Starbucks faces a coffee cup half full-half empty scenario as it offers up its latest earnings report.
On the plus side, the coffee giant reported same-store sales growth of 4% in the region that includes the U.S., its strongest comps in the last five quarters, according to Starbucks CEO Kevin Johnson. And revenue climbed to a record $6.3 billion globally, up 10.6% from a year ago. The U.S. sector saw 8% revenue growth.
On the negative side, traffic remains down, with a 1% decrease for the quarter ended Sept. 30. And sales growth was born largely out of price hikes. Check averages during the quarter jumped 5%.
“Starbucks’ record Q4 performance reflected meaningful improvement in virtually every critical operating metric compared to Q3,” Johnson said.
Also encouraging to Starbucks: Membership in the chain’s digital rewards program is up to 15.3 million people, an increase of 15% year over year. These superusers make up a whopping 40% of all money spent at the company, and mobile order and pay makes up 14% of all transactions, Chief Operating Officer Roz Brewer said during a call with analysts this week.
Results of a delivery test in Miami this summer are “promising,” Brewer said, adding that she would provide more details on delivery next month.
“It’s a potentially exciting opportunity for us,” she said.
Beverage sales contributed 3 of the 4 points of same-store sales growth, Brewer noted. As they’re the chain’s highest-margin category, Starbucks will continue its efforts to launch innovative new drinks while pushing the best performers—most notably the cold beverage line, she said.
Starbucks continues its efforts to redeploy workers to customer-focused tasks, especially during the traffic-plagued afternoons. And, after seeing strong performance from drive-thrus, the chain says 80% of all new stores will include them.
The latest earnings report, though, is a bright spot for a chain that’s seen struggles recently. Same-store sales grew just 1% for the previous quarter, while traffic fell 2%. In September, Starbucks said it planned layoffs and leadership changes. Activist investor William Ackman is keeping his eye on the company, revealing last month that he owns more than 10 million Starbucks shares.
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