Starbucks Corp (NASDAQ:SBUX) is trading lower Wednesday morning after the company announced worse-than-expected fiscal first-quarter earnings results.
Starbucks reported quarterly earnings of 72 cents per share, which came in below the estimate of 80 cents. The company reported quarterly revenue of $8.1 billion, which beat the estimate of $7.97 billion.
"Although demand was strong, this pandemic has not been linear and the macro environment remains dynamic as we experienced higher-than-expected inflationary pressures, increased costs due to omicron and a tight labor market," said CEO Kevin Johnson,
"Starbucks will continue to proactively address the industry challenges and operating environment while maintaining our focus on Starbucks partners and customers," Johnson added.
While Starbucks will raise menu prices this year and reduce some spending to offset higher costs, expectations are being reeled in. Goldman Sachs cut its rating on Starbucks to Neutral from Buy.
The firm is cautious on the recovery track for SBUX given the consistent choppiness in trends, the potential for higher turnover to persist despite wage investments, higher distribution costs and flow-through implications of consumer behavior normalization.
During the company's conference call, Starbucks said it expects 2022 revenue to be in the range of $32.5 billion to $33 billion. The company also said it anticipates over 200 basis points of incremental margin pressure in 2022.
Analysts point out that Starbucks has traded as low as $93.79 and as high as $126.32 over a 52-week period.
SBUX shares fell $2.30, or 2.3%, to open Wednesday at $96.47.
