The Seattle-based coffee chain attributes increased consumer spend in the US as driving total revenues of $8.41bn, but China’s zero-Covid policy continues to impede sales in its key growth market
Starbucks achieved sales growth of 3.3% to reach a record $8.41bn | Photo credit: Starbucks
Starbucks’ has hailed the implementation of its Reinvention plan, which aims to improve customer and staff experience alongside the company's sustainability efforts, after posting strong US sales.
However, onging Covid restrictions in China have impeded revenues in its key growth market, the coffee chain's third quarter results show.
Reporting on the three months ended 2 October 2022, Starbucks achieved sales total growth of 3.3% to reach a record $8.41bn.
The company’s US and North American revenues increased 6% to reach $6.1bn, driven by an 11% increase in company-operated comparable store sales. Starbucks’ store count in the region grew 3% to 17,295 outlets.
However, revenues in Starbucks’ second largest market China continued to decline following a sustained period of trading restrictions in the country under a nationwide zero-Covid policy.
As a result of a 16% decline in same-store sales in China, Starbucks’ international sales fell 7% to $1.8bn despite a store increase of more than 1,400 outlets in international markets during the period.
Revenues in Starbucks’ Channel Development segment, covering sales of packaged coffee, tea and ready-to-drink beverages outside of company-operated and licensed stores, grew 10% to $483.7m, driven by growth in the Global Coffee Alliance with Nestlé.
“We saw accelerating demand for Starbucks coffee around the world in Q4 and throughout the year. And our Q4 results demonstrate early evidence of the success of our US Reinvention investments. Reinvention will touch, and elevate, every aspect of our Starbucks partner, customer and store experiences, and ideally position Starbucks to deliver accelerated, sustainable, long-term, profitable growth and value creation beginning in 2023,” said Howard Schultz, Interim CEO, Starbucks.
Starbucks opened 763 net new stores in its fourth quarter to reach 35,711 stores globally, 51% of which are company operated. The company’s two largest markets, the US and China, comprise 61% of global Starbucks stores at 15,878 and 6,021 stores respectively.
At Starbucks biennial Investor Day in September 2022, Schultz revealed a target to reach 45,000 stores globally by the end of 2025 and 55,000 by 2030.
He said expansion would be driven by purpose-built store formats growth across the US, predominantly via drive-thru and curbside pickup sites, alongside a 50% increase in Chinese outlets to reach 9,000 locations by 2025. Starbucks surpassed 6,000 sites in China later that month.