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Starbucks Q3 earnings beat expectations

Starbucks (SBUX) posted its fiscal third quarter earnings Tuesday after market close that mostly beat Wall Street expectations as the company navigated inflationary pressures, labor costs, unionization efforts and the search for a permanent CEO to take the helm of the company.

Here's what the Seattle-based company reported compared to Wall Street expectations, according to a Bloomberg consensus:

  • Revenue: $8.15 billion versus $8.14 billion expected

  • Adj. earnings per share (EPS): $0.84 versus $0.76 expected

  • U.S. Same Store Sales: 9% versus 8.85% expected

  • International Sales: -18% versus -16.1% expected

This report comes as inflation has surged to a 40-year high of 9.1% last month, leaving investors concerned over the future of consumer spending. Now, Wall Street is worried that Starbucks, known as a market leader that sustained growth during the financial recession, could be hit by a potential economic downturn, but it appears consumer demand for the brand globally remains strong.

Consolidated net revenues spiked 9% to a quarterly record of $8.2 billion, despite a 2 percent adverse impact from foreign currency translation.

"We have clear line-of-sight on what we need to do to reinvent the company, elevate our partner and customer experiences and drive accelerated, profitable growth all around the world,” Howard Shultz, who returned to the helm of the company as interim CEO effective April 4, 2022, said in the earnings release.

In the U.S., comparable sales jumped by 9%, primarily driven by an 8% increase in average ticket size.

Meanwhile, the 90-day active members in the U.S. Starbucks Rewards loyalty program rose to 27.4 million, up 13% compared to a year ago.

Wall Street also kept a close eye on the company's overseas sales, particularly in China. There, sales decreased 44%, driven by a 43% decline in comparable transactions and a 1% decline in average ticket sales as consumer spending declined due to lockdowns and the zero-COVID policy in two-thirds of the quarter, which the company is treating as short-term destructions.

On June 3, the company reopened Starbucks Reserve Roastery Shanghai and has since reopened nearly 900 stores in Shanghai, home to the most Starbucks stores in the world.

This quarter, the company opened 318 net new stores, ending the period with 34,948 stores globally: 51% company-operated and 49% licensed. At the end of Q3, stores in the U.S. and China comprised 61% of the company’s global portfolio, with 15,650 stores in the U.S and 5,761 stores in China.

For 2022 year-end, U.S. same-store sales are expected to be up 11.97% year-over-year, while international sales are expected to decline 8.34% largely due to an expected drop in China, down 22.29%.

Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.

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