The world’s largest coffeehouse chain, Starbucks, has published its revenue and profit figures for Q4 and the financial year 2022. The company reported a significant growth in revenue over last year's revenue. Due to this, Starbucks has managed to perform better than the expectations of analysts on Wall Street. Starbucks said that the increasing demand for their products in the US market is one of the major factors behind this growth. The iced coffee drinks and Pumpkin Spice Lattes were the best-performing drinks for Starbucks in the US market. However, the company also reported a dip in sales in China, the second largest market for Starbucks, due to stringent regulations.
During the past two years, Starbucks has struggled due to the stringent regulations applied by many countries across the globe due to COVID-19. During 2020, and early 2021, Starbucks was struggling so much that the company let go of many employees during this period. In late 2021 and early 2022, the company was expected to produce subpar performance. Along with COVID-19, the company was also met with growing tensions between employees and management. Due to inflation, Starbucks employees were asking for better wedges to allow them to be financially capable of facing inflation. This feud between the employees and management led to the formation of employee unions. China, the largest market for Starbucks after the US, still has some of the most stringent COVID-19 restrictions in the world. This significantly cut down Starbucks' revenue from the Chinese market. These were the reasons that many analysts were hoping that the company would produce lower revenue. Hence, a significant growth in the revenue and profits for Starbucks in 2022 has come as a surprise for many analysts, significantly exceeding their expectations.
Rachel Ruggeri, the chief financial officer at Starbucks stated that due to the heavy promotions done by Starbucks during the fall season, the traffic in the US stores matched almost 95% of the pre-pandemic traffic. Along with this, the elevated prices due to inflation also favored it to generate higher revenue for the company, Ruggeri further stated. According to the published financial result from Starbucks, the North American segment of the company reported a 6% growth in revenue over the previous year, 2021. On the other hand, the International segment reported a decline in revenue by 7%. Along with this, the shares of Starbucks also grew by 2.7% during the year 2022. According to the expected values for shares by Wall Street analysts, Starbucks shares were expected to offer earnings of 72 cents per share, but offered an earning of 81 cents per share, pushing the revenue to $8.41 billion.
The US market proved to be the savior for the company, as it generated the maximum revenue for Starbucks. According to Starbucks, people in the US spent wholeheartedly on luxury drinks. Along with this, in 2022, Starbucks increased the prices of their products by almost 6%, which contributed to higher revenue. Although, Starbucks has stated that it has no plans to increase the prices any further for the time being.
