Monday 24 October 2016

Starbucks' strong results quash growth woes, shares rise

Published 24/04/2015 | 08:06

Starbucks Corp said on Thursday sales at its coffee shops in the Americas region grew more than expected, boosted by sales of breakfast sandwiches, lunch and new drinks, such as Flat White.

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The strong quarterly results from the world's biggest coffee chain helped quiet nagging worries that its growth was cooling, and shares jumped 5.4 percent to $52.12 in after-hours trading.

Starbucks, which is expanding its menus with food, beer and wine, tea drinks and fruit and vegetable smoothies, plans to begin offering delivery service in New York City and Seattle this year.

The Seattle-based company also said it is expanding its U.S. mobile order and pay service after a successful test launch.

The efforts come as U.S. restaurant chains ranging from McDonald's Corp to Panera Bread Co are turning to technology to increase sales, speed up service and connect with younger, tech-savvy consumers.

Sales at Starbucks shops open at least 13 months were up 7 percent in the Americas region for the fiscal second quarter ended March 29. Analysts polled by Consensus Metrix had expected a rise of 5.1 percent.

The Americas quarterly same-store sales included a 2 percent rise in traffic. Starbucks' Americas region, which includes the United States, Canada and Latin America, contributes the majority of company revenue.

Customer visits to Starbucks' Americas-region cafes have decelerated in the last year and a half, causing some investors and analysts to worry that the company's increased focus on food had slowed service.

The chain's quarterly net earnings grew 16 percent to $494.9 million, or 33 cents per share, up from $427 million.

Total revenue was up almost 18 percent to $4.56 billion.

Although the company said the strong dollar is expected to take a bigger bite out of earnings and revenue, it stood by its fiscal 2015 revenue growth forecast of 16 percent to 18 percent as well as its call for full-year earnings, excluding items, of $1.55 to $1.57 per share.


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