Starbucks to increase prices amid inflation

Leading coffee chain Starbucks announced they will raise their prices in 2022 and reduce some spending  blaming supply chain disruptions and rise in labour costs. Reporting its quarterly earnings on Tuesday February 1, the company said they missed estimates for quarterly profits and comparable sales as the fast-spreading Omicron variant led to delayed office reopenings and new restrictions in China, the company’s fastest growing market. For the last three months of last year, the company’s profit soared 31 percent, to $816 million.Revenue grew to $8.1 billion, a 19 percent jump compared with the same quarter a year ago.

The company revised its expected adjusted earnings per share growth forecast for 2022 to 8-10%, from at least 10% previously. The Seattle-based chain – whose workers in more than 50 of its U.S. stores are seeking to unionize – has also paid more to train new employees and for them to isolate after exposure to COVID-19.”When the Omicron surge began, inflationary costs and staffing shortages were amplified, well in excess of our expectations,”  Johnson added.

Global comparable sales rose 13% in the first quarter ended Jan. 2, Starbucks said, while analysts polled by Refinitiv IBES had expected growth of 13.2%. Same-store sales in the international division declined 3%, reflecting a 14% drop in China. Analysts had expected a 0.5% increase in the international segment.