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Starbucks’ earnings came under pressure in the holiday quarter from rising costs and renewed Covid-19 lockdown measures that hurt sales in China.

The coffee chain recorded comparable sales growth of 13 per cent year on year in the quarter ended January 2, driven by the restaurant recovery in the US and higher menu prices.

But comparable sales dropped 14 per cent in China, where some cities have imposed fresh pandemic curbs on dine-in service and other activity. Sales were down 3 per cent across the company’s international markets, coming up short against analysts’ forecast for a 0.5 per cent increase.

Starbucks also missed estimates on adjusted earnings of 72 cents a share, which was 8 cents below Wall Street’s forecast, as wage and commodity inflation contributed to higher operating costs.

Its shares lost 4.6 per cent in after-hours trading on Tuesday.

Restaurant chains are contending with higher supply chain costs and a shortage of available workers at a time when many consumers are eager to get back to dining out following Covid-19 vaccinations. The rise in Covid infections over the winter and related quarantine rules added to staffing challenges, even as companies raise wages to attract new workers.

Kevin Johnson, Starbucks’ chief executive, said that while customer demand was strong, the company experienced “higher than expected inflationary pressures”, as well as a tight labour market and increased costs related to the Omicron-fuelled resurgence in Covid cases.

Net sales were up 19 per cent to $8.1bn overall in the first fiscal quarter. Net income rose to $816mn, up from $622mn a year ago.

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