Starbucks sales top estimates on more and bigger orders

Company seeing momentum continuing in US and China

Starbucks’s revenue beat expectations in the latest sign that diners aren’t quitting their lattes even in tough economic conditions.

Same-store sales rose 8 per cent, surpassing the 6.3 per cent average analyst estimate. A higher number of transactions and larger orders drove the increase, according to results released Thursday.

Sales by that measure – which tracks how company-operated stores open for more than 13 months are doing – rose faster than expected in the US and China, the company’s two largest geographies. Investors were looking for continued momentum in North America but had questions about the Asian country’s uneven recovery, UBS analyst Dennis Geiger wrote before the report.

The shares rose 6.6 per cent in pre-market trading in New York. The stock had slid 7.9 per cent this year through Wednesday’s close, trailing the 10 per cent advance of the S&P 500 Index.


“We remain confident in the momentum throughout our business and headroom globally,” chief executive Laxman Narasimhan said in the statement.

Revenue including new restaurants was $9.4 billion (€8.8 billion), topping expectations. Earnings were $1.06 a share, ahead of estimates.

Attention now turns to the company’s outlook for the next 12 months. The chain is hosting an event later today at which Wall Street is looking for updates on the chain’s strategy. It’s the first investor day that Narasimhan, who took the reins in March, will preside over without founder Howard Schultz by his side.

The chain’s recent strategies to attract customers have included an early roll-out of its fall line-up and new products such as frozen refreshers. Its customers have also been increasingly ordering more food, fattening transaction sizes.

In addition, Starbucks has been seeking to improve speed of service. The initiative has fuelled revenue growth, increased efficiency and boosted margins, Narasimhan said Thursday. – Bloomberg