Starbucks Boosts Sales With Help From New Drinks, Store Upgrades
July 25 2019 - 5:31PM
Dow Jones News
By Heather Haddon
Starbucks Corp. said sales rose in its key U.S. and China
markets thanks to new drinks and upgrades to its stores and
digital-ordering platforms.
The world's largest coffee chain reported adjusted earnings of
78 cents a share for its fiscal third quarter, up 26% from the
previous year. Analysts polled by FactSet had expected earnings of
72 cents a share, excluding certain items.
Starbucks's sales of $6.8 billion were up 8% from last year,
also beating expectations. Global same-store sales growth of 6% was
the strongest in three years.
Shares rose nearly 6% in after-hours trading. Starbucks's stock
has climbed more than 40% this year, outpacing the S&P 500
Index and large U.S. restaurant stocks as a whole.
Chief Executive Kevin Johnson said after taking over in 2017
that he would slow the pace of opening more upscale coffee shops
and focus on improving its existing stores. The chain is also
opening new stores in markets where it has less of a presence, such
as the central U.S.
Starbucks also remains focused on expanding its business in
China. Net store growth there was 16% during the quarter, bringing
the chain's total to more than 30,000 locations world-wide.
Starbucks is also investing more in technology. The chain
earlier this week took an equity stake in technology company
Brightloom to help improve its digital loyalty, payments and
delivery systems.
The company also plans to add delivery from all its U.S. stores
through Uber Technologies Inc.'s Uber Eats by next year, the
companies said Tuesday. That was a victory for Uber Eats after the
division of the ride-hailing giant lost its status as the sole
delivery partner to McDonald's Corp. last week.
Starbucks's results were far better than its third quarter of
last year, when same-store sales rose by just 1%. The company
closed its 8,000 company-owned U.S. stores for one day during that
quarter for employees to undergo bias training after Starbucks was
criticized for its handling of the arrest of two black patrons at
one of its Philadelphia stores in May 2018.
Starbucks is facing tougher competition from smaller chains of
upscale coffee shops and from Dunkin' Brands Group Inc., which is
seeking to update its image and offerings, which now include
imitation-sausage breakfast sandwiches with Beyond Meat Inc.
patties. Abroad, Luckin Coffee Inc., a Chinese company that
specializes in delivery and mobile ordering, said Monday that it
had signed a partnership to open coffee shops in the Middle East
and India.
Starbucks raised its earnings guidance for this year to between
$2.80 and $2.82 a share on an adjusted basis, from $2.75 to $2.79
previously.
Write to Heather Haddon at heather.haddon@wsj.com
(END) Dow Jones Newswires
July 25, 2019 17:16 ET (21:16 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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