Starbucks raises annual forecasts again as turnaround takes root

By Neil J Kanatt

July ‌29 (Reuters) - Starbucks has ​raised ​its annual sales and profit forecasts for the second time, as CEO Brian Niccol's years-long turnaround efforts reignite demand at the ‌world's largest coffee chain, sending its shares up 5% in ⁠extended trading.

Under Niccol, the company has aimed to improve customer experience through a simplified ‌menu and shortened wait times, ‌fueling four straight quarters of comparable sales growth.

"We have more work to do," Niccol said in a statement on Wednesday, while finance chief Cathy ​Smith said the company is focused on what it can control amid a "dynamic operating environment"

The Seattle-based company forecast global same-store sales growth ⁠of near 6%, above its prior forecast of about 5% or above. It expects adjusted earnings per ​share to be between $2.55 and $2.65, compared with its previous forecast of $2.25 to $2.45.

"Starbucks has begun to experience market share stabilization ​in recent months, most notably with younger ‌diners," Consumer Edge analyst Michael Gunther said.

"Consumers may be shifting dining dollars toward in-home eating but are leaving room ⁠in the budget for daily drink habits," he added.

The "Back to Starbucks" strategy had been squeezing margins, as it involved heavy investments in staffing and store operations, which ⁠the company has looked to tackle with cost cuts through layoffs, office consolidation and ​streamlining its operations.

The company said refunds received in the quarter "largely offset" tariffs costs incurred so far this fiscal year.

The company's consolidated quarterly operating margin was 14.4% in the ‌quarter, compared with 10.1% a year earlier. This helped it post adjusted earnings per share of 85 cents, compared ‌with estimates of 66 cents.

Starbucks reported third-quarter global same-store sales growth of 7.9%, ⁠which surpassed analysts' expectations of ‌5.7%, according to data ​compiled by LSEG.

(Reporting by Neil J Kanatt in Bengaluru and Waylon Cunningham in New York; Editing by David Gregorio and ‌Sriraj Kalluvila)

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