By Dhirendra Tripathi

Investing.com – Starbucks stock (NASDAQ:) traded 2.7% lower in premarket Wednesday after increasing cost pressure led the coffee-brewer to project a sharper decline in earnings this year.

The earnings per share are expected to fall 4% to 6% in the current year, compared with its earlier projections of no more that 4%.

After first quarter results which fell short of predictions, the revised outlook is a result of surging labor costs in an extremely tight labour and material market. This year, the company will raise its hourly wages in America to $17 per hour. It is one of many retail stores doing this to keep their staff.

Same-store international sales dropped 3% due to 14% decline in China. This is due to the fact that the administration in several Chinese cities has halted movement in order stop the spread of the pandemic before the Winter Olympics which begin on Friday. According to the company, the value-added taxes in China had reduced the numbers by approximately 4 percentage points. China saw a drop in average ticket sales.

North America saw an 18% increase in comparable store sales to the U.S. due to greater traffic at stores and higher orders from customers.

Reiterating its forecast for an annual consolidated income of $32.75Billion, the company said that this would increase by just 13% over 2021.

The holiday season, opening more economies, and increased sales to stores drove the first quarter revenue growth of 19%, surpassing $8 billion. Comparable store sales increased 13%. The adjusted EPS rose 18% and was 72 cents.

The quarter ended with the closing of 34,317 units. 484 stores were opened net by the company. China was responsible for over one-seventh of these.