Starbucks raises annual outlook as turnaround strategy fuels stronger sales

New Delhi: Brewing up a stronger future, Starbucks has raised its annual sales and profit forecasts for the second time this year as its turnaround strategy continues to gain traction, according to a Reuters report.

The world’s largest coffee chain credited improving customer demand and stronger operational performance for the upgraded outlook. The announcement sent Starbucks shares up 5 per cent in extended trading following the release of its quarterly results.

Under the leadership of Brian Niccol, the company has focused on simplifying its menu, reducing wait times and improving the in-store customer experience. Those initiatives have helped deliver four consecutive quarters of comparable sales growth, although the company said more work remains to sustain the momentum.

Starbucks now expects global same-store sales growth of nearly 6 per cent for the financial year, up from its earlier forecast of about 5 per cent or more. It also raised its adjusted earnings per share guidance to between $2.55 and $2.65, compared with its previous outlook of $2.25 to $2.45.

The company said it remains focused on factors within its control despite what it described as a dynamic operating environment.

The improved outlook comes as Starbucks continues to execute its “Back to Starbucks” strategy, which initially weighed on margins because of higher spending on staffing and store operations. The company has since worked to offset those costs through layoffs, office consolidation and operational streamlining. It also said refunds received during the quarter largely offset tariff-related costs incurred so far this financial year.

Third-quarter performance exceeded market expectations. Starbucks reported global same-store sales growth of 7.9 per cent, comfortably ahead of analysts’ expectations of 5.7 per cent, according to LSEG data. Consolidated operating margin improved to 14.4 per cent from 10.1 per cent a year earlier, while adjusted earnings per share came in at 85 cents, beating analysts’ estimates of 66 cents.

Analysts said the results indicate Starbucks is beginning to stabilise its market share, particularly among younger consumers, as many continue to prioritise their daily coffee purchases despite broader pressure on discretionary spending.

The stronger-than-expected quarter suggests Starbucks’ turnaround strategy is beginning to deliver measurable results, giving the company greater confidence in its growth trajectory even as it navigates an uncertain economic environment.