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Starbucks posts strong Q2 growth, boosted by US and China sales

·Former Correspondent
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Starbucks (SBUX) on Thursday reported better-than-expected earnings, boosted by strong sales in U.S. and China, where customers have flocked to the company’s rewards program and new drinks.

The global coffee giant posted earnings per share of 60 cents per share during its fiscal second quarter, compared to 53 cents per share a year ago. Revenue was $6.31 billion, versus $6.03 billion in the comparable quarter of 2018.

Analysts polled by Bloomberg, on average, expected Starbucks to post earnings per share of 56 cents on revenues of $6.32 billion.

Starbucks also raised its guidance, boosting its 2019 earnings per share range to $2.40 to $2.44, up from $2.32 and $2.37.

In the after-hours market, Starbucks shares rose modestly from their Thursday closing levels, after getting a fleeting boost after the earnings were released. The stock traded above $77 per share.

“Starbucks remains focused and disciplined in the execution of our three key strategic priorities: accelerating growth in our targeted markets of the U.S. and China, expanding the global reach of the Starbucks brand through our Global Coffee Alliance with Nestlé, and increasing shareholder returns,” CEO Kevin Johnson said in a statement.

The closely-followed comparable store sales metric was up 3% globally. In the U.S., comp sales were up 4%, while China saw comp store sales growth of 3%. The average ticket increased by 4% in the U.S. and by 2% in China/Asia Pacific.

“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,” Johnson said in the release.

“With solid first-half financial results, we are on track to deliver on our full-year commitments,” he added.

Starbucks’ rewards membership, which offers customers incentives for making purchases on a regular basis, surged by 13% in the U.S. to more than 16.8 million active members.

On a conference call with analysts and investors, Johnson highlighted Starbucks’ strong growth in China. He said the coffee chain was planning to build on momentum from the rewards program to expand mobile order capabilities in the country by end of fiscal year.

The company also cited new products, such as the Cloud Macchiato — as a contributor to growth during the quarter, and cited its Cold Foam drinks as a continued seller.

Starbucks, which also plans to open more stores in China in the coming year, is “playing the long game as we look to the future,” Johnson said. He characterized customer reception to the rewards program as “phenomenal.”

During the quarter, Starbucks opened 319 new stores, representing a 7% increase from the number opened during the same quarter a year ago. Starbucks now operates 30,184 worldwide.

—Javier E. David contributed to this article.

Julia La Roche is a finance reporter at Yahoo Finance. Follow her on Twitter.