Coffee house colossus Starbucks (SBUX:NASDAQ) anticipates global like-for-like growth of around 20% this year as China continues to drive expansion. In a first quarter update that showed earnings topping analysts’ estimates, the Seattle-based chain said it expects same-store growth of between 18% and 23% in 2021, and 27% to 32% in China.
That would be an impressive outcome given that US recovery has been interrupted by a resurgence of Covid-19 that kept customers at home. Same-store sales in China, the Seattle-headquartered company’s second largest market and long-term growth engine, turned positive for the first time since the start of the pandemic.
In the first quarter ended 27 December, the coffee chain giant’s global same-store sales fell 5%, more than the 3.4% decline called for by analysts. Net sales softened 5% to $6.75 billion, falling short of the $6.93 billion called for by Wall Street scribes and sending the shares slightly lower overnight.
US same store sales fell 5% in the quarter, as a surge in coronavirus cases rattled consumer confidence and led to stricter dining restrictions across the pond, though the number of Starbucks Rewards members grew 15% year-on-year.
Adjusted earnings per share came in at $0.61 versus the $0.55 that analysts surveyed by Refinitiv were expecting.
And despite ongoing pandemic disruption, the increasingly confident Starbucks raised its earnings guidance for 2021, with management now looking for earnings per share ‘in the range’ of $2.42 to $2.62, up from earlier guidance of $2.34 to $2.54.
Though the pandemic has dramatically reduced footfall to its sprawling global portfolio of stores and has cost the coffee company billions in lost sales, Starbucks’ two biggest markets, the US and China, are rebounding more rapidly than anyone might have expected.
President and chief executive Kevin Johnson said he is ‘very pleased’ with Starbucks’ start to fiscal 2021, highlighting ‘meaningful, sequential improvements in quarterly financial results despite ongoing business disruption from the pandemic.
‘Investments in our partners, beverage innovation and digital customer relationships continued to fuel our recovery and position Starbucks for long-term, sustainable growth.
‘We remain optimistic about our robust operating outlook for fiscal 2021 as well as our ability to unlock the full potential of Starbucks to create value for our stakeholders,’ he added.
Shares highlighted the growth and income attractions of the Cappuccinos-to-Pumpkin Spice Lattes purveyor here in November.