Starbucks Expects Higher Profit as Customers Return -- Update
April 27 2021 - 6:02PM
Dow Jones News
By Heather Haddon
Starbucks Corp. said it expects profit to increase this year as
customers come back to its cafes now operating more efficiently
than before the coronavirus struck.
The coffee giant's sales plummeted last year as it closed stores
first in China then around the world as the pandemic took hold.
Starbucks has steadily reopened stores since last summer, when
health restrictions on business and public gatherings began to ease
in parts of the U.S. It has also pushed mobile ordering of
beverages while increasing its to-go options.
Starbucks said Tuesday that global same-store sales in its
March-ended quarter increased 15% from the same period last year.
International markets accounted for much of the growth; same-store
sales in the U.S. rose 9%. Analysts had expected global growth of
17%. Shares in Starbucks fell 1.5% in after-market trading to
$114.
Starbucks said it expects profit for the year to rise more than
it previously projected. It now sees annual earnings of $2.65 to
$2.75 a share, up from $2.42 to $2.62 previously. The chain also
bumped up its projections for store margins and sales.
The coffee giant is among restaurant chains working to draw
consumers back from home-brewing habits they have adopted during
the pandemic. Nestlé SA, the Swiss packaged-food company that makes
Starbucks-branded products in addition to its own, said last week
that at-home coffee sales drove its best quarterly sales growth in
almost a decade.
Starbucks has also drawn more people into its online loyalty
program as it has sought to boost in-person sales. The chain said
it had 23 million U.S. members in the latest quarter, an 18%
increase from last year. Members receive deals through repeat
purchases.
The chain is also developing more to-go oriented stores as it
phases out some sit-down locations. Starbucks said it closed 300
stores in the U.S. and Canada during the latest quarter as part of
this shift.
Starbucks said it spent more in the quarter on wages and
benefits related to working during the health crisis. The chain
said pandemic-related government subsidies helped offset some of
the payroll costs. Restaurants have said recently that they are
offering more in pay and benefits as they struggle to staff their
stores.
For its fiscal second quarter, Starbucks reported earnings
adjusted for one-time items of 62 cents a share. Analysts polled by
FactSet were expecting earnings of 53 cents a share by that metric.
Sales of $6.7 billion were short of an expected $6.8 billion.
Write to Heather Haddon at heather.haddon@wsj.com
(END) Dow Jones Newswires
April 27, 2021 17:47 ET (21:47 GMT)
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