Starbucks reported a drop in quarterly profits Tuesday as it staged a partial recovery from the most severe stretch of Covid-19 restrictions.

The coffee giant continued a gradual recovery from an unprofitable quarter in the middle of 2020 as it returned to comparable sales growth in China and suffered a smaller decline in the United States compared with the year-ago period, but revenues nonetheless lagged analyst estimates.

"Our results demonstrate the continued strength and relevance of our brand," said Chief Executive Kevin Johnson.

"We remain optimistic about our robust operating outlook for fiscal 2021 as well as our ability to unlock the full potential of Starbucks to create value for our stakeholders."

Starbucks reported a drop in profits but is nonetheless bouncing back after its business suffered during the most severe Covid-19 restrictions
Starbucks reported a drop in profits but is nonetheless bouncing back after its business suffered during the most severe Covid-19 restrictions AFP / LOIC VENANCE

The company reported fiscal first-quarter profits of $622.2 million for the quarter ending December 27, down 29.8 percent from the year-ago period on a 4.9 percent drop in revenues to $6.7 billion.

US comparable sales fell five percent, better than the nine percent slide in the prior quarter. China comparable sales rose five percent, up from a three percent decline in the prior quarter.

Starbucks lifted its full-year profit forecast, but projected second-quarter profits below Wall Street analyst expectations, placing more of the expected improvement for later in the year.

Shares fell 1.2 percent to $103.42 in after-hours trading.

Coronavirus China