Starbucks slips on sales disappointment despite China bump
Investing.com | Author Scott Kanowsky
Published Aug 01, 2023 04:27PM ET
Updated Aug 02, 2023 06:43AM ET
Investing.com -- Shares in Starbucks (NASDAQ:SBUX) drifted lower in premarket U.S. trading Wednesday after the coffeehouse chain reported global comparable sales that missed estimates, as demand for the Frappuccino maker's drinks and food showed signs of slowing in North America.
Quarterly transactions in the region rose by just 1%, down from a 6% uptick in the prior three-month period. Comparable store sales in North America grew by 7%, missing expectations.
On a global basis, comparable sales at Starbucks grew by 10%, below analysts' projections for an 11.1% jump.
Speaking to investors following the earnings, executives at Starbucks flagged that they expect to see continued revenue pressure in the fourth quarter due in part to a normalization in pricing trends after several months of price increases.
But Starbucks still posted adjusted earnings per share of $1.00, topping Bloomberg consensus estimates of $0.95, thanks to a sharp recovery in sales in China. Tapering commodity costs also offset the impact of spending on wages and worker benefits, boosting profit margin for the quarter ended July 2 up to 17.4%.
"We believe Starbucks's scale, best-in-class digital platform, innovation competencies, and forward-thinking business mentality should position the Company well over the [long-term]. However, the operating environment remains challenged," analysts at KeyBanc said in a note to clients following the results.
(Liz Moyer contributed to this report.)
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