Starbucks earnings come up short as Omicron dents recovery | Food News

Shares of Starbucks were down 3.5 percent in extended trading, following a 16 percent drop last month.

Starbucks Corp missed market estimates for quarterly same-store sales on Tuesday as rising COVID-19 infections during December and fresh curbs hampered recovery in its fast-growing China market.

The fast-spreading Omicron variant has delayed office reopenings and worsened a labour crunch – hurting the United States-based chain, which relies heavily on consumers picking up their coffees en route to work.

Shares of Starbucks were down 3.5 percent in extended trading, following a 16 percent drop last month.

Several Chinese cities have closed seating areas and restricted movement to curb COVID-19 ahead of the Winter Olympics, knocking the coffee chain’s revenue. The brand also came under fire in the country after a report said two of its stores used expired ingredients.

Global comparable sales rose 13 percent in the first quarter ended January 2, Starbucks said, while analysts polled by Refinitiv IBES had expected growth of 13.2 percent.

Comparable sales in the US jumped 18 percent, benefitting from new cold beverages, higher prices and an increase in rewards members.

But same-store sales in the international division declined 3 percent, reflecting a 14 percent drop in China. Analysts had expected a 0.5 percent increase in the international segment.

Higher-than-expected inflation, staffing costs and COVID-related pay also hurt Starbucks, particularly in December.

Total net revenue rose 19 percent to $8.1bn, while analysts had expected $7.95bn. On an adjusted basis, it earned 72 cents per share.