By Praveen Paramasivam and Hilary Russ
(Reuters) -Starbucks Corp missed market estimates for quarterly same-store sales on Thursday, as a COVID-19 resurgence in China closed stores in several major cities and overshadowed a strong performance by its U.S. business.
Fresh lockdowns to curb the spread of the Delta variant in Starbucks’ largest growth market of China have also hit businesses of several other restaurant chain operators, including Yum China Holdings Inc. The coffee chain posted a 7% decline in China comparable sales in the fourth quarter, missing its forecast of roughly flat growth and offsetting a 22% jump in the United States.
Shares fell 2% in aftermarket trading.
Analysts say the pressure in China should be temporary as restrictions ease and Seattle-based Starbucks opens more stores in the world’s second-largest economy to boost growth.
Global comparable sales rose 17% in the quarter ended Oct. 3, compared with analysts’ average estimate of 18.5% growth, according to Refinitiv IBES data.
Revenue came in at $8.15 billion to miss Wall Street expectations of $8.21 billion. Starbucks earned $1 per share on an adjusted basis – narrowly beating estimates of 99 cents – compared with 51 cents a year earlier.
The company said on Wednesday it would give pay raises to workers in the United States with at least two years of employment and offer $200 referral bonuses, as it grapples with a labor crunch in the country.
The worker shortage has weighed on earnings of major U.S. restaurant chains such as Burger King-parent Restaurant Brands International Inc and Domino’s Pizza Inc.
Starbucks’ rewards program for loyal customers grew 28% year-over-year to 24.8 million 90-day active members.
The coffee chain also committed to $20 billion of share repurchases and dividends over the next three years.
(Reporting by Praveen Paramasivam in Bengaluru and Hilary Russ in New York; Editing by Aditya Soni and Aurora Ellis)
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