Starbucks Shares Surge on Earnings Beat as U.S. Consumers Splurge on Beverages

Starbucks (SBUX) shares surged more than 10% in early trading Thursday after the company posted better-than-expected earnings for its fiscal fourth quarter, as U.S. consumers continued to splurge on coffee and beverages despite inflation.

Revenue surged to a record $9.37 billion, which was up 11% from the same quarter last year. Net earnings jumped almost 39% to $1.22 billion, or $1.06 per diluted share, which was well above consensus estimates of 97 cents per share provided by Visible Alpha.

Sales growth was driven by an 8% increase in same-store sales in North America, as U.S. consumers continued to spend on coffee and beverages despite more expensive drinks. It reflects the robust consumer spending that powered GDP growth higher in the third quarter, as the U.S. consumer remained resilient despite persistently high inflation and rising interest rates.

In China, which is the company's second-largest market, same store sales rose 5% in the latest quarter compared with a year earlier. However, unlike in North America, where the average ticket, or amount that customers spend per transaction, rose 6% versus the prior year, in China the average ticket fell 3%. Chinese consumers remain cautious and hesitant to spend amid economic headwinds in China.

Starbucks continued to expand its global footprint, opening 816 new stores in the latest quarter and bringing the worldwide total to more than 38,000, more than half of which are outside of the U.S. China and the U.S.—the company's two biggest markets—together accounted for just over 60% of the company's footprint globally.

"We finished our fourth quarter and full fiscal year strong, delivering on the higher end of our full-year guidance," Starbucks' Chief Executive Officer (CEO) Laxman Narasimhan said in a press release. "As we enter the current year, in the face of macro uncertainty, we remain confident in the momentum throughout our business and headroom globally."

Before Thursday's gain, Starbucks shares had traded almost 10% lower for the year. They've now fully recovered their year-to-date losses.