Starbucks Success

One in seven Americans received a Starbucks gift card over the holidays, according to the company, driving strong seasonal sales at the coffee chain. Starbucks Corp. reported double-digit growth in earnings and revenue for its first quarter of fiscal 2015. Global comparable sales climbed 5%, with a 2% increase in global traffic.

“For the quarter, we drove nearly 9 million more customer transactions through our U.S. stores than we did in Q1 last year, almost 12 million more globally,” said Howard Schultz, chairman, president and chief executive officer, during a Jan. 22 conference call with financial analysts to discuss first-quarter performance.

For the first quarter ended Dec. 28, 2014, net earnings attributable to Starbucks increased 82% to $983.1 million, equal to $1.30 per share, which compared with $540.7 million, or 71c per share, in the year-ago period. Results included the benefit of the September acquisition of Starbucks Japan, which the company previously operated under a joint venture agreement.

Revenues totaled $4,803.2 million, up 13% from $4,239.6 million in the prior-year quarter.

Comparable sales in the Americas rose 5%, with a 2% increase in traffic. Net revenues for the segment advanced 10% to $3,366.9 million, benefitting from incremental sales from 766 net new store openings over the past year. Operating income increased 12% to $817.5 million.

“We increased operational focus to help drive transaction growth across all day parts, including strong growth at peak and accelerated during holiday,” said Scott Maw, executive vice-president and chief financial officer, during the call. “And for the fourth consecutive quarter, food contributed 2% to comp growth, including the excellent performance by our breakfast sandwiches, with net sales growing 29% in Q1 versus the prior year, and strong holiday limited-time food offers.”

Food contributed 2% to comparable sales growth in the United States with strong performance from breakfast sandwiches.

Holiday beverages, including the new chestnut praline latte, delivered 9% year-over-year growth, and total tea sales in U.S. stores grew 17% over the comparable quarter.

Starbucks plans to expand its mobile order and payment platform, which debuted in Portland stores in December and is expected to drive an increase in mobile payment transactions and strengthen customer loyalty.

“Mobile Order and Pay has been extremely well received by customers in the Portland market,” Schultz said. “We will be launching it now in over 600 stores in the Pacific Northwest in the months ahead and will be rolled out nationally later in calendar 2015.”

Also this year, the company plans to introduce delivery, with two models — one that uses Starbucks’ baristas and one that leverages a third-party service.

“We will have more to share with you on our plans for delivery in the months ahead, but rest assured that delivery, like Mobile Order and Pay, will drive incrementally and increased customer loyalty,” Schultz said.