Starbucks posts record quarterly sales as U.S. comps rise 22%
Starbucks Corp. reported a mixed quarter, with strong sales at home but weakness in its second-largest market.
The coffee giant reported its fourth-quarter results the day after it announced a wage hike for its U.S. hourly employees. By January 2022, employees with two or more years of service will see up to a 5% to 10% increase in their pay, and in summer 2022, all hourly retail workers in the U.S. will make an average of nearly $17 an hour, with hourly rates ranging from $15 to $23 an hour across the country.
Starbucks reported net income of $1.76 billion, or $1.49 per share, for the quarter ended Oct. 3, up from $392.6 million, or $0.33 per share, in the year-ago period. Adjusted earnings came to $1 per share. Analysts had expected earnings of $0.99 per share.
Net sales rose 31% to $8.1 billion — an all-time quarterly high for the company— but missing expectations of $8.21 billion. Global same-store sales rose 17%, driven by a 15% increase in comparable transactions and a 2% increase in average ticket. U.S. comparable store sales increased 22%, driven by a 19% increase in comparable transactions and a 3% increase in average ticket.
Starbucks’ loyalty program’s had 24.8 million active U.S. members, up 28% year-over-year. During the quarter, 51% of customers were Starbucks Rewards members.
Starbucks COO John Culver told investors on the chain’s conference call that “routines are beginning to normalize,” with peak hours returning to pre-pandemic times. But the pandemic surge in digital ordering continues. Drive-thru and mobile ordering made up 70% of transactions during the quarter, up 15% from pre-pandemic levels.
Comparable store sales in China, Starbucks’ second largest market, decreased 7%, amid the resurgence of COVID-19 in select cities.
The company opened 538 net new stores in the quarter, ending the period with a record 33,833 stores globally. Stores in the U.S. and China comprised 62% of the company’s global portfolio at the end of the quarter, with 15,450 and 5,360 stores, respectively
On the earnings call with investors, Johnson said that Starbucks’ wage hikes — along with previously announced increases — will result in $1 billion in incremental spending for the chain in the 2021 and 2022 fiscal years. But he added that the investment will ensure Starbucks remains “an employer of choice” in a tight labor market.
“Our strong finish to fiscal 2021, including record performance in the fourth quarter, demonstrates the resilience of Starbucks and reinforces the value of the bold strategic moves we have taken over the past two years,” said Kevin Johnson, president and CEO. "Through it all, we have thoughtfully navigated a strong recovery with an eye towards our future, all guided by our mission and values We anticipate that our strong business momentum, increased operating efficiency and continued global store expansion will fund these unprecedented investments while delivering yet another year of significant growth.”
Starbucks announced it would resume its share buyback program during its fiscal first quarter.