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Starbucks reports quarterly results, comments on coronavirus outbreak

From the January 2020 issue.

Starbucks has consolidated net revenues of US$7.1 billion for its 13-week fiscal first quarter ended 29 December 2019 (Q1). Revenues grew 7 per cent over the prior year.

Consolidated net revenues grew 9 per cent over the prior year adjusted for unfavourable impacts of approximately 2 per cent from streamline-driven activities. These activities primarily included the conversion of certain international retail operations from company-operated to licensed models.

“Building on solid business momentum from fiscal 2019, Starbucks performed very well throughout [Q1], including one of the strongest holiday seasons in the history of our company. As a result, we are off to a strong start in fiscal 2020,” Starbucks President and CEO Kevin Johnson says.

“Our growth was fueled by a healthy balance of comparable sales growth and new store development, as well as continued expansion of our Global Coffee Alliance with Nestlé. Investments in our partners, beverage innovation, and digital customer relationships contributed not only to strong topline growth, but also significant margin expansion in the quarter.”

The company opened 539 net new stores in Q1, yielding 31,795 stores at the end of the quarter, a 6 per cent increase over the prior year.

Global comparable store sales are up 5 per cent, driven by a 3 per cent increase in average ticket and a 2 per cent increase in comparable transactions

Americas comparable store sales up 6 per cent, driven by a 3 per cent increase in average ticket and a 2 per cent increase in comparable transactions. In the United States alone, comparable store sales are up 6 per cent, with comparable transactions up 3 per cent.

International comparable store sales are up 1 per cent, driven by a 2 per cent increase in average ticket and a 1 per cent decrease in comparable transactions. China comparable store sales up 3 per cent, with comparable transactions up 1 per cent.

Starbucks’ growth in China may be halted by the nation’s recent outbreak of the coronavirus. The company has temporarily closed more than half of its Chinese locations.

“Our partners are the centre of creating a special Starbucks Experience for each and every customer we serve, and I am very grateful for their extraordinary efforts through this holiday quarter. As we begin our fiscal second quarter, I want to acknowledge the dynamic situation our partners in China are navigating as health officials respond to the coronavirus,” Johnson says.

“As events unfold, we will be transparent with all stakeholders in communicating how we are responding to these extraordinary circumstances and the implications for our near-term business results. We remain optimistic and committed to the long-term opportunity in China, building on our brand heritage and 20-year legacy of profitable growth.”

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