Holidays deliver robust 1Q earnings for Starbucks
NEW YORK » Starbucks Corp.’s fiscal first-quarter earnings soared 82 percent as the coffee chain attracted more customers around the globe who snapped up an expanded offering of food and drinks over the holidays.
Starbucks has enjoyed healthy sales growth but is seeking to keep its momentum going by expanding on a number of fronts.
To convince more customers to get something to eat with their drinks, the Seattle-based company has been introducing new and revamped baked goods, sandwiches and salads and wants to become more of a destination for grabbing a quick lunch.
In the evenings it plans to offer beer and wine in a quarter of its U.S. stores over the next five years. The idea is to drive up sales throughout the day, not just during the morning rush when people are getting their caffeine fixes.
Another way it’s driving sales is through its mobile app and loyalty program, which help get customers in the habit of visiting Starbucks rather than its competitors.
The company said Thursday it’s expanding its program that allows shoppers to order ahead on their smartphones, a move that should help shrink lines. Starbucks began the program in 150 stores in Portland, Ore., in December and it has been well received, the company told investors on a conference call Thursday. It’s now expanding the program to 600 stores in the Pacific Northwest in the months ahead and will be rolling it out nationwide later this year.
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"Operationally, we delivered the best in-store experiences to customers in our history," Howard Schultz, the company’s chairman and CEO, told investors.
Starbucks also is undergoing a major change at the top. The company Thursday named board member Kevin Johnson as president and chief operating officer. He will assume the role March 1. Johnson had been the president of computer networking equipment maker Juniper Networks from September 2008 through December 2013.
The appointment comes after Starbucks’ chief operating officer, Troy Alstead, said earlier this month he plans to take an "extended unpaid leave" after 23 years with the company. The company said it was a personal decision by Alstead, who wanted to spend more time with his family.
Johnson’s technology background will help propel the company to expand its mobile initiatives and other innovations, Schultz said.
Starbucks said it earned $983.1 million in the quarter ended Dec. 28, or $1.30 per share. That compared with $540.7 million or 71 cents per share, a year earlier.
The results met Wall Street expectations. The average estimate of analysts surveyed by Zacks Investment Research was also for earnings of 80 cents per share.
Starbucks posted revenue of $4.8 billion in the period, beating Street forecasts. Analysts expected $4.79 billion, according to Zacks.