Skip to main content

Advertisement

Advertisement

Starbucks’ profit climbs as customers spend more

NEW YORK — Starbucks says yesterday (Oct 30) its profit rose 34 per cent in the quarter, as the coffee chain used its loyalty programme to get customers to visit more often and spend more on revamped sandwiches and other food.

The Starbucks logo hangs on a window inside a newly designed Starbucks coffee shop in Fountain Valley, California on Aug 22, 2013. Photo: Reuters

The Starbucks logo hangs on a window inside a newly designed Starbucks coffee shop in Fountain Valley, California on Aug 22, 2013. Photo: Reuters

NEW YORK — Starbucks says yesterday (Oct 30) its profit rose 34 per cent in the quarter, as the coffee chain used its loyalty programme to get customers to visit more often and spend more on revamped sandwiches and other food.

The Seattle-based company said global sales rose 7 per cent at cafes open at least a year, including an 8 per cent rise in both the United States and Asia. In the region encompassing Europe, the Middle East and Africa, where the company has struggled, the figure rose 2 per cent.

The sales performance is somewhat of a standout in the restaurant industry. Chains including McDonald’s and Burger King have blamed the weak economy as they fight to drive up sales. But others are faring relatively better, with Chipotle reporting a 6.2 per cent sales increase at stores open at least a year and Dunkin Donuts reporting a 4.2 per cent increase for the latest quarter.

Starbucks has managed to keep growing through a mix of measures. It’s adding items such as Evolution juices, which can cost as much as US$6 (S$7.5) a bottle, and has rolled out new sandwiches and salads to get people to spend more when they stop in for a drink. Prices on several beverages were also hiked over the summer.

Mr Troy Alstead, Starbucks’ chief financial officer, said the increase in the average receipt for the quarter was mostly because of food. “As they’re adding those purchases, that’s giving us a lift,” he said.

Still, Mr Alstead said only about a third of purchases overall include food. But he said the trends are improving, and should continue to do so as the company finishes the rollout of new La Boulange baked goods.

The company has also been benefiting from lower costs for coffee beans.

For the quarter, Starbucks said it earned US$481.1 million, or US$0.63 per share. Analysts expected US$0.59 per share. A year ago, the company earned US$359 million, or US$0.46 per share.

Revenue rose to US$3.8 billion, but was shy of the US$3.81 billion analysts expected, and the company’s stock fell 2 per cent to US$79.20. Over the past year, the stock is up more than 73 per cent.

Starbucks also stood by its forecast to earn between US$2.55 and US$2.65 per share next year. That was short of the US$2.67 per share analysts expected, according to FactSet.

The company forecast revenue growth of “10 per cent or greater” for next year, which Mr Alstead said represented “zero change” in the company’s expectations. In the previous quarter, Starbucks had specified a forecast of 10 per cent to 13 per cent growth.

The company raised its dividend by 24 per cent to 26 cents per share.

Starbucks has about 20,000 locations around the world, with about 12,000 of those in the US. AP

Read more of the latest in

Advertisement

Advertisement

Stay in the know. Anytime. Anywhere.

Subscribe to get daily news updates, insights and must reads delivered straight to your inbox.

By clicking subscribe, I agree for my personal data to be used to send me TODAY newsletters, promotional offers and for research and analysis.