Starbucks missed market expectations for quarterly comparable sales on Tuesday, with demand for its coffees and cold drinks showing some signs of tapering in the North American and international markets even as China sales rebounded sharply.
The world’s largest coffeehouse chain has targeted its younger, wealthier U.S. customer base by launching new drinks and promoting food options that have helped drive up average customer sales. But quarterly transactions climbed just 1% in North America, slowing from a 6% increase in the prior quarter.
However, Starbucks saw a sharp recovery in China, with comparable sales surging 46% in the third quarter. That rebound was in line with its expectations and is expected to last, company officials told investors in a call.
“China, I think, is what’s holding the stock up here,” Sante Faustini III, director of product intelligence at research firm M Science, told Reuters.
Shares of Starbucks were marginally lower in after-hours trading even as the coffee chain topped Wall Street estimates for quarterly profit and slightly lifted its outlook for full-year earnings growth.