Starbucks’ profit is lower than forecast as sales in China plummet

Feb 3 (Reuters) – A surprisingly strong decline in Starbucks sales in China hit the chain’s quarterly results and sent shares down 2.2% in post-share trading on Thursday.

The company reported adjusted earnings per share of 75 cents in October-December, while analysts had expected an average of 77 cents, according to Refinitiv data.

According to Refinitiv IBES data, Starbucks’ global sales increased by 5% compared to an average analyst rating of 6.75%.

Starbucks sales in the fiscal first quarter ending Jan. 1 fell 29% – four times the chain’s expectations – resulting in a 13% drop in international sales. The US company has no clear idea when business in China will fully recover, Starbucks said.

The company’s operating margin was 14.4% in the quarter compared to 14.6% a year earlier. The slight decline was due to large investments in technology upgrades, as well as higher labor and raw material costs.

The company confirmed its global sales growth forecast of 7%-9% in fiscal year 2023. Original message in English available via code (Deborah Sophia in Bangalore, Hilary Russ in New York)