Starbucks says turnaround is “advanced” amid the resumption of sales
Starbucks on Wednesday reported robust sales gains for its fourth quarter, which the company says is a sign that the coffee giant’s restructuring plan is moving faster than expected.
Sales at stores open at least a year in the United States rose 4% in the quarter ended December 28, compared to the previous year, exceeding analysts’ projections.
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Brian Niccol, the network’s chief executive, stated in the earnings release that the numbers demonstrate that the restructuring is “working and, we believe, ahead of schedule.”
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The company recorded an increase in customer flow and the average amount spent per visit. Part of this increase in traffic may have come from the launch of a limited-edition holiday-themed cup that became a social media sensation. The bear-shaped cup sold out almost immediately, sparking a backlash from consumers frustrated at not being able to purchase the product.
Before the results were released, some Wall Street analysts said it was likely that U.S. same-store sales would be boosted by the closing of more than 600 underperforming stores at the end of the previous quarter. The closures not only reduced the negative impact on overall sales, but also likely resulted in a shift in revenue as customers flocked to other locations in search of caffeine.
Starbucks said it opened 128 additional stores last quarter.
During the period, revenue grew 5%, to US$9.9 billion. Profit fell more than 60%, to US$293 million, with expenses rising sharply as the company hired more employees in stores to speed up the delivery of orders to customers, as part of the restructuring effort.
Overall, global same-store sales advanced 4% compared to a year earlier, with sales in international markets rising 5%. China stood out, with an increase of almost 7%.
In early November, Starbucks said it had agreed to sell up to 60% of its retail operations in China to Boyu Capital, a private equity firm, in a deal valued at $4 billion.
Under the agreement, Boyu and Starbucks will operate nearly 8,000 stores in the country through a joint venture. Starbucks will own and license its brand and intellectual property to the new entity.
Starbucks shares rose 9% in premarket trading on Wednesday.
