Starbucks reported stronger-than-expected fiscal third-quarter results on Wednesday as higher customer traffic, increased spending per visit and broad-based sales growth prompted the company to raise its financial outlook for the year.
The Seattle-based coffee chain said global comparable-store sales increased 7.9% during the April–June quarter, exceeding analysts’ expectations of 5.7%, according to FactSet. Comparable-store sales in the United States also rose 7.9%.
Investors responded positively to the results, sending Starbucks shares more than 5% higher in after-hours trading.
The company also raised its outlook, forecasting 6% global comparable-store sales growth for the fiscal year ending Sept. 28, up from its previous projection of 5%.
Starbucks now expects full-year earnings per share of $2.55 to $2.65, compared with its earlier guidance of $2.25 to $2.45.
Sales Growth Broadens Across Customer Groups
Starbucks said quarterly growth was driven by improved performance across multiple customer income groups and throughout both morning and afternoon business hours.
The company also reported that customers spent more during each visit, supported by continued growth in delivery orders and demand for newly introduced beverages.
The results suggest Starbucks’ sales momentum extended beyond its traditional morning coffee business.
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New Beverages Support Customer Demand
Chairman and Chief Executive Officer Brian Niccol highlighted the success of the company’s seasonal beverage lineup.
He said the S’mores Cold Brew, featuring marshmallow syrup, marshmallow cream cold foam and graham cracker topping, became one of Starbucks’ strongest limited-time summer beverage launches in recent years, particularly among Generation Z customers.
Niccol also said Starbucks’ fruit-based Refreshers beverages continued performing well despite growing competition.
McDonald’s expanded its own fruit beverage offerings in the United States earlier this year as restaurant chains compete for customers in the fast-growing specialty drinks market.
Store Upgrades Continue
Starbucks said investments in store renovations have also improved the customer experience.
“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 told investors during a conference call.
The company has redesigned more than 1,000 stores across North America and plans to renovate another 500 locations before the end of its fiscal year.
Revenue Tops Expectations Despite Annual Decline
Starbucks reported $9.3 billion in quarterly revenue, a 1% decline from the same period last year but above analysts’ expectation of $9.2 billion.
The company said part of the decline reflected the sale of a stake in its China business, a transaction completed in April.
Starbucks also said its quarterly results benefited from a tariff refund received during the period, which largely offset tariffs paid during the first three quarters of the fiscal year.
Profit Climbs Sharply
Starbucks reported net income of $1 billion, an 87% increase from a year earlier.
Excluding one-time items, the company earned 85 cents per share, surpassing analysts’ estimate of 66 cents per share.
The results reflect stronger operating performance as Starbucks continued efforts to improve store operations, expand menu offerings and strengthen customer engagement.
Company Sees Momentum Continuing
The higher full-year guidance reflects management’s confidence that store renovations, beverage innovation and stronger customer spending will continue supporting sales growth.
The company said improved performance across multiple customer groups and dayparts indicates demand has broadened rather than relying solely on traditional morning coffee traffic.
As competition intensifies across the coffee and specialty beverage market, Starbucks continues investing in product innovation and store improvements while balancing restructuring efforts and external cost pressures.
This report is based on reporting by The Associated Press.
