Starbucks Looks to China Reopening for a Sales Boost

investopedia.com:

Starbucks (SBUX) is expected to post higher income and earnings per share in its latest report, though sales are forecast to decline from the previous record quarter.

Starbucks is expected to report earnings per share of $0.65, up from $0.58 a year ago with a net income of $750 million, according to Visible Alpha. North American revenue is expected to reach $6.15 billion, versus $5.44 billion a year ago. International revenue has increased to $1.76 billion, up from $1.7 billion for the same period.

The coffee chain will report its second-quarter earnings at 2 p.m. PT Tuesday.

Starbucks’ earnings were strong in the previous quarter, with record sales of $8.7 billion, up 8% year-on-year, or 12% without foreign exchange headwinds. That was powered by 10% growth in North America and 5% globally.

Last quarter's earnings are more impressive when factoring in the China lockdowns, which the company said knocked $0.06 off its first quarter EPS. The company will be looking for a boost this quarter as China's lockdowns eased in January.

Starbucks shook off a tough retail climate at the end of 2022, but the second quarter earnings could suffer from a post-Christmas hangover. Starbucks reported a record of $3.3 billion loaded on gift cards in the U.S., which will have inflated the previous numbers. However, 30 million people had active Starbucks Rewards membership in the U.S., which could cushion the blow, alongside the China boost.

Starbucks shares are up around 50% over the last year, outperforming the S&P500 Consumer Discretionary Index which is down by 19%.