Starbucks revenue misses estimates as US growth slips

Seattle, Washington-based coffee company's stock alternated between losses and gains in late trading after results released

The chain’s comparable sales, a key gauge of how existing stores are performing, rose 10 per cent in the three months through July 2 from the prior year. Reuters

Starbucks' quarterly sales fell short of analysts’ estimates on Tuesday, as traffic growth slowed in the US, with higher prices and add-ons to beverages helping bolster profit.

The chain’s comparable sales, a key gauge of how existing stores are performing, rose 10 per cent in the three months through July 2 from the prior year, trailing the average estimate of analysts polled by Bloomberg.

Sales by that metric rose 7 per cent in North America as transactions advanced 1 per cent, slower than last quarter. That was largely due to higher prices and customers ordering more items per visit, according to the Associated Press.

Meanwhile, adjusted earnings per share of $1 beat the 95-cent average analyst estimate. Revenue in the company’s fiscal third quarter was a record $9.2 billion, Starbucks said, but that still fell short of the $9.3 billion analysts expected.

The Seattle, Washington-based coffee company's stock alternated between losses and gains in late trading after the release of results. The shares have risen 2.1 per cent in 2023 through Tuesday’s market close in New York, trailing the S&P 500 Index’s 19 per cent advance.

The results contrast with those of McDonald’s, which topped estimates despite warnings of slowing growth. Starbucks’ earnings show that US consumers may be starting to cut back on discretionary services such as dining out.

International same-store sales grew 24 per cent in the quarter, in line with estimates, powered by higher traffic. That included higher-than-anticipated growth in China, which is still recovering after extended Covid-19 restrictions.

Same-store sales – or sales at stores open at least a year – jumped 46 per cent in China, reversing last year’s declines due to Covid infections.

Starbucks’ overall same-store sales increase of 10 per cent was also lower than Wall Street’s forecast of 11 per cent.