Starbucks hit the reset button Thursday.
The coffee company, which reported revenue that fell below Wall Street expectations, and earnings per share that were in line with expectations, initiated a new long-term outlook, slashing earnings estimates for 2018.
But its CEO is feeling optimistic about the brand's ability to meet and exceed those new targets, and the rosy outlook sent shares higher Friday.
"The current environment that we're operating in and, with the work we're doing on throughput and innovation, we're optimistic we can exceed that," Kevin Johnson, CEO of Starbucks, said on CNBC's "Squawk on the Street" on Friday. "This quarter alone, we have a strong holiday planned and we're already off to a good start. We're confident in our FY18 guidance and long-term guidance we've given."
Starbucks now expects long-term annual earnings-per-share growth of at least 12 percent, down from its previously forecast 15 to 20 percent. The company also said that it anticipates annual global same-store sales growth will be between 3 and 5 percent and annual consolidated net revenue growth in the high single digits.
The move, which sent shares tumbling 7 percent in aftermarket trading Thursday, wasn't an unexpected one. But Starbucks shares opened slightly positive and added to gains after Johnson's remarks. Recently the stock was up nearly 3 percent.
"While some might protest the lower long-term comp targets, we believe investors were increasingly skeptical of the previous mid-single digit target anyway," Peter Saleh, an analyst at BTIG, wrote in a research note Friday.
"While the new targets strike us as reasonably achievable, we do anticipate some weakness in the near-term as investors sort through the new growth targets and strategic actions that set the stage for beyond FY18," he said.
Johnson said that the company has been looking at a number of different data sources, including restaurant industry studies, credit card data and same-store sales trackers, to set its forecasts.
"It's fair to say the overall U.S. retail-restaurant industry has been very flat on sales and actually negative on transactions," he said. "The fact that we were able to build over 2,000 Starbucks stores globally that are performing at higher annual unit volumes than other generations in an era where retailers are closing stores at a record pace gives us confidence that there's affinity for the brand."
Going forward, Johnson expects that Starbucks will see a boost from holiday gift card purchases, which leads to an uptick in sales in the beginning of the coming year.
"Think about this, when we get into holiday and we sell billions of dollars worth of Starbucks gift cards, many of those gift cards translate into rewards members," he said.
In 2017, Starbucks Rewards membership grew 11 percent and these customers accounted for 36 percent of sales. In the fourth quarter alone, the company found that Rewards members had increased how much they spent at Starbucks by 8 percent.
In addition, Johnson quelled any speculation that Starbucks was considering spinning off its China division. Same-store sales in China grew 8 percent in the fourth quarter, and will be the home of one of its upcoming Starbucks Roastery sites.
"We think having two powerful growth engines for the company, the U.S. and China, is what's going to fuel consistent long-term profitable growth for shareholders and we think both of those growth engines are important," Johnson said.
Starbucks' same-store sales in the U.S. have been positive in recent quarters, the company has been hurt by slowing foot traffic at the mall and customers are have been making fewer trips to its cafes. In the fourth quarter, sales also were hurt by several severe hurricanes that hit the U.S. and caused store closures.
Starbucks has been trying to reinvigorate its business by investing in technology, growing its membership rewards program, and introducing new drinks that include on-trend ingredients such as soy and almond milk.
"Starbucks has been a pioneer among retail and restaurant companies in navigating changes in consumer behavior caused by demographic shifts and technology disruptions," Stifel analyst Chris O'Cull wrote in a research note Friday.
The company said Thursday that it expects that its revenue growth will also take a small hit in the coming quarters because of its decision to shutter all 379 Teavana locations by spring 2018 and close its e-commerce platform.
For investors who are skeptical about Starbucks' ability to reignite its growth, Baird's David Tarantino said that if the company achieves these new long-term goals it will continue to be "within the top-quartile of revenue growth for S&P 500 Consumer Discretionary companies."