Starbucks reports same-store sales growth for the first time in nearly two years

Starbucks on Wednesday reported that its quarterly same-store sales returned to growth for the first time in nearly two years, showing that its turnaround strategy is winning over lapsed customers.

The coffee chain’s global same-store sales rose 1%, lifted by international markets. Its U.S. same-store sales were flat for the quarter but turned positive in September. Wall Street was projecting global same-store sales declines of 0.3% and a 0.9% decrease in U.S. same-store sales.

“We’re a year into our ‘Back to Starbucks’ strategy, and it’s clear that our turnaround is taking hold,” CEO Brian Niccol said in a statement.

Shares of Starbucks rose 2% in extended trading.

Here’s what the company reported for the quarter ended Sept. 28 compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

• Earnings per share: 52 cents adjusted vs. 56 cents expected
• Revenue: $9.57 billion vs. $9.35 billion expected

The coffee giant reported fiscal fourth-quarter net income attributable to Starbucks of $133.1 million, or 12 cents per share, down from $909.3 million, or 80 cents per share, a year earlier.

Excluding restructuring costs, litigation settlements and other items, Starbucks earned 52 cents per share. During the quarter, the company closed 627 locations and laid off roughly 900 nonretail employees as part of a restructuring plan.

In addition to the restructuring plan, Starbucks has been investing heavily in labor, including adding assistant store managers to many North American cafes. The added labor costs weighed on its operating margin this quarter.

Net sales rose 5% to $9.57 billion.

To revive U.S. sales, Niccol has focused on improving the in-store experience for customers and cutting service times to under four minutes per order. The company’s marketing efforts have switched from promotions and limited-time items to highlighting its coffee and trendy innovation, like protein-packed cold foam.

Outside Starbucks’ home market, same-store sales increased 3%, fueled by a 6% jump in traffic.

In China, the company’s second-largest market, same-store sales rose 2%, boosted by a 9% climb in traffic. Under pressure in the country from home-grown rivals with cheaper beverages, Starbucks has lowered prices on many of its iced drinks to bring back customers.

The company is also exploring selling a stake in its China business after years of sales declines in the competitive market. Niccol told CNBC’s Jim Cramer that the company values the China business at more than $10 billion.