Starbucks’ largest market performs well against the backdrop of rising costs and reduced consumer confidence, but Covid-19 lockdowns cause sales to slump in China
Photo credit: Hiroko Nishimura
Starbucks has a ‘clear line of sight’ to reinvent the company and accelerate growth following ‘record’ quarterly performance, according to the coffee chain's interim CEO, Howard Shultz.
Reporting its third quarter results ended 3 July 2023, the Seattle-based coffee chain posted $8.2bn revenues, 8% higher than in the same period during 2021.
In North America, Starbucks’ largest market, revenues grew 13% to reach $6.1bn, with like-for-like sales increasing 9%. Starbucks Rewards loyalty program 90-day active members in the US increased to 27.4 million, up 13% year-over-year.
Starbucks opened 318 net new stores during the period to operate a total of 34,948 stores globally. It’s two largest markets, the US and China, now comprise 61% of outlets globally, with the coffee chain operating 15,650 stores and 5,761 stores in each market respectively.
However, Starbucks’ international segment saw revenues fall 6% to $1.6bn, primarily driven Covid-19 trading restrictions in China, which are gradually being eased with the resumption of in-store dining
at around 800 stores in Shanghai in June.
The company also cited inflation and supply chain disruption arising from the war in Ukraine has key market headwinds impacting sales globally.
“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,” said Howard Schultz, Interim CEO, Starbucks.
“The Q3 results we announced today demonstrate the early progress we have made in just four short months,” Schultz added.
“We delivered record-breaking revenue performance during the quarter from continued strength in customer demand globally, balanced with our ability to execute investments despite macroeconomic and operational headwinds. Our commitment to deliver shareholder value has not wavered, and we are making the right decisions and investments today for the future of Starbucks,” commented Rachel Ruggeri, Chief Financial Officer.
The world’s largest coffee chain is still searching for a new permanent CEO after Kevin Johnson stepped down in April 2022. Howard Schultz, who was CEO of the company until 2017, is expected to remain in the interim role until 2023.