Starbucks delivered a better-than-expected performance in the first quarter of fiscal 2019, with global same-store sales up 4 percent, driven by 4-percent same-store sales growth in the U.S., the company said Thursday.
The domestic gains for the quarter ended Dec. 30 were helped by a 3-percent increase in average ticket, but there was relatively positive news on the traffic front, as U.S. transactions were flat instead of down for the first time in three quarters.
The improving traffic trends were helped by a focus on efficiency, in-store experience and digital initiatives. Membership in the Starbucks Rewards program, for example, increased 14 percent in the quarter to 16.3 million U.S. users, the company said.
The coffee chain is also seeing steady improvement in afternoon sales, which had been a weak spot. In a Thursday earnings call, chief financial officer Patrick Grismer said daytime traffic saw “improvement across the board” with the best afternoon performance over the past five quarters.
“Beverage growth was led by our espresso and brewed platforms which delivered the highest contribution to comp growth in nine quarters,” Grismer said on the call. “Of note, iced beverages continued to lead this growth across all dayparts with strong performance from Starbucks Refreshers, iced espresso and iced coffee, in particular, Cold Brew and Nitro.”
The average ticket increase over the quarter was driven by increased customer spending on food and merchandise through the Starbucks Rewards app, Grismer added.
Chief operating officer Rosalind Brewer also noted that the brand is seeing “a little bit of a higher ticket” through customers using the Starbucks Delivers platform both in the U.S. and in China. Delivery will expand to 2,000 stores across seven U.S. markets across later this year.
Net revenues for the first quarter, ended Dec. 30, 2018, increased 9.2 percent to $6.6 billion up from $6.1 billion the year previously. Net income, with special charges, decreased 66.2 percent to $760.6 million, or 61 cents per share, compared with $2.25 billion, or $1.57 per share, in the year-earlier quarter.
Starbucks is also continuing its growth in China, with the expansion of Starbucks Delivers to 1,100 stores in partnership with Ele.Me, owned by China’s Alibaba. Same-store sales in China were up 1 percent in the quarter, despite a 2-percent decline in traffic.
“We've recognized the tremendous opportunity ahead requires navigating a rapidly evolving competitive landscape, changing consumer behaviors and a dynamic economy,” CEO Kevin Johnson said during the earnings call. “With a large and growing addressable market around coffee, we expect competition to remain highly promotional and disruptive.”
Starbucks opened 541 units in the first quarter and as of Dec. 30, has 29,865 stores worldwide.
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