Starbucks Sales Rise as Cost Pressures Increase

The chain’s total sales of $8.1 billion topped expectations of $7.98 billion.

“Although demand was strong, this pandemic has not been linear,” Starbucks Chief Executive

Kevin Johnson

said.

Starbucks shares fell about 1% to $98 a share in after-market trading.

Seattle-based Starbucks and other restaurant chains are selling food for takeout only, closing dining-room seating or shortening hours at some locations during the Omicron variant’s surge. The coffee chain last month expanded paid leave to workers with a Covid-19 exposure regardless of vaccination status, which executives said could hurt staffing levels but was needed for the safety of employees and customers.

Starbucks reported a same-store sales increase of 18% at U.S. stores compared with a year earlier. Sales weakened in the latter part of the quarter, during the Omicron surge, the company said. China, a significant market for the chain, suffered during the period, with same-store sales falling 14%, Starbucks said.

China’s strict policies aimed at controlling the coronavirus resulted in store closures and reduced sales during the quarter, Starbucks said. The company said it continues to open new stores in its second-largest market, and was operating more than 5,500 stores in China at the end of the quarter.

Price increases in Starbucks’ North American stores helped its margins during the quarter, the chain said, while supply-chain costs and higher wages dragged on profit. Starbucks raised prices last month and last October in the U.S., and plans to increase them further this year to try to offset rising costs, Mr. Johnson said Tuesday.

In the U.S., labor shortages at the chain’s regular suppliers prompted Starbucks to turn to higher-cost vendors to fulfill demand, Mr. Johnson said.

“We anticipate supply-chain disruptions will continue for the foreseeable future,” he told investors on a conference call.

Write to Heather Haddon at heather.haddon@wsj.com