Starbucks earnings, sales top estimates; North American comps jump 7.1%
Starbucks Corp. reported earnings and revenue that topped estimates amid its second consecutive quarter of traffic growth.
The coffee giant raised its full-year outlook for comparable earnings and same-store sales growth as its investments in improving the customer experience appear to be paying off.
“Our second quarter marked the turn in our turnaround as our Back to Starbucks plan drove both top and bottom line growth,” commented Brian Niccol, chairman and CEO. “This is the Starbucks our customers deserve and the Starbucks we believe will deliver long-term growth and value for our partners and shareholders as we execute consistently, at-scale.”
[READ MORE: Starbucks adding two new elements to its store uplift program]
Starbucks reported adjusted earnings per share of $0.50 for the quarter ended March 29. Analysts had exceeded earnings of $0.43 per share.
Net revenues increased 9% to $9.5 billion, or a 8% increase on a constant currency basis. Net revenues for North America increased 7% to $6.9 billion
Total global comparable store sales increased 6.2%, primarily driven by a 3.8% increase in comparable transactions and a 2.3% increase in average ticket
In North America, comparable store sales increased 7.1%, primarily driven by a 4.4% increase in comparable transactions and a 2.6% increase in average ticket. Comp sales in the U.S. increased 7.1%, with a 4.3% increase in comparable transactions and a 2.7% increase in average ticket.
International same-store sales rose 2.6%. In China, Starbucks’ second largest market, comparable sales increased 0.5%, primarily driven by a 2.1% increase in comparable transactions, which was partially offset by a 1.6% decline in average ticket.
Starbucks' second-quarter operating income for its North American segment decreased to $679.9 million compared to $748.3 million in the year-ago period. Operating margin of 9.9% (North American segment) contracted from 11.6% in the prior year, primarily driven by labor investments largely in support of the “Back to Starbucks" strategy, product mix shift and inflation led by tariffs and elevated coffee pricing.
“We’ve been clear that topline improvement would come first, with earnings growth to follow, said CFO Cathy Smith. “We have more work to do, but we're pleased to see the combination of our comp growth and cost discipline starting to show up in margins.”
The company opened 11 net new stores in the quarter, ending the period with 41,129 stores, with 52% company-operated and 48% licensed. At the end of the quarter, stores in the U.S. and China comprised 61% of the company’s global portfolio, with 16,944 and 7,991 stores in the U.S. and China, respectively.
