SBUX Starbucks Corporation

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 were flat in after-hours trading. The coffee company's shares have risen 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.

Starbucks executives on Thursday played down those complaints. The company said Starbucks Rewards members accounted for more than 40% of transactions in the U.S. during the quarter.

"We think this program is more accessible for us," Chief Operating Officer Roz Brewer told investors.

Other restaurant companies are also using loyalty programs to try to drive sales. Chipotle Mexican Grill Inc. expanded a rewards program nationally last month.

The chain said 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.

Starbucks said Thursday it would introduce mobile ordering and payment in its China stores by the end of the current fiscal year. Company officials reported increased competition in China but said they remain confident in their strategy and wouldn't slash prices.

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. The company also boosted its outlook for operating margins in the Americas.

Write to Heather Haddon at heather.haddon@wsj.com

(END) Dow Jones Newswires

April 25, 2019 18:33 ET (22:33 GMT)

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