Starbucks sales top estimates, buoyed by strength in US and China

CHICAGO – Starbucks shares slumped on Tuesday after the coffee chain reaffirmed its guidance for the full fiscal year – a cautious move that appeared to disappoint Wall Street following a strong quarter in which sales and profit outpaced expectations. 

Comparable sales rose 11 per cent in the quarter ended April 2, besting analysts’ projections for a 7.3 per cent gain. Sales by that measure surpassed estimates in both key growth markets of the United States and China. 

The results underscore consumers’ resilience as they continue paying higher menu prices for discretionary items like oat milk lattes. The numbers also further reinforce that dining out is back: Last week, Chipotle Mexican Grill and McDonald’s also posted sales that topped Wall Street expectations. 

The shares slumped 5.6 per cent at 6.19pm in late trading in New York on Tuesday (6.19am on Wednesday Singapore time), extending declines during executives’ call with analysts. The stock’s year-to-date gain of 15 per cent – more than double that of the S&P 500 index’s advance over the same period – may have left the company with little margin to manoeuvre. 

Starbucks said transactions grew 6 per cent in the US and also rose in China. Traffic in US, company-operated stores also surpassed pre-pandemic levels in the quarter during the busiest parts of the day, executives said. 

Operating margin was 14.3 per cent, surpassing the average estimate from analysts. In North America, profitability was helped by higher prices, among other factors. 

The decision to leave guidance unchanged signals unease about the economy’s trajectory, with executives referring to uncertainty multiple times during the call. Starbucks joins large US companies such as Ford Motor and Pfizer in holding steady their outlook despite better-than-expected performance at the start of the year. BLOOMBERG