Popular coffee chain Starbucks Corp. (SBUX, Financial) reported better-than-expected second-quarter earnings after the market closed on Thursday, though shares remained unchanged in extended trading.
The Seattle-based company posted adjusted earnings of 60 cents per share, topping Refinitiv’s estimates of 56 cents. Revenue grew 5% from the prior-year quarter to $6.31 billion, but was just shy of the $6.32 billion analysts were expecting.
Same-store sales gained 3%, surpassing the anticipated 2.9% increase. Starbucks attributed the growth to a 3% increase in average ticket prices. The company also recorded a 13% increase in its loyalty program to 16.8 million active members in the U.S.
In a statement, President and CEO Kevin Jonson praised the coffee company’s performance.
“We are especially pleased with our comparable store sales growth in our two lead markets, the U.S. and China, where we are also continuing to drive strong new store development with industry-leading returns,” he said.
By region, U.S. same-store sales grew 4% while revenue increased 8% to $4.3 billion. China and Asia Pacific recorded strong comparable sales growth of 2%, while revenue grew 9% to $1.3 billion. The company also saw 2% same-store sales growth in Europe, the Middle East and Africa, but revenue declined 9% to $227.5 billion as a result of unfavorable foreign currency translation.
The company’s channel development segment recorded a 21% decrease in revenue to $446.6 million. The division was impacted by a licensing deal with Nestle (XSWX:NESN, Financial), which allows it to sell Starbucks-branded coffee products in grocery stores throughout Europe, Asia and Latin America.
As a result of its performance, Starbucks raised its full-year earnings forecast. It now expects adjusted earnings per share to range from $2.75 to $2.79, up from the prior guidance of $2.68 to $2.73. Analysts had projected earnings of $2.71 per share for 2019.
The company also reiterated global comparable store sales growth between 3% and 4% as well as 5% to 7% revenue growth for the full year.
Johnson said Starbucks is continuing to focus on its three key priorities, which are “accelerating growth in our targeted markets of the U.S. and China, expanding the global reach of the Starbucks brand through our Global Coffee Alliance with Nestlé, and increasing shareholder returns.”
“With our efforts to streamline the company and elevate the Starbucks brand, we are not only positioning the company to deliver more predictable and sustainable operating results but are also building Starbucks to be an enduring company that creates meaningful value for shareholders for decades to come,” he said.
With a market cap of $94.74 billion, shares of Starbucks were trading 0.97% lower on Friday morning at $76.36. After gaining 12% in 2018, GuruFocus estimates the stock has advanced another 17% year to date.
Disclosure: No positions.
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