Starbucks Gains With a Digital Assist -- WSJ
July 26 2019 - 3:02AM
Dow Jones News
By Heather Haddon
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 26, 2019).
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 posted adjusted earnings of 78
cents a share for its fiscal third quarter, a 26% increase compared
with a year earlier. 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%, also beating
expectations. Global same-store sales growth of 6% was the
strongest in three years. U.S. same-store sales rose 7%. Cold
beverages helped drive growth in the afternoon, the company said, a
time when Starbucks has struggled to boost sales.
Shares rose over 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 the company's 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.
And Starbucks is investing more in technology. The chain earlier
this week took an equity stake in tech company Brightloom to help
improve its digital loyalty, payments and delivery systems.
Data collected by Starbucks's digital programs is helping the
company better understand what beverages customers want, said Chief
Operating Officer Roz Brewer. "We know a lot more about our
customers now," she said.
The company 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, which
lost its status as the sole delivery partner to McDonald's Corp.
last week.
Mr. Johnson said delivery isn't a big business driver in the
U.S., but that he expects that demand to grow.
Starbucks's results were far better than its third quarter of
last year, when same-store sales rose by just 1%. It closed its
8,000 company-owned U.S. stores for one day during that quarter for
employees to undergo antibias 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, including the addition
of 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 fiscal year to
between $2.80 and $2.82 a share on an adjusted basis, from $2.75 to
$2.79 previously. It trimmed its projected store openings globally
this fiscal year to 2,000.
Write to Heather Haddon at heather.haddon@wsj.com
(END) Dow Jones Newswires
July 26, 2019 02:47 ET (06:47 GMT)
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