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•Shares of the coffee chain fell nearly 6% in premarket trading on Friday
•Outlook for fiscal 2022 earnings fall below Wall Street’s expectations
Starbucks Inc (SBUX)reported lower-than- expected earnings on Friday as its international sales growth fell due to resurgence of COVID-19 cases in China.
Shares of the coffee chain fell nearly 6% in premarket trading on Friday.
Net income of Starbucks for the fourth-quarter was $1.76 billion, or $1.49 per share, an increase from $392.66 million, or 33 cents per share, a year ago.
The company reported 31% rise in its revenue to $8.1 billion, missing expectation of $8.21 billion. The global same-store sales jumped 17%, missing StreetAccount estimates of 18.3%.
For the quarter, Starbucks posted earnings per share of $1 per share, beating analysts’ expectations of 99 cents per share, according to Refinitv.
Labor Shortage
Similar to fast-food chains such as McDonald’s and Domino’s Pizza, Starbucks also admitted of the staffing challenges faced by the coffee chain. On Thursday, Starbucks announced to hike employees’ wages at least twice in 2022.
International sales
Starbucks’ international markets sales was muted due to COVID-19 resurgence in China. The second-largest market of the coffee chain, China’s same-store sales fell 7%.
“At its peak in mid-August, approximately 80% of our stores in China were impacted by the pandemic,” CEO Kevin Johnson told analysts.
Starbucks international same-store sales grew by 3%.
Fiscal 2022 forecast
Starbucks forecast its GAAP earnings per share to reduce by 4%, while its adjusted earnings per share to rise by at least 10%.
The outlook for earnings is below Wall Street’s expectations of $3.73, which is more than 15% higher than fiscal 2021.
The company said earnings will be lowest during the fiscal second quarter due to wage hikes, but expects profits to reach their peak by the next quarter.
Picture Credits: AP