Starbucks Corp (NASDAQ:SBUX, XETRA:SRB) beat Wall Street estimates for fiscal third-quarter revenue and profit as its turnaround plan drove stronger-than-expected US sales growth.
Adjusted earnings per share came in at $0.85, above the $0.66 analyst estimate and up 70% year-over-year. Revenue was $9.3 billion, topping the $9.16 billion consensus though down 1% from a year earlier.
Global comparable sales rose 7.9%, with North America up 8.1% and international sales up 5.7%. US comparable sales climbed 7.9%, driven by a 4.2% rise in traffic and a 3.6% increase in average ticket.
Starbucks raised its full-year guidance, now expecting adjusted EPS of $2.55 to $2.65, above the $2.40 consensus. Global comparable sales growth is expected to near 6% for the year, with non-GAAP operating margin above 11% and 600 to 650 net new coffeehouses planned. Fourth-quarter US comparable sales are guided to grow at least 6.5%.
North America net revenue reached $7.4 billion, up 7%, while International net revenue fell 34% to $1.3 billion. Channel Development revenue rose 22% to $587.9 million.
The International decline reflects April's conversion of Starbucks' China retail operations into a licensed joint venture with Boyu Capital, the company said, not a drop in demand. Starbucks retains a 40% stake and continues to own and license the brand.
Part of the China proceeds funded tender offers for roughly $1.3 billion in outstanding notes.
Non-GAAP operating margin for the quarter rose 430 basis points to 14.4%, while the effective tax rate fell 540 basis points to 26.4%.
"We have more work to do, but we're relentlessly focused on reclaiming the third place and becoming the world's greatest customer service company," Starbucks CEO Brian Niccol told shareholders.
Jefferies called the quarter a solid beat, noting just under half of the US comp gain reflected sales transferred from underperforming stores closed last year, with the rest driven by faster service under the Green Apron initiative, higher marketing spend, Rewards program growth and menu innovation.
Shares of Starbucks moved around 1.4% higher on Thursday morning.