Starbucks expects to continue raising prices in the coming months to combat squeezed profit from inflation and labor issues related to the pandemic.
Starbucks Corp. expects to continue raising prices in the coming months to combat squeezed profit from inflation and labor issues related to the COVID-19 pandemic, plans that helped the company’s stock turn around in late trading Tuesday.
Johnson noted three big drivers of increased costs in the U.S.: Inflation, COVID-related pay to employees, and the costs of hiring and training new workers in a tight labor market. Starbucks is implementing raises and other incentives, which Johnson has previously said would amount to $1 billion. “[We have] already taken pricing actions this fiscal year, one in October 2021 and another in January 2022. And we have additional pricing actions planned through the balance of this year, which play an important role to mitigate cost pressures, including inflation, as we position our business for the future,” Johnson said.
“We expect Q2 quarterly non-GAAP EPS and margin to be below prior-year levels, with significant improvement in Q3 coming from our margin-enhancement actions materializing,” Ruggeri said. “Q4 is then expected to show continued recovery but at a more gradual pace, inclusive of the summer step-up in wage investments, as we raise the U.S. average store hourly wage to $17.”
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