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Higher prices helped Starbucks Corp. to achieve the largest increase in its quarterly sales in more than a year, but the coffee giant is still struggling to attract more customers in US stores.
Starbucks shares rose 9% after normal trading hours on Thursday, according to its report, according to which the comparable store business turnover of 4% in its critical domestic market exceeded expectations of a growth of about 2% to 3%, thus generating comparable store gains globally in its last quarter.
However, the growth comes entirely from a 5% increase in the average ticket over the period. The number of transactions in the United States decreased by 1% compared to the previous year.
"Transaction growth is our greatest opportunity," said chief operating officer Rosalind Brewer in an interview, adding that traffic has improved at the end of the quarter thanks to the new cold coffee beverages.
The pressure to improve customer traffic is increasing as the Seattle-based chain sits between cheaper competitors like Dunkin's Brands Group Inc. and more expensive specialty cafes.
The period just ended marks the first full quarter in which Chief Executive Kevin Johnson led the company without the presence of long-time CEO Howard Schultz, who stepped down as president in June. The company's challenges have recently attracted activist investor William Ackman, who announced a 1.1% stake in Starbucks last month. Until now, Mr. Ackman said he was in agreement with what Mr. Johnson was doing.
Under Johnson's leadership, the company strives to know the preferences of more visitors in order to better target them with attractive offers for their ordering behavior. Starbucks has recently opened its mobile ordering app to everyone – not just customers who subscribe to its rewards program – and has attracted 4 million new customers digitally registered in the last quarter, "said Brewer.
The number of guests in its loyalty program is also growing, with 15.3 million active members in the United States, up 15% from the previous year.
In the afternoon, when the chain ran out of traffic, Starbucks reduced the time employees spend on administrative tasks so they can focus on customer service. It also tests healthier Frappuccino drinks, which tend to be a treat in the afternoons. In addition, Starbucks is closing underperforming stores in overcrowded urban markets with high rents and slowing the growth of licensed stores at airports and supermarkets, while expanding into new midwestern and southern cities.
Starbucks is also trying to satisfy consumers who want to drink their coffee on the go. The company plans to open more stores with driver-controlled windows, which it says has higher sales than stores without them. The chain is also testing delivery to Miami.
US companies have increased prices for everything from airline tickets to chocolate bars, after years of low inflation, and Starbucks is no exception.
The chain raises prices faster than independent cafés, fast-food chains and donut shops.
Ms Brewer said the company had raised prices from 1% to 2% on different items from different markets throughout the year.
Globally, Starbucks experienced a 3% increase in sales per store, exceeding the 2.4% increase expected by analysts.
Revenues for the fourth fiscal quarter, which ended September 30, jumped 11 percent to $ 6.3 billion, exceeding estimates of $ 6.27 billion. Starbucks earned $ 755.8 million, or 56 cents a share, compared to $ 788.5 million, or 54 cents a share, a year ago.
Excluding non-recurring items, Starbucks posted a profit of 62 cents per share, ahead of analysts' expectations.
For the new fiscal year, the company forecast revenue growth of 5% to 7%. The company expects global comparable store sales growth to be close to the lower end of the range of 3% to 5%, compared to the 2.5% estimated by analysts.
Adjusted earnings per share of Starbucks is between $ 2.61 and $ 2.66 for the full year, compared with $ 2.63 in analysts' estimates. The company also plans to add about 2,100 new stores. It opened 1,985 net new stores in the past year.
–Aisha Al-Muslim contributed to this article.
Write to Julie Jargon at [email protected]
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