Starbucks Corp. served up an extra frothy third quarter, zooming past Wall Street’s forecasts thanks to new drinks and growing loyalty.
Based on the strong results, the Seattle-based coffee giant raised its full-year earnings guidance. It now expects adjusted earnings of $2.80 to $2.82 per share, up from $2.75 to $2.79. It also said it expects global same-store sales growth of 4%, which is at the higher end of its previous forecast.
Starbucks shares, which closed at a record $90.98 Thursday, rose even higher in after-market trading.
Starbucks reported revenue of $6.8 billion, up 8% over the April-June period a year ago. That was higher than the $6.7 billion analysts forecast, according to FactSet.
Net earnings rose 61% to $1.4 billion. Adjusted for income tax benefits and other one-time items, Starbucks earned 78 cents per share, beating Wall Street’s forecast 72 cents.
Starbucks said sales at locations open at least 13 months — a critical measure known as same-store sales — jumped 6% globally, higher than the 4% growth analysts were predicting. Starbucks said half that growth came from increased transactions while half was due to visitors spending more.
In the U.S., same-store sales jumped 7%. Starbucks President and CEO Kevin Johnson said new cold drinks, like its cloud macchiato and nitro cold brew, helped draw traffic, particularly in the afternoon. A year-old effort to make stores more efficient is also paying off, Johnson said.
Delivery is not yet a meaningful revenue driver in the U.S., where it’s available at 2,700 stores in 11 markets, Johnson said. But it’s expected to be eventually. Earlier this week, Starbucks said it plans to expand delivery nationwide by early next year.
Johnson said Starbucks increased U.S. membership in its loyalty program by 14% to 17.2 million during the quarter and gave members more flexibility in how to spend their points. Around 42% of total U.S. spending came from loyalty members, he said.
“The acceleration we saw in active rewards members is paying off for us,” Johnson said.
In China, where Starbucks is rapidly growing, same-store sales rose 6%. New beverages developed in Shanghai helped draw customers, Johnson said. Starbucks also launched mobile ordering and payment in four Chinese cities during the quarter.
Delivery sales represented 6% of total volume in China during the quarter. Starbucks now offers delivery from 2,900 stores in 80 Chinese cities, and expects that to exceed 3,000 stores by the end of its fiscal year.