Starbucks

Starbucks Reports Increased Traffic and Sales Thanks to...Tea

Starbucks Reports Increased Traffic and Sales Thanks to...Tea
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Starbucks again got a big boost from its recent acquisition of Starbucks Japan and from its new Flat White and tea drinks. Here are some takeaways from Thursday’s earnings report.

What you need to know: The coffee chain reported 7% growth in sales at stores open at least 13 months for the period ending March 29, an improvement over two consecutive quarters of 5% growth. Analysts had predicted those store sales would rise 5% for a third straight reporting period. The company’s sales were $4.6 billion, up 18% from $3.87 billion in the same period last year. Foot traffic ticked up 3% globally.

The coffee chain got a bump from a somewhat unlikely source: tea. Sales by the company’s tea division rose 15% year-over-year, COO Kevin Johnson said on the earnings call Thursday, citing the popularity of its Teavana shaken iced teas and Teavana tea lattes. Tea drove 1 point of the Americas region’s 7% same store growth.

Johnson also gave a shout-out to Starbucks’ Flat White, introduced to United States customers in January. The drink—similar to a latte, but silkier and made with more espresso—has driven growth in the company’s core espresso segment and helped increase food sales, he said.

Revenues of the company’s segment that includes the sale of ground and whole coffee beans and ready-to-drink beverages at grocery, convenience, specialty, and warehouse stores grew 16% to $428 million

The big number: Starbuck’s China/Asia Pacific segment, which includes more than 5,000 stores, performed particularly well. Revenue for the division grew a staggering 124% to $595.2 million in the quarter, propelled by the company’s recent decision to acquire full ownership of Starbucks Japan. Same store sales in the region rose 12% as traffic grew 10%; the company has opened a net of 711 new stores in the region in the last 12 months.

The robust sales figures in Asia helped offset the 10% decline in revenue to $280.3 million that the company reported in its Europe, Middle East and Africa segment. The decline is attributable—in large part—to unfavorable foreign currency exchange rates and the company’s shift toward more licensed stores there. Same store sales and traffic in the region both increased 2%.

What you might have missed: Starbucks will tell you that its customers are loyal, and this quarter it really has the numbers to prove it. A record 1.3 million customers joined the chain’s My Starbucks Rewards program, which brings its total active membership to 10.3 million. Six million of those users are classified as gold members, meaning they’ve made at least 30 purchases with a Starbucks card or the mobile app within 12 months. Matthew Ryan, the global chief strategy officer for Starbucks, said Thursday that Starbucks expects My Starbucks Rewards to grow as the company continues to roll out its service for letting customers place orders ahead of time via their mobile devices. About 600 stores in the Pacific Northwest havethe mobile order and pay feature; the company plans to expand it nationwide this year.


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