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Starbucks Gets Sales Bump From US Demand For 'Affordable Luxuries'

By Donna Ahern
Starbucks Gets Sales Bump From US Demand For 'Affordable Luxuries'

Starbucks beat Wall Street targets for fourth-quarter sales and profit as robust demand for its pricey coffees and cold drinks in North America offset a feeble recovery in China.

The late-August return of the global coffeehouse giant's iconic fall season staple, the Pumpkin Spice Latte, also helped drive up US same-store sales by 8%, recently sending shares up 5% pre-market.

There was a 20% surge in visits on the day of the Pumpkin Spice Latte's launch, data from showed.

Consumer Base

Starbucks also benefited from its younger, more affluent consumer base prioritising their morning coffee fix at a time when the wider US restaurant industry grapples with a slowdown wrought by sticky inflation.


"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, adding that the 2% rise in customer transactions was 'impressive.'

The coffee chain has also leaned on its breakfast sandwiches, wraps and bakery items to drive up customer spending at stores.

Average ticket in the US - or the average spending per customer on a visit - jumped 6% in the quarter.

China Sales

Still, China sales came in just 5% higher - much smaller than the 46% surge seen in the previous quarter - suggesting that trends in the company's second-largest market were not recovering as robustly as expected.


Ticket fell 3% in China, indicating consumers were spending less at the coffee chain, as it also faces tough competition from local rivals such as Luckin Coffee and Manner Coffee.

Global comparable sales at Starbucks climbed 8% in the fiscal fourth quarter, compared with analysts' expectations for a 6.56% rise, according to LSEG IBES data.

Excluding items, Starbucks posted a per-share profit of $1.06 for the quarter ended 1 October, surpassing estimates of 97 cents.

Read More: Starbucks To Add 100 New UK Stores As Britons Thirst For Iced Espressos

News by Reuters, edited by Donna Ahern, Checkout. For more retail news, click here. Click subscribe to sign up for the Checkout print edition.

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