Starbucks raises 2019 profit outlook after earnings beat

Starbucks Corp. is raising its profit outlook for 2019 after better-than-expected results in its most recent quarter.

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The Seattle-based coffee company said Thursday it earned $663.2 million, or 53 cents per share, in its fiscal second quarter, up slightly from the January-March period a year ago.

Excluding one-time items, such as the sale of its Tazo tea brand, Starbucks earned 60 cents per share. That beat Wall Street’s estimate of 56 cents, according to a survey of 13 analysts by Zacks Investment Research.

Sales at stores open at least a year rose 3% globally, meeting analysts’ forecasts. Revenue rose 4.5% to $6.31 billion, which was also in line with forecasts.

The company said it now expects full-year earnings in the range of $2.75 to $2.79 per share, up from its previous guidance of $2.68 to $2.73. It reiterated that it expects same-store sales to grow 3% to 4% globally this year.

The company said transactions at established stores were flat in the Americas, Asia and Europe. But customers spent more per order. The company opened 319 net new stores during the quarter. Almost all of those were outside the U.S.

In a conference call with analysts, Starbucks brushed off concerns about Luckin Coffee, a low-cost Chinese competitor that filed for an initial public offering on the Nasdaq stock exchange earlier this week.

Starbucks CEO Kevin Johnson said the company’s research shows Chinese consumers prefer Starbucks for its coffee and its in-store experience. Most of Luckin’s stores are designed for quick pick-ups; it also has nearly 100 kitchens that make coffee drinks for delivery, according to its filings with U.S. regulators.

“Our leadership position is underpinned by our brand strength and operating results,” Johnson said.

Johnson said Starbucks continues to expand rapidly in China, where it’s building 600 stores per year with the goal of having 6,000 stores by 2022. He said the company is now offering delivery in under 20 minutes from 2,100 stores in 35 Chinese cities and aims to increase that to 3,000 stores across 50 cities by the end of 2019.

Johnson didn’t give an update on plans to increase delivery from U.S. stores. Starbucks and its partner, UberEats, launched U.S. delivery earlier this year. It’s now offered from 1,600 stores in seven markets, he said.

Starbucks’ shares were flat at $77.40 in after-hours trading following the earnings report.