter delivered strong revenue growth highlighted by incredible customer demand for Starbucks,” said Kevin Johnson, president and CEO. “Although demand was strong, this pandemic has not been linear, and the macro environment remains dynamic as we experienced higher-than-expected inflationary pressures, increased costs due to Omicron and a tight labor market. We remain focused on actions that drive both top and bottom-line growth, including industry-leading investments to attract, train and retain the best talent for our stores as customer occasions increase.”

Starbucks opened 484 net new stores in the first quarter, ending the period with a record 34,317 stores globally, of which 51% and 49% were company-operated and licensed, respectively. Stores in the U.S. and China comprised 61% of the company’s global portfolio, with 15,500 and 5,557 stores, respectively.

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