July 29 (Reuters) – Starbucks raised its annual sales and profit forecasts for the second time on Wednesday, betting that CEO Brian Niccol’s turnaround efforts will translate into sustainable growth for the world’s largest coffee chain, sending its shares up about 9% in extended trading.
Under Niccol, who took the helm nearly two years ago, the company has aimed to improve customer experience through a simplified menu and shortened wait times, fueling four straight quarters of comparable sales growth.
This has helped Starbucks offset a broader sector slowdown due to consumer belt-tightening amid rising cost of living.
The Seattle-based company forecast global same-store sales growth of 6.5% or more, above its prior forecast of about 5% or above.
It expects fiscal 2026 adjusted earnings per share of $2.55 to $2.65, compared with its previous estimates of $2.25 to $2.45.
However, the “Back to Starbucks” strategy, which involves heavy investment in staffing and store operations, has been pressuring margins, which the company has attempted to tackle with cost cuts through layoffs, office consolidation and streamlining its operations.
The company’s consolidated quarterly operating margin was 19.1% in the quarter, compared with 13.6% a year earlier. This helped it post adjusted earnings per share of 85 cents, compared with estimates of 66 cents.
Starbucks reported third-quarter global same-store sales growth of 7.9%, which surpassed analysts’ expectations of 5.7%, according to data compiled by LSEG.
(Reporting by Neil J Kanatt in Bengaluru and Waylon Cunningham in New York; Editing by David Gregorio and Sriraj Kalluvila)
