Starbucks says it will suspend its operations in Russia – Copyright AFP/File Alastair Pike
Robust sales in North America were offset by weakness in China as Starbucks reported a modest profit increase Tuesday as it boosts investment in US stores amid a unionization campaign.
The coffee giant scored a 12 percent jump in comparable sales in North America, while suffering a 23 percent slide in China amid that country’s latest Covid-19 outbreak.
Interim Chief Executive Howard Schultz said the chain was ramping up investments in “high-returning” drive-thru stores and cafe renovations in its home market.
“We are single-mindedly focused on enhancing our core US business through our partner, customer and store experiences,” Schultz said in a news release.
“The investments we are making in our people and the company will add the capacity we need in our US stores today and position us ahead of the coming growth curve ahead.”
Net income edged up 2.3 percent to $674.5 million in the quarter ending April 3 following an 14.5 percent jump in revenues to $7.6 billion.
The company’s North America division saw lower profit margins due to higher material costs, increased employee wages and “new partner training, on-boarding and support costs to address labor market conditions,” Starbucks said in a news release.
Under Schultz — the longtime leader of the company who rejoined in March — Starbucks has doubled down on its opposition to a push to unionize stores that has grown following the December vote of two New York stores to unionize.
Some 250 Starbucks stores have launched unionization campaigns in the United States, with employees voting for a union in 47 stores, said the group, Starbucks Workers United.
Shares of Starbucks rose 1.8 percent to $75.63 in after-hours trading.