In the three months ending July 3, sales at Chinese Starbucks locations that were open at least 13 months ago fell 44%.
“China is facing the worst COVID disruption since the start of the pandemic,” Belinda Wong, chairman of Starbucks China, said this quarter during a call with analysts on Tuesday discussing the results. “Movement restrictions and lockdowns were put in place faster and eased slower as part of China’s COVID-19 policy,” she said, adding that Shanghai, Starbucks’ largest market, was completely locked down for about two-thirds of the quarter.
Starbucks’ international sales for the quarter fell 18% due to poor results in China. The company said Tuesday that aside from falling sales, international growth would have been double-digit.
Even in light of a challenging quarter, “our market position and our aspirations for the future have never been better” in China, Starbucks acting CEO Howard Schultz said in a phone call Tuesday.
The situation is improving as Covid restrictions are eased, Wong said, noting that “we saw an immediate improvement in traffic and sales after Shanghai reopened in early June.” She added that “we continue to relentlessly focus on the long term, even with short-term disruptions.” By the end of the year, the company plans to open 6,000 offices in China.