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MW Starbucks swings to quarterly profit, but sees inflation, wages pushing U.S. costs higher

Claudia Assis

Starbucks Corp. swung to a quarterly profit, reporting sales that came in above Wall Street expectations, but the stock dropped late Tuesday as the retailer also reported rising costs for its operations in the Americas.

Starbucks $(SBUX)$ said it earned $1.15 billion, or 97 cents a share, in the fiscal third quarter, swinging from a loss of $678 million, or 58 cents a share, in the year-ago quarter. Adjusted for one-time items, the retailer earned $1.01 a share.

Sales rose to $7.50 billion, from $4.22 billion a year ago. Comparable-store sales rose 73%, the company said.

Analysts polled by FactSet expected Starbucks to report adjusted earnings of 78 cents a share on sales of $7.29 billion in the quarter.

Shares dropped more than 3% after earnings, having ended the regular trading day down less than 0.1%.

"Starbucks delivered record performance in the third quarter, demonstrating powerful momentum beyond recovery," Chief Executive Kevin Johnson said in a statement.

"Our ability to move with speed and agility and to be out in front of shifting customer behaviors has helped further differentiate Starbucks, positioning us well for this moment," he said.

Starbucks' Americas operating income rose to $1.3 billion, from an operating loss of $404.9 million a year ago, thanks mostly to the economic recovery, the company said.

That was partially offset, however, by "investments in wages and benefits for store partners coupled with increased supply-chain costs due to inflationary pressures," Starbucks said.

The company guided for fiscal fourth-quarter same-store sales growth between 18% and 21%, and an Americas and U.S. same-store growth between 22% and 25%.

Starbucks tweaked the lower end of its guidance for full-year 2021 revenue to a range between $29.1 billion and $29.3 billion, compared with a previous guidance of a range between $28.5 billion and $29.3 billion.

It called for full-year adjusted EPS between $3.20 and $3.25, compared with a previous guidance between $2.90 and $3.

Starbucks stock has gained 18%, compared with gains of around 17% for the S&P 500 index in the same period.

-Claudia Assis; 415-439-6400; AskNewswires@dowjones.com

$(END)$ Dow Jones Newswires

July 27, 2021 16:44 ET (20:44 GMT)

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