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Thanks to Loyalty Program and Mobile Capabilities, Starbucks Registers Record Q3

Thanks in part to its loyalty program and mobile capabilities, Starbucks recorded a stellar 9% increase in same-store sales for its third quarter ended June 30, 2013. The massive increase was so unexpected that CEO Howard Schultz said during a conference call that it isn’t something that can be expected all the time.

“We are extraordinarily proud and stunned that we’re able to achieve a 9% comp, and it would be irresponsible to share with you that we can do that again in [the fourth quarter],” Schultz said. “Starbucks Q3 results represent the best across-the-board third-quarter performance in our 42-year history. Our more than 19,000 store global footprint, our fast-growing CPG [consumer packaged goods] presence and our best-in-class digital, card, loyalty and mobile capabilities are creating a 'flywheel' effect elevating the relevancy of all things Starbucks and driving profitability.’’’

For the third quarter, Starbucks’ profit rose 25% on sales that grew 13%, to $3.7 billion. Starbucks plans to open 1,400 cafes in the fiscal year that begins in October -- 100 more than it is opening this year. Starbucks had 19,209 stores when the quarter ended June 30.

“Our powerful Q3 results reflect the outstanding success of our growth platforms both in the U.S. and globally, with all regions delivering an acceleration in comparable store sales and operating margin versus Q2,” Starbucks Chief Financial Officer Troy Alstead said during the call. “Our ability to grow income at a pace that exceeds revenue growth clearly demonstrates the strategic synergies we generate across our global footprint, which combined with the diversity of our portfolio, enables consistent delivery of excellent results. Looking forward to FY14 and beyond, I am as confident as ever in our ability to continue to deliver strong revenue and earnings growth.”

 

Starbucks recorded robust increases in global traffic, increasing popularity of its Starbucks loyalty cards, efficiency improvements, while cost controls and lower coffee costs boosted profits.

Of the 1,400 cafes scheduled to open in 2014, half are in Asia, 600 in the Americas and 100 in Europe, Africa and the Middle East. Most of Starbucks’ stores and profit still come from the Americas, primarily the United States and Canada.

Another strong performer was the company’s “channel development” business, which sells coffee, tea, and other products in grocery stores, on airlines and elsewhere. Its operating income increased 14%, to $96.3 million.

Starbucks’ struggling Europe, Middle East, and Africa business registered a sharp increase in operating income from $1.6 million to $9.3 million on a modest 2% revenue gain. The low figure a year ago — which changed from a previously reported number of $2.6 million because the company shifted accounting for certain costs — was mostly due to costs in changing its distribution model in the U.K.

Global comparable same-store sales grew 8%.

 

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