Starbucks Q3 profit beats on US turnaround, lifts full-year guidance

Starbucks Corp ( NASDAQ:SBUX XETRA:SRB ) beat Wall Street estimates for fiscal third-quarter revenue and profit as its turnaround plan drove stronger-than-expected US sales growth.

Adjusted earnings per share came in at $0.85, above the $0.66 analyst estimate and up 70% year-over-year.

Revenue was $9.3 billion, topping the $9.16 billion consensus though down 1% from a year earlier.

Global comparable sales rose 7.9%, with North America up 8.1% and international sales up 5.7%. US comparable sales climbed 7.9%, driven by a 4.2% rise in traffic and a 3.6% increase in average ticket.

Starbucks raised its full-year guidance, now expecting adjusted EPS of $2.55 to $2.65, above the $2.40 consensus.

Global comparable sales growth is expected to near 6.0% for the year, with non-GAAP operating margin above 11% and 600 to 650 net new coffeehouses planned.

Fourth-quarter US comparable sales are guided to grow at least 6.5%.

North America net revenue reached $7.4 billion, up 7%, while International net revenue fell 34% to $1.3 billion.

Channel Development revenue rose 22% to $587.9 million.

The International decline reflects April's conversion of Starbucks' China retail operations into a licensed joint venture with Boyu Capital, the company said, not a drop in demand.

Starbucks retains a 40% stake and continues to own and license the brand.

Part of the China proceeds funded tender offers for roughly $1.3 billion in outstanding notes.

Non-GAAP operating margin for the quarter rose 430 basis points to 14.4%, while the effective tax rate fell 540 basis points to 26.4%.