China blocks some Taiwan imports but not chips
The Taiwanese-made processor chips needed by Chinese factories
WASHINGTON: Starbucks on Tuesday reported record revenue in the April-June period, as strong U.S. demand made up for COVID shutdowns in China.
The Seattle-based coffee giant exceeded sales expectations despite continuing store closures and reduced hours in China due to coronavirus measures. Starbucks said its same-store sales in China – its second-largest market after the US were down 44% in its fiscal third quarter. Starbucks said it ended the quarter with roughly 2,000 stores in 50 cities operating with COVID restrictions.
But strong US demand made up for that. Same-store sales, or sales at stores open at least a year, rose 9% in the U.S., where customers are spending more on customizable cold beverages and food, like lime-frosted coconut bars. Morning traffic was also picking up as more people returned to offices.
Interim Starbucks CEO Howard Schultz said the company isn’t yet seeing any impact from inflation, despite increasing prices about 5% over the same period last year.
“While we are sensitive to the impact inflation and economic uncertainty are having on consumers, it’s critically important that you all understand we are not currently seeing any measurable reduction in customer spending or any evidence of customer’s trading down,” Schultz said Tuesday on a conference call with investors.
Schultz added that cold drinks, which now make up 74% of US beverage sales, have become a huge competitive advantage for Starbucks and are bringing in younger customers.
“The premium, customized cold coffee opportunity is simply enormous,” Schultz said.
Starbucks’ revenue rose 9% to $8.2 billion, a quarterly record. That surpassed Wall Street’s forecast of $8.1 billion, according to analysts polled by FactSet.
New stores, including many that are more focused on drivethru and curbside service, are helping sales. The company said it has opened 298 net new stores in its North America region since June 2021 and 1,355 new stores in international markets.
Starbucks said its net income fell 21% to $912.9 million as it spent more on labor, worker training and supply chain costs. Last fall, the company announced a $1 billion investment in employee wages and benefits in an effort to lift US workers’ pay. US workers currently make an average of $17 per hour, Starbucks North America chief John Culver said. Training hours have also increased..(AP)
NEW YORK: JetBlue Airways lost $188 million in the second quarter, as fuel costs nearly tripled and wiped out a large increase in revenue during the early part of the peak vacationtravel season.
The loss reported Tuesday was wider than Wall Street expected. JetBlue was unable to keep pace with bigger rivals, who posted profits for the quarter on full planes and higher fares. Shares of JetBlue fell 6% in late-morning trading Tuesday. JetBlue gave the financial update just days after reaching an agreement to buy Spirit Airlines for about $3.8 billion. CEO Robin Hayes said the deal, which JetBlue expects to close by early 2024, will increase his airline’s earnings per share in the first year after closing.
Antitrust regulators are already reviewing the deal, and it is unclear how long that process will take.
“Obviously we’re not in control of the timeline,” Hayes said on a call with analysts. He said Spirit shareholders - who were poised to reject a merger with Frontier Airlines - will likely vote in the next three months. (AP)
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TOKYO: Nintendo’s profit in the April-June quarter rose 28% from a year earlier on healthy demand for its games, although its console sales were dented by a shortage of semiconductors.
The Japanese video game maker behind the Super Mario and Pokemon franchises said Wednesday its profit in the last quarter totaled 118.9 billion yen ($895 million), up from 92.7 billion yen in the same period in 2021.
Quarterly sales fell 4.7% to 307.4 billion yen ($2.3 billion), according to Kyoto-based Nintendo Co.
Other game makers, such as Sony Group Corp., automakers like Toyota Motor Corp. and other manufacturers have been hurt by shortfalls in supplies of the chips that run most modern products.
While those supply chain disruptions are largely due to the pandemic, game companies got a big boost in demand from COVID-19, which had people stuck at home and turning to games for entertainment. As pandemic precautions ease, that spike in sales is wearing off.
Hit games have also driven console sales, such as “Animal Crossing: New Horizons.” Among the games that were released and did well during the last quarter were “Nintendo Switch Sports,” which sold 4.84 million units, and “Mario Strikers: Battle League.” (AP)
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LOS ANGELES: Airbnb said Tuesday that it earned $379 million in the second quarter on record bookings and rising rates, and the short-term rental giant announced a plan to spend up to $2 billion to buy its own stock.
The results showed a reversal from losses in the second quarter of both last year and 2019.
Airbnb indicated that its third-quarter revenue will be better than analysts currently forecast, although the gross value of bookings in the second quarter fell short of Wall Street expectations.
Airbnb has benefitted from the increase in travel and the exodus of workers from offices, which frees them to work from just about anywhere they can get internet access.
Bookings in the second quarter were about one-fourth higher than last year and 2019, but their gross value of $17.0 billion was slightly below analysts’ forecast of more than $17.1 billion, according to FactSet. Chief Financial Officer Dave Stephenson said the gross value of bookings is still rising sharply compared with 2019.
The San Francisco-based company said customers were making more international bookings. Listings away from major cities rose nearly 50% compared with the second quarter of 2019, and Airbnb said urban listings grew compared with the previous three months.
BEIJING, Aug 3, (AP): China blocked imports of citrus, fish and other foods from Taiwan in retaliation for a visit by a top American lawmaker, Nancy Pelosi, but has avoided disrupting one of the world’s most important technology and manufacturing relationships.
The two sides, which split in 1949 after a civil war, have no official relations but multibillion-dollar business ties, especially in the flow of Taiwanese-made processor chips needed by Chinese factories that assemble the world’s smartphones and other electronics.
They built that business while Beijing threatened for decades to enforce the ruling Communist Party’s claim to the island by attacking.
Two-way trade soared 26% last year to $328.3 billion. Taiwan, which produces half the world’s processor chips and has technology the mainland can’t match, said sales to Chinese factories rose 24.4% to $104.3 billion.
“The global economy cannot function without chips that are made in either Taiwan or China,” Carl B. Weinberg of High-Frequency Economics said in a report.
On Wednesday, Beijing blocked imports of citrus and frozen
hairtail and mackerel from Taiwan after Pelosi, speaker of the House of Representatives, arrived on the island. China has not disrupted the flow of chips and other industrial components, a step that would send shock waves through the shaky global economy.
Also this week, China blocked imports of hundreds of other food items from Taiwan including cookies and seafood, though the timing was unclear. The customs website showed their import status was switched to “suspended.”
Fruit, fish and other foods are a small part of Taiwan’s exports to China, but the ban hurts areas that are seen as supporters of President Tsai Ing-wen.
Beijing has used import bans on bananas, wine, coal and other goods as leverage in disputes with Australia, the Philippines and other governments.
Beijing also announced four days of military exercises with artillery fire in waters around Taiwan. That might delay or disrupt shipping to and from the island, one of the biggest global traders.
The potential disruption adds to concerns over weakening global economic growth, but Asian stock markets rose Wednesday after there was no immediate sign of Chinese military action.
The Communist Party says Pelosi’s visit might embolden Taiwan to make its decades-old de facto independence permanent. Beijing says that would lead to war.