Investing.com – Starbucks stock (NASDAQ:SBUX) fell 5.4% in Friday’s premarket trading as the coffee brewer said it expect a significant slowdown in comparable same-store sales growth in the current financial year, after a weak fourth quarter in China, its biggest market outside the U.S.
According to Reuters, the company expects global comparable sales to grow in the high single digits in its current financial year.
Sales in the world’s second largest economy declined 7% in the three months through September as local governments reimposed curbs to contain the spread of a resurgent coronavirus. This affected operations as well as visits to its stores.
The company sees global comparable sales growing by less than 10% in the current financial year, down from 20% in 2021. Operating margin is seen lower at 17% as the company grapples with rising labor costs, higher rentals and costlier raw materials. The company has a target of 18%-19% operating margin by 2023.
Traders ignored the coffee chain’s commitment to a program of $20 billion in share repurchases and dividends over the next three years.
CEO Kevin Johnson told Reuters the company is hiking prices and will continue to in an inflationary environment.
The drop in China sales offset the 22% same-store sales growth in the U.S. Overall, same-store sales rose 17% and revenue rose 31% to $8.1 billion in the fourth quarter but that wasn’t enough to beat estimates.
Adjusted profit of $1 just about met estimates.
The company will start to raise wages in phases from January, it said in a note.
The retail chain will open 2,000 net new locations globally in 2022, up from 1,173 in 2021, about 75% of them outside the U.S.