Giant coffee chain Starbucks reported better-than-expected financial results for the third fiscal quarter with consolidated net revenues up 9% to a quarterly record $8.2 billion, including a 2% adverse impact from strong dollar, but diluted earnings per share decreased 19% to 0.79$.

Global comparable store sales increased 3%, driven by a 6% increase in average ticket, partially offset by a 3% decline in comparable transactions.

Net revenues for the North America segment grew 13% over Q3 FY21 to $6.1 billion in Q3 FY22, primarily driven by a 9% increase in company-operated comparable store sales, driven by an 8% increase in average ticket and a 1% increase in transactions, net new store growth of 2% over the past 12 months.

Operating income increased to $1,330.1 million in Q3 FY22, up from $1,304.3 million in Q3 FY21. Operating margin of 22.0% contracted from 24.3% in the prior year, primarily driven by higher commodity and supply chain costs due to inflationary pressures, investments in labor including enhanced store partner wages as well as increased spend on partner training support costs. This contraction was partially offset by pricing.

“We have clear line-of-sight on what we need to do to reinvent the company, elevate our partner and customer experiences and drive accelerated, profitable growth all around the world,” said Howard Schultz, interim chief executive officer. “The Q3 results we announced today demonstrate the early progress we have made in just four short months,” Schultz added.

Source: Company press release

Net revenues for the International segment declined 6% over Q3 FY21 to $1.6 billion in Q3 FY22, driven by an 18% decline in comparable store sales, primarily attributable to COVID-19 related restrictions in China, as well as a 9% adverse impact from foreign currency translation.

These decreases were partially offset by growth in store revenue including higher product sales, royalty revenues and the conversion of the Korea market from a joint venture to a fully licensed market in Q4 FY21, as well as 1,355 net new store openings, or 8% store growth, over the past 12 months.

Operating income decreased to $135.3 million in Q3 FY22 compared to $327.3 million in Q3 FY21. Operating margin of 8.5% contracted from 19.4% in the prior year, primarily driven by sales deleverage related to COVID-19 restrictions in China, higher commodity and supply chain costs due to inflationary pressures, lower government subsidies and investments in store partner wages, partially offset by sales leverage across markets outside of China.

The company’s guidance remains suspended for the balance of this fiscal year due to increased uncertainty.