Starbucks’ Global Sales Miss Estimates Despite U.S. Strength

(Bloomberg) -- Starbucks Corp.’s global growth fell short of expectations, overshadowing strong U.S. results and an improved sales outlook for the full year.

Gains across all regions were expected in the company’s second quarter after the weakness of a year ago amid lockdowns and Covid-19’s spread. But the global same-store sales increase -- a closely watched metric -- of 15% was short of the 17% estimate compiled by Bloomberg, reflecting pockets of weakness in the global recovery, even as a rebound is apparent in the coffee giant’s key markets of China and the U.S.

In the Americas and some other international markets, which both also posted same-store sales that missed estimates, Starbucks said that lower product sales and royalty revenue from licensees limited gains. Large markets like Brazil, Mexico and India have struggled to contain the pandemic in recent months. And in Europe, operational restrictions are hurting results, Bloomberg Intelligence analyst Mike Halen said.

“Many countries are completely locked down,” he said. “Restaurants are closed.”

In the U.S., same-store sales rose 9%, beating the 7.5% estimate. That measure rose 91% in China -- a breakneck pace that reflects the widespread Covid closures of the year before. Even so, this was below the 97% estimate.

The stock fell 1.9% at 4:34 p.m. in New York late trading on Tuesday.

The results in the U.S., which along with China is the company’s most important market, show performance is returning to normal there as vaccinations rise, even if the global recovery is uneven. The Seattle-based company is also likely seeing a boost from stimulus checks in the U.S. and an easing of dining-room restrictions.

The company updated projections for the company’s full fiscal year, with sales now seen at $28.5 billion to $29.3 billion, versus the previous guidance of $28 billion to $29 billion. Starbucks also boosted its expected operating margin.

Much like in past quarters, the company reported a decline in the number of transactions, but higher ticket prices. This means that customers are going to Starbucks less, but spending more when they do.

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