Starbucks Boosts U.S., China Sales
April 25 2019 - 5:28PM
Dow Jones News
By Heather Haddon
Starbucks Corp. beat profit expectations during its most recent
quarter and boosted forecasts for sales growth this year, a sign
that the chain is rejuvenating sales in its biggest markets.
Shares in the coffee giant rose 1% in after-hours trading. The
coffee company's shares were up more than 19% this year through
Thursday's close, and hit a 52-week high during the day.
Starbucks said Thursday same-stores sales grew by 3% during its
fiscal second quarter. Sales were up 4% in the company's Americas
region and 3% in China, its second-biggest market.
Chief Executive Kevin Johnson has focused on streamlining the
chain's operations since taking over two years ago. He has pushed
Starbucks to boost digital efforts, including its delivery and
loyalty programs.
Last week, Starbucks rolled out a revamped loyalty program that
allows customers to accrue freebies sooner. Some customers, though,
are complaining online that the new approach penalizes heavy users
because it eliminates some premium benefits to spread rewards to
more consumers.
The chain said Thursday that it had 16.8 million Starbucks
Rewards members during the quarter, up 13% from a year earlier.
Starbucks also continues to tinker with its strategy for its
more-indulgent drinks. It has been researching ways to reduce sugar
and calories of its signature Frappuccino drink as sales have
fallen.
But the chain is also bringing back its S'mores Frappuccino this
summer after fans complained when the drink wasn't available last
year.
In China, where Starbucks operates more than 3,700 stores, rival
Luckin Coffee Inc. has grown rapidly through delivery. Starbucks
has relied on a delivery partnership in China with Alibaba Group
Holding Ltd. Luckin said this week it is planning an initial public
offering in the U.S.
For the quarter ended March 31, Starbucks reported a profit of
$663.2 million, or 53 cents a share, up from $660.1 million, or 47
cents a share, in the year-ago period.
Excluding one-time items, Starbucks earned 60 cents a share,
above analysts' expectations. Revenue of $6.3 billion was up 5%
from the previous year. Analysts polled by FactSet had forecast
adjusted earnings of 56 cents a share and $6.32 billion in
revenue.
Starbucks now expects adjusted earnings per share of $2.75 to
$2.79 for its full fiscal year, up from a prior forecast of $2.68
to $2.73.
Write to Heather Haddon at heather.haddon@wsj.com
(END) Dow Jones Newswires
April 25, 2019 17:13 ET (21:13 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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