Starbucks misses q1 earnings estimates, shares slide

On Thursday, Starbucks Corp missed Wall Street expectations for quarterly comparable sales, because of weakness in China, the coffee chain's China business, and strong sales in the North American market.

The shares of the Seattle, Washington-based company fell about 3 per cent to $106.34 in extended trading.

Customer traffic at Starbucks remained weak owing to widespread COVID 19 outbreaks in the country, although China has abandoned its zero-COVID policy and began reopening in early December.

In the first quarter of January, Starbucks' comparable sales fell by 29 per cent, compared to the Chinese equivalent sales for the company in China, down 13 per cent.

Wall Street analysts said that near-term trends in China are bound to be choppy. The lifting of restrictions could benefit Starbucks heading further into the year, boosted by its pricier cold drinks and growing loyalty program.

A younger and wealthier coffee-loving crowd shrugged off inflationary pressures and continued to order coffees, cold drinks and food item add-ons, as well as food item add-ons, according to a 10 per cent jump in comparable sales in North America.

According to Refinitiv IBES data, global comparable sales at Starbucks rose 5 per cent, compared to analysts' average estimate of 6.75 per cent.

The roughly 280 newly unionized U.S. locations are not yet at an agreement with Starbucks on a labor contract, which has weighed on the company's 280 newly unionized U.S. locations.

The operating margin of Starbucks was 14.4 per cent for the quarter, down from 14.6 per cent a year ago, and was pinched by heavy investments to modernize its stores through technology as well as elevated labor and raw material costs.