Starbucks on Tuesday reported record revenue in its fiscal first quarter but the results fell short of Wall Street’s expectations as customer spending slowed in some key markets.
The Seattle coffee giant said its revenue rose 8% to $9.43 billion for the October-December period. That was lower than the $9.6 billion analysts had forecast, according to FactSet.
Same-store sales, or sales at stores open at least a year, also fell short of Wall Street’s expectations. Starbucks said global same-store sales rose 5%; analysts had forecast a 7% increase.
In the U.S., same-store sales rose 5% in the quarter. Customer transactions rose 1% and consumers spent more per order. But in China — Starbucks’ second-largest market — results were mixed. Transactions were up 21% but average spending per order fell 9%.
Starbucks said its net income rose 20% to just over $1 billion, or 90 cents per share. Analysts had forecast earnings of 93 cents per share.
Starbucks faced multiple headwinds in the quarter. On Nov. 16, workers at more than 200 U.S. stores walked off the job to protest lack of progress in negotiating union contracts with the company. It was the largest strike yet in the 2-year-old effort to unionize Starbucks’ company-owned U.S. stores.
It also faced boycotts around the world after it sued Workers United — the union organizing its workers — after a union social media account posted a pro-Palestinian message.
Starbucks said it was trying to get the union to stop using its name and likeness, since it was also facing protests from pro-Israel demonstrators. But some boycotters felt the company wasn’t adequately supporting the people of Gaza. Starbucks and Workers United plan to try to resolve the lawsuit in mediation sessions next month, according to court filings.
In December, Starbucks CEO Laxman Narasimhan tried to allay tensions in an open letter to employees, saying Starbucks condemns “violence against the innocent, hate and weaponized speech and lies.”
“Our stance is clear. We stand for humanity,” he wrote.
