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Starbucks Top Sales Forecasts As Holiday Drinks Make Comeback

Published on Jan 25 2019 7:00 AM in A-Brands tagged: Featured Post / China / Starbucks / Results / America

Starbucks Top Sales Forecasts As Holiday Drinks Make Comeback

Starbucks Corp exceeded Wall Street forecasts for quarterly sales and earnings, helped by aggressive promotions and the popularity of holiday-themed beverages.

Globally, Starbucks' same-restaurant sales rose 4% during the final three months of 2018, topping analysts' average estimate of a 2.8% increase, according to IBES data from Refinitiv.

Holiday Favourites

Its promotions included holiday favourites such as Peppermint Mochas and Gingerbread lattes, while its Draft Nitro cold brew, which aims to creates a beer-like experience, has been pulling in customers during slow afternoons.

"This comprehensive, insight-driven approach delivered results and importantly, created momentum that provides a solid foundation for future quarters," Starbucks chief executive officer Kevin Johnson said on a conference call with analysts.

The company has also teamed up with food-delivery services in China to help boost sales as it faces rising competition from local upstarts.

‘A Solid Quarter’

"Overall, we believe it was a solid quarter and this is another quarter that reinforces our view that the turnaround is showing progress and gaining some steam," Edward Jones analyst Brian Yarbrough said.

Sales from Starbucks' Americas and US business reached a record $4.6 billion (€4.1 billion) in the three months ended 30 December 2018, while sales from China, its second biggest market, trumped estimates.

For a graphic on Starbucks' sales growth in China, click here.

In China, where the company competes with local brands like Luckin Coffee, sales at established Starbucks cafes beat estimates, driven mainly by new store openings and its delivery program that now supports 2,000 stores across 30 Chinese cities.

Beating Estimates

The company's quarterly net revenue climbed 9.2% to $6.63 billion (€5.9 billion), beating analysts' forecasts of $6.49 billion (€5.7 billion).

Quarterly net earnings attributable to Starbucks fell to $760.6 million from $2.25 billion a year earlier, reflecting nearly $1.8 billion in gains last year from acquisitions and the sale of some businesses.

Excluding one-time items, the company earned 68 cents per share, beating estimates by 3 cents.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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