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Thursday October 6th, 2022 12:07AM

Starbucks reports record Q2 sales as costs climb

By The Associated Press

Starbucks’ sales climbed to record levels in its fiscal second quarter, but its profits took a hit from climbing labor and ingredient costs.

The Seattle coffee company __ which welcomed back former CEO Howard Schultz last month as its interim leader __ said revenue rose 15% to a record $7.6 billion in its 13-week quarter, which ended April 3. That was in line with Wall Street’s estimates, according to analysts polled by FactSet.

But net earnings rose just 2% to $674 million. Starbucks’ adjusted earnings of 59 cents per share fell short of analysts’ forecast of 60 cents.

Starbucks noted that it faced higher employment costs and higher costs to buy and transport ingredients during the quarter. The company Starbucks announced a $1 billion investment in employee wages and benefits last fall, with a plan to lift U.S. workers’ pay to at least $15 per hour by this summer. Schutz said Tuesday those increases will give the stores the workers they need to handle customer demand.

Starbucks said its same-store sales __ or sales at stores open at least a year __ rose 7% globally in the second quarter, surpassing Wall Street’s estimate of 6.5%. That was largely on the strength of the business in North America, where same-store sales rose 12%. U.S. price increases in December didn't appear to dampen demand.

International same-store sales fell 8%, largely due to coronavirus restrictions in China. China, which is Starbucks' largest market outside the U.S., saw same-store sales plummet 23% in the quarter, the company said.

Starbucks shares were up 1% in after-hours trading Tuesday.

  • Associated Categories: Associated Press (AP), AP Business, AP Business - Corporate News
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