Improved U.S. holiday sales helped Starbucks Corp. achieve better-than-expected results in its fiscal first quarter.
Dee-Ann Durbin of the Associated Press had the news:
After a disappointing holiday in 2017, Starbucks made some changes. This past year, holiday drinks went on sale earlier and the company removed some merchandise from the lobby to make a clearer path to gift cards.
It worked. Starbucks Chief Operating Officer Roz Brewer said gift card sales — which were down last year — jumped 12 percent to $2.6 billion in its fiscal first quarter that ended Dec. 30.
Net revenue for Starbucks’ Americas segment rose 8 percent to $4.6 billion. Same-store sales growth was up 4 percent. Store transactions were flat, but customers spent more per visit.
Starbucks hopes to boost U.S. sales by adding a delivery option through UberEats. It announced earlier this week that the service is launching soon at some stores in San Francisco, New York, Boston, Washington, Chicago and Los Angeles. Brewer said more cities will be announced at the end of the second quarter.
Amelia Lucas and Kate Rogers of CNBC.com reported that same-store sales also beat expectations:
While the number of transactions in the U.S. remained flat, Starbucks reported same-store sales growth of 4 percent thanks to a 3 percent bump in the average check size. Wall Street was expecting to see same-store sales increase by 3.2 percent.
The company’s iced beverages led growth with its Refreshers, iced espresso and iced coffee drinks proving popular with customers all day.
“We also saw continued improvement in cold beverages,” Starbucks Chief Operating Officer Rosalind Brewer told CNBC. “So we continue to learn that cold beverages sell all year long.”
The company also increased the number of rewards members to 16.3 million people, a year-over-year increase of 14 percent. Johnson said that the company is changing the loyalty program so customers can earn and redeem rewards more quickly and across a broader range of products.
Alex Eule of Barron’s reported that the company’s stock has been recently outperforming the market:
The back story. Starbucks shares were struggling last summer, beset by concerns that the coffee giant had reached a saturation point and would struggle to grow like it had in the past. But the value of the brand never changed, as recognized by activist investor William Ackman who took a stakein the company last fall. Starbucks has now soared 37% since its June 2018 low, and the stock is up 7% over the last 12 months versus a 7% decline for the S&P 500. Now investors are waiting to see whether Starbucks can deliver. Its shares closed at $65.30 on Thursday.
The plot twist. Late Thursday, Starbucks reported a fiscal-first-quarter adjusted profit of 75 cents a share, easily beating Wall Street’s forecast for 65 cents a share. Revenue of $6.63 billion also topped expectations for $6.49 billion. Closely watched comparable-store sales rose 4% in the quarter, versus predictions for 2% growth.
“We are particularly pleased with the sequential improvement in quarterly comparable store transactions in the U.S., underpinned by our digital initiatives and improved execution of our in-store experience,” CEO Kevin Johnson said in the company’s press release.
