Starbucks beats sales forecasts as China recovers

Starbucks posted stronger-than-expected sales in its fiscal second quarter as demand in China began to recover, but the company said that sales growth could moderate as the year progresses.

The Seattle coffee giant said Tuesday that its net revenue jumped 14% in the January-March period to $8.72 billion. That was better than the $8.41 billion Wall Street had forecast, according to analysts polled by FactSet.

Same-store sales — or sales at stores open at least a year — rose 11% as traffic picked up in stores. That also beat analysts' forecast of a 7.3% increase.

Same-store sales in China were up 3%, reversing a 29% decline the company saw in its October-December period due to a spike in COVID infections. It was the first time Starbucks had seen positive same-store sales in China since 2021.

Starbucks Chief Financial Officer Rachel Ruggeri said traffic is strong in the afternoons and on weekends at stores in China. But the company is still uncertain about post-pandemic customer patterns as well as the resumption of international travel to China. Ruggeri said Starbucks expects the pace of weekly sales' improvement to moderate in the second half of this year.

"We’re very encouraged by many of the signs that we see, but there’s a lot that we’re navigating," she said on a conference call Tuesday with investors.

In North America, same-store sales climbed 12%, and the company reported more store visits as well as higher spending per visit. The double-digit gain was partly due to comparisons with the same period last year, when sales were impacted by the omicron variant. For the full year, Starbucks expects North American same-store sales increases in the 7-9% range, Ruggeri said.

Starbucks said it opened 464 net new stores during the quarter, including 100 in North America....