Starbucks’ quarterly earnings and revenue exceeded analysts’ expectations thanks to increased spending by American customers on iced coffee drinks and Pumpkin Spice Lattes. The coffee company, based in Seattle, also reported that U.S. traffic improved in the quarter and has almost reached 2019 levels.

“Despite elevated pricing actions taken throughout the year, daily store traffic in the U.S. reached approximately 95% pre-pandemic levels in September fueled by the wildly successful fall promotion,” Chief Financial Officer Rachel Ruggeri said on the company’s quarterly conference call.

In after-hours trading, shares of the company in the US rose 2.7%.

The company reported earnings per share: 81 cents adjusted compared to 72 cents expected according to a survey of analysts by Refinitiv. The revenues of the company for the quarter came in at $8.41 billion compared to analysts’ expectations of $8.31 billion expected and its net sales for the period increased by 3.3% to $8.41 billion. The firm also reported a rise in global same-store sales by 7%, which was driven by increased spending in its home market.

Starbucks reported same-store sales growth of 11% in the US, which was brought on by customers spending more money overall and a slight increase in traffic. Although executives stated they do not currently have any plans to increase prices further, prices were also up 6% from a year ago.

At American company-owned cafes, cold beverages made up more than three-quarters of all beverage sales. According to Starbucks, customers are more likely to add expensive syrups, cold foam, and dairy alternatives to cold drinks, increasing the cost of those beverages.

However, customers continue to purchase hot coffee drinks. According to Sara Trilling, president of Starbucks North America, sales of pumpkin spice lattes increased by 70% from the same time last year.

The company’s loyalty program saw a 16% increase in active members during the quarter, reaching 28.7 million.

The Seattle-based company unveiled a comprehensive plan to reinvent its business in September to address shifting employee and customer needs. New machinery to make cold drinks more quickly is one of those updates.

Starbucks’ international performance continued to be hampered by Covid-19 restrictions in China. According to StreetAccount, the company’s international same-store sales decreased by 5%, which was less than the 7.1% decline that was predicted. China, Starbucks’ second-largest market, saw a 16% decline in same-store sales during the quarter.

“We anticipate the current Covid-related uncertainty to continue,” CEO Howard Schultz said.

Starbucks anticipates revenue growth of 10% to 12% for the fiscal year 2023, despite a 3% hit from currency conversion. The company projects that same-store sales will grow globally at the high end of its previously projected range of 7% to 9%. However, because of Chinese lockdowns, the fiscal first quarter is probably going to be at the low end of that range.

Starbucks also stated that the low end of its previously stated range of 15% to 20% will apply to its adjusted earnings per share growth in fiscal 2023, citing the costs of its reinvention plan.

Additionally, according to Ruggeri, the company expects commodity headwinds to persist into fiscal 2023, albeit at a lower intensity than in fiscal 2022.

For its fourth quarter, the net income attributable to Starbucks fell from $1.76 billion, or $1.49 per share, a year earlier, to $878.3 million, or 76 cents per share.

Starbucks earned 81 cents per share after deducting restructuring and impairment costs, the sale of its joint venture in Russia, and other items.

(Adapted from NPR.org)