Starbucks Corporation (NASDAQ:SBUX) stock rose 5.69% (As on May 4, 11:37:49 AM UTC-4, Source: Google Finance) after the company posted inline results for the second quarter of FY 22. Profits for the quarter were $674.5 million, up from $659.4 million for the same period in 2021. The company has reported record 2Q revenues despite a significant decrease in sales in China due to the country’s pandemic lockdowns.
SBUX in the second quarter of FY 22 has reported the adjusted earnings per share of 58 cents, which is inline with the analysts’ estimates for the adjusted earnings per share of 58 cents. The company had reported the adjusted revenue of $7.6 billion in the second quarter of FY 22, which is inline with the analysts’ estimates for revenue of $7.6 billion. The impressive revenue figures came despite government mandated lockdowns in China, where the company reported a comparable store sale decrease of 23% in the country. According to Bloomberg estimates, the coffee chain’s sales were expected to drop 6.5% due to China’s pandemic-related shutdowns. However, the company reported a 12% increase in North America comparable store sales, with revenue reaching $5.5 billion in 2Q compared to $4.6 billion in the same quarter last year.
Meanwhile, SBUX has announced the company will make additional investments in partners and stores for prioritized areas such as increased pay, modernized training and collaboration, store innovation, and the celebration of coffee, bringing the total investments to nearly $1 billion in this fiscal year alone. This decision enables Starbucks to meet record customer demand and partner needs in an operating environment deeply impacted by COVID.
As previously announced, Starbucks is moving all U.S. store partners to a $15/hour floor this summer, effective August 1, and also adding incremental increases that will apply to all U.S. store partners, while recognizing and rewarding tenure. On August 1, average hourly pay at Starbucks will be nearly $17/hour nationally. All partners hired on or before May 2 will get either a 3% raise or $15/hour, whichever is higher.
Further, Starbucks will continue to recognize tenured partners. Partners with 2-5 years of service will receive at least a 5% increase or move to 5% above the market start rate, whichever is higher. Partners with 5+ years of service will receive at least a 7% increase or move to 10% above the market start rate, whichever is higher. On August 1, Starbucks will also double the planned investments in store manager, assistant store manager and shift manager pay for leaders hired on or before May 2. These are one-time investments in base pay in addition to the planned FY23 raises this fall