[Source: Reuters]

Starbucks Corp (SBUX.O) beat Wall Street estimates on Tuesday for quarterly profits and comparable sales, powered by a sharp recovery in business in China and steady demand for its coffees and cold drinks in North America.

With most of China’s COVID-19 curbs now scrapped, consumer mobility and spending in the region bounced back sharply in March.

Even so, some analysts had expected China sales to remain in the red after tumbling 29% the previous quarter.

Instead, the world’s largest coffeehouse chain posted a 3% rise in China comparable sales in its second quarter ended April 2, helping boost international sales 7%, more than double the 2.94% increase of the average analyst’s estimate, according to Refinitiv data.

“The 3% number in China was definitely better than we anticipated and clearly an improvement in the China trajectory, probably a few months ahead of expectations,” said BTIG analyst Peter Saleh.

Globally, the Seattle-based chain’s comparable sales climbed 11%, trouncing analysts’ expectation of a 7.36% rise.

Customers visited more often and spent more per trip, according to the earnings release. Excluding one-time items, Starbucks earned 74 cents per share, beating estimates of 65 cents.

Shares bounced around in after-hours trading and were last more than 2% lower.

“The stock has outperformed, and expectations were high,” said Credit Suisse analyst Lauren Silberman. “This is more about stock positioning than anything fundamental.”

Starbucks’ stock jumped 16% in the past 5 weeks had “a pretty big run” into the earnings report, Edward Jones analyst Brian Yarbrough noted.

Broadly, restaurant shares have outperformed the S&P 500 Index this year, and McDonald’s Corp and others reported a strong quarter.

Starbucks, whose customers are typically younger, wealthier and relatively unfazed by inflation, has doubled down on its cold and customizable beverages, boosting traffic in the U.S. and driving a 12% jump in comparable store sales in its North American market.