Starbucks Corp.’s growth is holding strong in the key Chinese and U.S. markets following last year’s changes led by Chief Executive Officer Kevin Johnson.

• For the quarter ended in March, the world’s biggest coffee chain reported same-store sales that rose 4 per cent in the Americas, topping the 3.7 per cent growth estimate from Consensus Metrix. The metric -- a key gauge of restaurant success -- also rose 3 per cent in Asia Pacific and China, double the estimate of 1.5 per cent.

Key Insights

• Starbucks is betting it can overcome competition in its key markets with a revamped loyalty program, better service and new drinks that appeal to health-conscious consumers. These efforts appear to be catching on, as the average ticket -- the amount customers pay at the cash register -- rose in all markets.
• The number of transactions were flat in China and the Americas, however, a sign that growth is being driven by higher prices rather than an increase in traffic.
• Starbucks said it was helped by its rapid growth in China, where its net store count ballooned by 17 per cent. The world’s most populous nation is a key bet for Starbucks, but success won’t come easy: Luckin Coffee Inc., the startup that’s planning a U.S. IPO, is spending millions of dollars there to unseat Starbucks, while Tim Hortons is also expanding.
• At the same time, Starbucks is betting big on delivery to help it maintain sales growth. It’s testing the service in U.S. cities and London, and is using Alibaba Group Holding Ltd. in China to bring more drinks to customers at home and work.
• The Seattle-based company also upgraded its profit guidance for the fiscal year amid cost savings and a lower tax rate. Starbucks now sees adjusted earnings per share in a range of US$2.75 to US$2.79, up from a prior forecast of US$2.68 to US$2.73. That’s above analysts’ average estimate.

Market Reaction

• Starbucks rose as much as 2.4 per cent in late trading in New York Thursday.