Starbucks (NASDAQ:SBUX) just gave investors some new reasons to feel optimistic about the stock. The coffee giant returned to global sales growth in the fiscal second quarter and is gearing up for a likely surge in customer traffic as the pandemic threat recedes later in 2021.

In a conference call with Wall Street analysts, CEO Kevin Johnson and his team discussed that improving demand picture, and they outlined why Starbucks might be a standout performer during the restaurant industry's gathering rebound.

Let's look at some highlights from that presentation.

A young woman holding a to-go cup of coffee.

Image source: Getty Images.

The rebound is working

Johnson said: "Customers have responded extremely well to the new beverage platforms we have introduced with a focus on relevant new handcrafted beverages that deliver on wellness trends, offer customers choice, and support our sustainability agenda. Our winter and spring menus resonated and drove momentum." 

Starbucks posted a head-turning 21% spike in average spending in the second quarter, and that success played the biggest part in its return to overall sales growth through late March. Coffee fans flocked to the digital sales channel to order more food, more premium beverages, and bigger meals overall in recent weeks.

The product wins included plant-based breakfast sandwiches, cake pops, and cold beverages like refreshers and Cold Brew. "Any way you look at it," Johnson said, "our Q2 results were phenomenal in the U.S. and exceeded our expectations."

Better than before

"On a cumulative two-year basis, which measures our growth relative to pre-pandemic levels, U.S. comp sales in the month of March grew 11%, implying annual average growth above our long-term [goals]," CFO Rachel Ruggeri said.

Wild demand swings over the past year can make it hard to judge the health of the business, and so Starbucks pointed shareholders to its two-year sales trends that smooth out the volatility. On that basis, the chain returned to solid growth by March. In fact, sales expanded faster than management's annual target for growth between 4% to 5%.

That success adds weight to management's claim that 2021 will be an unusually strong year for the business, even though executives chose to leave most of their short-term sales forecasts unchanged.

Prepping for a big finish

"Our cash position remains strong, and we have meaningfully deleveraged our balance sheet this year by paying off debt maturities totaling nearly $1.7 billion," Ruggeri said.

Starbucks is investing heavily in its business. Management's growth initiatives today include big capital projects aimed at boosting the customer shopping experience both online and in stores, raising marketing spending, and driving traffic through a flood of additions to its offerings of drinks.

But the business is still generating more than enough cash to handle those commitments. As a result, investors should expect to see rising returns from dividends and stock buybacks. With the chain on pace to pay down enough debt to reach its long-term target, those extra returns should start as early as late 2021 and coincide with a likely impressive return to growth in global customer traffic.

"As we celebrate our 50th anniversary," Johnson said, "we do so knowing that Starbucks' 'third place' experience is well established and core to the great human reconnection that has begun."

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