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Earnings Results: Starbucks adding more drive-throughs to boost North American business

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Starbucks Corp. stock edged higher in after-hours trading Tuesday after the coffee chain reported fiscal second-quarter earnings within expectations, highlighting it as an achievement amid rising costs, inflation and thinner margins.

Starbucks
SBUX,
-1.38%

said it earned $675 million, or 58 cents a share, in the quarter, compared with $659 million, or 56 cents a share, in the year-ago period. Adjusted for one-time items, Starbucks earned 59 cents a share.

Revenue rose 15% to $7.6 billion, which the company said it was a record and included a 17% rise for revenues from its North America business, thanks in part to a 12% increase in company-operated comparable-store sales and increases for average tickets and transactions.

Analysts polled by FactSet expected adjusted EPS of 60 cents on revenue of $7.6 billion.

“We are single-mindedly focused on enhancing our core U.S. business,” interim Chief Executive Howard Schultz said in a statement. “Record” demand and changes in customer behavior are accelerating store-growth plans, mostly by adding “high returning” drive-through locations, Schultz said.

“The investments we are making in our people and the company will add the capacity we need in our U.S. stores today and position us ahead of the coming growth curve ahead,” Schultz said.

International comparable-store sales fell 8%, including a 23% drop for same-store sales in China, the company said. China has been beset by lockdowns and other measures to curb an uptick in COVID-19 cases.

Operating margins dropped as well, which Starbucks pinned in part on “inflationary pressures” and the restrictions and lockdowns in China. That was partially offset by pricing in North America, it said.

The stock has lost more than 36% this year, compared with losses of around 12% for the S&P 500 index
SPX,
+0.48%
.

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