(Reuters) – Starbucks leaned on the hype around its Pumpkin Spice Latte and other fall-themed drinks in North America to surpass Wall Street targets for fourth-quarter results, as demand for its pricey coffees defied sticky inflation.
Its shares shot up 11% in early trading on Thursday, after the global coffeehouse giant also delivered an upbeat annual profit forecast, banking on its updated store technology and menu enhancements.
The seasonal return of the Pumpkin Spice Latte (PSL) in August, coupled with new menu items such as the Iced Pumpkin Cream Chai Tea Latte and apple-flavored Espressos and croissants, helped drive U.S. same-store sales up 8% in the quarter.
Placer.ai data showed a 20% surge in visits on the day of the PSL launch. Starbucks (NASDAQ:SBUX) also said the fall-season launch led to record average weekly sales.
Traffic at the coffee chain has also benefited from its younger, more affluent customer base prioritizing their morning coffee fix even as the wider U.S. restaurant industry grapples with an inflation-driven slowdown.
“Customer demand for us remains strong. We’re not really seeing any change in the sentiment,” CEO Laxman Narasimhan said on a post-earnings call.
Starbucks forecast fiscal 2024 per-share profit growth of 15% to 20%, above analysts’ estimates of 15.1%, according to LSEG data.
It expects fiscal 2024 global comparable sales to grow between 5% and 7%, with China sales also projected to rise 4% to 6% in the last three quarters. Sales in China would be higher than that range in the first quarter, it said.
In the U.S., fourth-quarter transactions rose 2% and average spending per customer jumped, as demand for its breakfast sandwiches, wraps and bakery items increasingly became a regular part of orders.
“The consumer is stressed, but they’re going to go to … those affordable luxuries… And Starbucks does a great job with that,” Stephens analyst Joshua Long said.
Quarterly China sales came in just 5% higher, much smaller than the previous quarter’s 46% surge, but analysts said that was in line with expectations.
Global comparable sales at Starbucks climbed 8% in the quarter ended Oct. 1, beating expectations for a 6.56% rise. Adjusted per-share profit of $1.06 surpassed estimates of 97 cents.
