Starbucks earnings beat, raises forecast as customers spend more per visit

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Starbucks CEO Kevin Johnson cites an 'enhanced in-store experience,' drinks like cold brew and the cloud macchiato, and growth in China as reasons for the company's great quarter.

Starbucks on Thursday reported earnings that outpaced analyst expectations and raised its outlook for the year, as customers spent more at its cafes in the U.S. and sales growth in China was stronger than expected."We are especially pleased with our comparable store sales growth in our two lead markets, the U.S. and China, where we are also continuing to drive strong new store development with industry-leading returns," CEO Kevin Johnson said in a statement.

Excluding the sale of its Tazo brand, costs related to its licensing deal with Nestle and other items, Starbucks earned 60 cents per share, topping the 56 cents per share expected by analysts surveyed by Refinitiv. Starbucks released one of those pricier drinks last month, the Cloud Macchiato, with help from pop star Ariana Grande. Johnson called the drink's launch"the second most viral Starbucks campaign ever." The beverage is part of its wider drink innovation strategy: focus more on cold drinks and less on limited-time offerings and Frappucinos. The strategy is meant to build more brand affinity to keep customers coming back to Starbucks' coffee shops regularly.

"This performance is especially noteworthy when you consider the intensity of competition from discounting in China, as well as our aggressive pace of new store development," Johnson said. In the second quarter, Starbucks Rewards reached 8.3 million active Chinese members. Executives said on the conference call that loyalty program members represent over 50% of its transactions in China.

 

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if the barista isn't blowing me while i'm waiting for my coffee, then it ain't no 'enhanced in-store experience'.

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