Starbucks posts strong results as China rival Luckin Coffee's IPO looms

Starbucks posted strong results in its key U.S. and China markets in the second quarter as the coffeehouse giant prepares for increased competition from its Beijing-based rival, Luckin Coffee.

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The Seattle-based company posted earnings per share of 60 cents, topping Wall Street’s estimates according to Refinitiv data, while quarterly revenue of $6.31 billion was in line with expectations.

Starbucks’ overall same-store sales rose 3 percent, slightly outpacing projections and driven by a 4 percent in the average customer's bill. Comparable sales grew by 4 percent in the U.S. and 3 percent in China.

“Starbucks delivered another quarter of solid operating results, demonstrating that our 'Growth at Scale' agenda is working,” Starbucks CEO and President Kevin Johnson said in a press release. “We are especially pleased with our comparable store sales growth in our two lead markets, the U.S. and China, where we are also continuing to drive strong new store development with industry-leading returns. With solid first-half financial results, we are on track to deliver on our full-year commitments.”

The earnings beat came days after Luckin filed for its initial public offering in a bid to raise $100 million. The Beijing-based company, which emphasizes fast transactions and mobile orders out of streamlined store layouts, said it is aiming to open 2,500 new stores in China in 2019 alone. Luckin already operates 2,370 locations in China, while Starbucks has more than 3,700 stores in the region.

Starbucks raised its earnings guidance for fiscal 2019, noting that it now expects adjusted earnings per share of $2.75 to $2.79, up from a previous projection of between $2.68 and $2.73.

Membership in Starbucks’ “Rewards” loyalty program grew 13 percent to 16.8 million active members. The company overhauled its loyalty program in recent quarters.

Starbucks said it opened 319 net new stores in the second quarter, 94 percent of which are located outside the United States.  The chain now operates more than 30,000 locations worldwide.

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Shares rose slightly in after-hours trading on the earnings beat.