Reuters Starbucks cut its annual sales forecast on Tuesday as the IsraelHamas war hurt its Middle East business, while warning that softer demand in January and slow recovery in China were likely to dent its secondquarter performance.

The world39;s largest coffee chain also missed market expectations for firstquarter results, also due to slowing demand for its coffee and cold drinks in the United States.

Its shares, however, rose 4 after the bell, as Wall Street analysts and investors were bracing for a bigger hit to sales following weak store traffic in November and December.

CEO Laxman Narasimhan said on a postearnings call that the company saw a significant impact on traffic and sales in the Middle East due to the conflict.

Its impact also spilled into the U.S., he said, as some consumers launched protests and boycott campaigns asking the company to take a stance on the issue.

The company had in a 2023 statement on its website said it is a nonpolitical organization and dismissed rumors that it had provided support to the Israeli government or army.

While Starbucks was working to mitigate headwinds in the U.S. through efforts including promotional offers, it would take time for its plans to materialize, the company executives said.

The company now expects fullyear comparable sales both globally and in the U.S. to grow between 4 and 6, down from its previous range of 5 to 7 growth.

While comparable sales in China rose 10 in the quarter ended Dec. 31, improving…