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Starbucks is suspending its outlook as Covid lockdowns plunge sales in China

Starbucks is suspending its outlook as Covid lockdowns plunge sales

May 5, 2022: -On Tuesday, Starbucks suspended its outlook for 2022 as Covid lockdowns in China weighed on international sales.

Still, strong demand in the U.S. offset sharp declines from China, helping the quarterly revenue of the company.

Starbucks reported a fiscal second-quarter net income attributable to Starbucks of $674.5 million, or 58 cents for each share, up from $659.4 million, or 56 cents per share, a year earlier.

With the excluded items, Starbucks earns 59 cents per share, according to estimates from analysts surveyed by Refinitiv.

Net sales increased 14.5% to $7.64 billion, topping expectations of $7.6 billion. Global same-store sales increased 7% in the quarter, fueling solid growth in the U.S.

U.S. same-store sales increased 12%, as customers spent more per order and visited more often. Active membership of Starbucks’ loyalty program increased by 17% to 26.7 million customers.

In the U.S., the company’s baristas have been unionizing to earn better pay and working conditions. Nearly 50 company-owned locations have voted in favor of unionizing in the last six months. Since Howard Schultz returned as interim CEO in April, he has paused stock buybacks and embarked on a listening campaign with baristas nationwide to curb the growing union push.

As the company seeks to curb the union push, Schultz announced $1 billion in investments for fiscal 2022 on wage hikes, improved training, and store innovation during fiscal 2022. However, the coffee giant will not offer the enhanced benefits to workers at the cafes that have voted to unionize. Such changes at unionized stores would have to come through bargaining, Starbucks said.

“The union contract will not even come close to what Starbucks offers,” Schultz told analysts on the company’s conference call.

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