Shares of Starbucks Corp. (SBUX) were up nearly 2% in after-hours trading on Thursday, April 26, after the coffee chain reported a 2% rise in same-store sales in the fiscal second quarter, a better figure than expected, Morningstar Inc. analyst R.J. Hottovy said.
"The market was bracing for worse, or 1.8%," said Hottovy, who noted that restaurant chains in general are experiencing lower sales. "This same-store sales number should give the market a sense of relief."
The figure is an indication that traffic in U.S. stores is still down, Hottovy said.
CFO Scott Maw said during the earnings call that Starbucks is expecting same-store sales of 3% in the third quarter. It is also pushing to increase traffic in the typically slow afternoon by offering a happy hour to customers and more cold-brew drinks, which are popular later in the day.
- Here's what Dunkin' Donuts (DNKN) CEO Nigel Travis told TheStreet's Executive Editor Brian Sozzi on Thursday.
Global same-store sales also were up 2%, but it was same-store sales bump in China that were the bright spot, at 4%. Starbucks has been in China for 20 years. CEO Kevin Johnson during the earnings call that the Chinese drink one-half cup per person year of coffee versus 300 cups per year per person in the U.S. The company's Shanghai Roastery, which is a megastore for coffee drinkers and offers coffee-bean roasting facilities, does twice the dollar volume in a day than a regular Starbucks does in one day.
More growth in the Asia-Pacific is in Korea, where Starbucks has 1,200 stores now.
For the quarter ended April 1,the coffee retailer posted revenue of $6 billion, up $14%, and above the estimated $5.9 billion. Earnings per share of 53 cents matched the consensus estimate.
Starbucks' adjusted operating margin came in at 16.2%, down 170 basis points year over year, because of higher investments in store renovations and brand awareness and wage increases for employees.