Starbucks beat quarterly profit estimates, powered by a sharp recovery in business in China, but shares fell about 6% in after-hours trading after the company did not lift its 2023 guidance.
With most of China's COVID-19 curbs now scrapped, consumer mobility and spending in the region bounced back sharply in March.
Even so, some analysts had expected China sales to remain in the red after tumbling 29% the previous quarter.
Instead, the world's largest coffee house chain posted a 3% rise in China comparable sales in its second quarter ended April 2, helping boost international sales 7%, more than double the 2.94% increase of the average analyst's estimate, according to Refinitiv data.
Starbucks Reinvention
“I am very pleased with our Reinvention progress and grateful for the opportunity to fully immerse into the company, which I formally took over on March 20, 2023. It is a privilege to have learned from our founder and partners around the world,” commented Laxman Narasimhan, chief executive officer.
“From my immersion observations, our leadership team now has a clear line of sight into our growth headroom, as well as our opportunities to enhance margins and modernise the business, brand, partner experience and culture of Starbucks.
Read More: Laxman Narasimhan Steps In As Starbucks' Chief Executive Officer
Moderate Recovery
While the China recovery was better than the company expected, growth in average weekly sales there will be at a more moderate pace in the second half, chief financial officer Rachel Ruggeri said during an earnings call.
"We've already seen it start to moderate," she said, noting uncertainty about consumer behavior and international travel.
Read More: Starbucks To Expand US Delivery Via DoorDash Nationwide
News by Reuters, additional reporting by ESM – your source for the latest A-Brands news. Click subscribe to sign up to ESM: European Supermarket Magazine.
