Starbucks reported record quarterly sales, however higher costs put a dent in profits.
Shares of the coffee giant rose 5% in after-hours trading.
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Sales climbed 15% to a record $7.6 billion, which matched Wall Street’s estimates.
Sales were impacted due to China’s tough COVID-19 curbs. Comparable sales in China declined 23%, overshadowing 12% growth in North America. Same-store sales rose 7% globally, topping estimates.
STARBUCKS INTERIM CEO SCHULTZ SUSPENDS STOCK REPURCHASING, REFOCUSING CAPITAL IN EMPLOYEES, STORES
Starbucks suspended guidance for the remainder of its current fiscal year as uncertainty around its China market makes it difficult to predict earnings.
“I remain convinced Starbucks’ business in China will be eventually larger than our business in the U.S.,” Chief Executive Officer Howard Schultz said in a call with investors.
Schultz said customer demand for Starbucks remains strong.
Net earnings rose just 2% to $674 million and adjusted earnings of 59 cents per share fell short of analysts’ forecast of 60 cents.
STARBUCKS COUNTERS UNIONS WITH $1 BILLION INVESTMENT IN WORKERS
Profit was impacted by higher labor costs, which are expecting to climb further as the company tries to head off a growing union movement.
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Starbucks said Tuesday it will spend $200 million this year on better pay and benefits, but stressed that workers at unionized stores won’t be eligible. Workers at more than 50 U.S. stores have voted to unionize since late last year. Union organizers responded by filing a complaint with the National Labor Relations Board.
The Associated Press contributed to this report.