In China, the company’s second-largest market, transactions at cafes open at least 13 months plunged 28%. During the quarter, the Chinese government relaxed its zero Covid policy, which led to new outbreaks of the virus.
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Despite weak performance in China, CFO Rachel Ruggeri reiterated the company’s fiscal 2023 outlook. However, Starbucks now expects negative same-store sales growth in China through the fiscal second quarter, followed by a reversal of the trend in the second half of the fiscal year. The company said it would discuss its forecast further on the conference call.
Shares of the company fell more than 3% in extended trading.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
Earnings per share: 75 cents adjusted vs. 77 cents expectedRevenue: $8.71 billion vs. $8.78 billion expected
The coffee giant reported fiscal first-quarter net income of $855.2 million, or 74 cents per share, up from $815.9 million, or 69 cents per share, a year earlier.
Excluding restructuring and impairment costs and other items, Starbucks earned 75 cents per share.
Net salesrose 8% to $8.71 billion. Globally, its same-store sales rose 5%, driven by a 7% increase in average transaction spend.
In the U.S., Starbucks saw same-store sales growth of 10%, thanks to customers spending more and a 1% bump in traffic. Its rewards program reached 30.4 million active members, up 15% from the year-ago period. The coffee chain recently changed its loyalty program, making it more expensive to redeem points for a hand-crafted drink but cheaper for beverages that are easier to make.
Outside its home market, Starbucks’ same-store sales shrank 13%, dragged down by China’s dismal performance.
The company opened 459 net new locations in the quarter.
Looking to 2023, the company is projecting revenue growth of 10% to 12% and adjusted earnings per share growth on the low end of 15% to 20% for fiscal 2023.
Read the full Starbucks earnings report.