(Reuters) – Starbucks Corp (SBUX.O) raised its annual earnings forecast after quarterly same-store sales exceeded Wall Street estimates on Thursday, as the world’s largest coffee chain saw robust demand in the United States and China for its new beverages.
FILE PHOTO: A Starbucks sign is show on one of the companies stores in Los Angeles, California, U.S. October 19,2018. REUTERS/Mike Blake/File Photo
Shares of the Seattle-based company rose nearly 6% to $96.40 after the bell and were on track for a record high, after the company posted its biggest same-store sales growth in 12 quarters.
Starbucks has been trying to make its menu more appealing by adding new beverages such as the Dragon drink and Cocoa Cloud Macchiato, while also expanding the delivery side of its business with new partnerships.
Those efforts helped drive a 3% growth in transactions for the third quarter, with the United States and China accounting for a major share of those gains.
“(Traffic is) an area where Starbucks has struggled,” Edward Jones analyst Brian Yarbrough said. “A lot of investors were asking when are you going to see traffic increase … this is a nice quarter in that standpoint.”
The company has been investing heavily in China, which accounts for a fifth of its total revenue, by opening new stores and expanding delivery to cater to increased demand for on-the-go coffee.
The plans are paying off as same-store sales rose 5% in China and the Asia-Pacific region, beating analysts’ estimates of a 3.45% rise, according to IBES data from Refinitiv. Same-store sales growth was 7% in the Americas, above estimates of a 4.43% gain.
For fiscal 2019, the company is expecting same-store sales near the higher end of its previous forecast of 3% to 4% growth.
It also expects to earn between $2.80 and $2.82 per share in fiscal 2019, compared with it previous forecast of between $2.75 and $2.79.
For the third quarter, sales at restaurants open for at least 13 months rose 6%, beating estimates of 4.04%.
Total net revenue rose 8.1% to $6.82 billion, surpassing the average estimate of $6.68 billion.
Excluding one-time items, the company earned 78 cents, 6 cents more than analysts’ estimate.
Reporting by Nivedita Balu in Bengaluru; Editing by Bernard Orr and Anil D’Silva