Starbucks shares soared Wednesday after the coffee giant reported better-than-expected quarterly revenue and profit and raised its financial outlook for the year.
The Seattle company said global same-store sales in its fiscal third quarter rose 7.9%, which was well above the 5.7% increase Wall Street was expecting, according to analysts polled by FactSet. Same-store sales also were up 7.9% in the U.S. during the April-June period, the company said.
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Starbucks said it now expects global same-store sales to grow 6% for its full fiscal year, which ends Sept. 28. The company previously forecast same-store sales to grow 5% for the year. The company also expects full-year earnings per share of $2.55 to $2.65, up from $2.25 to $2.45 previously.
Starbucks shares were up more than 5% in after-hours trading Wednesday.
Starbucks said its business grew across customer income levels and in the morning as well as the afternoon. Customers spent more per visit, partly due to growth in delivery orders but also due to innovative drinks, the company said.
S’mores Cold Brew, which features marshmallow syrup, marshmallow cream cold foam and a graham cracker topping, was particularly popular with Generation Z customers and is one of the company’s strongest limited-time summer offerings in years, Starbucks Chairman and CEO Brian Niccol said.
Niccol said Starbucks' fruity Refreshers also continued to see strong demand despite growing competition. McDonald's added fruity drinks to its U.S. menu in May, for example.
Niccol said Starbucks' redesign of stores to give them a cozier, coffeehouse feel helped in improving sales.
“People just feel better about, you know, even doing their mobile order pickup when they go to a coffeehouse versus a place that maybe wasn’t up to our Starbucks standards,” Niccol said Wednesday during a conference call with investors.
Starbucks has revamped more than 1,000 stores across North America so far and plans to complete another 500 before the end of its fiscal year.
Revenue fell 1% to $9.3 billion for the quarter, which also beat analysts’ forecast of $9.2 billion. Part of the drop in revenue was due to Starbucks' sale of a stake in its China business, a transaction that was completed in April.
Starbucks said its results also got a boost from a tariff refund it applied for and received during its fiscal third quarter. The refund largely offset tariffs that Starbucks paid in the first three quarters of its fiscal year, the company said.
Starbucks said its net income rose 87% to $1 billion. Adjusted for one-time items, the company earned 85 cents per share, which surpassed analysts' forecast of 66 cents.