Starbucks First-Quarter Profit Surges 82% as Food Sales Gain

By Craig Giammona

Starbucks Corp. (SBUX), the world’s biggest coffee-shop chain, said first-quarter profit rose 82 percent as new food and holiday drinks boosted customer traffic and sales.
Net income increased to $983.1 million, or $1.30 a share, from $540.7 million, or 71 cents, a year earlier, the Seattle-based company said in a statement. Excluding some items, profit was 80 cents, matching the average estimate of 22 analysts surveyed by Bloomberg.
Starbucks is expanding its lunch offerings and bringing beer and wine to more stores, aiming to draw more customers after the morning hours. The company has a goal of doubling food revenue to more than $4 billion in the next five years. Starbucks also is adding breakfast sandwiches and bakery items in a bid to step up competition with fast-food restaurants.
“The easy way to increase the throughput is to get people to purchase
outside the morning rush,” said Asit Sharma, an analyst at the Motley Fool in Raleigh, North Carolina. “These numbers indicate they’re starting to have success with that”
First-quarter revenue gained 13 percent to $4.8 billion, matching analysts’ estimates.
The shares rose 3.3 percent to $85.51 at 4:27 p.m. in late trading in New York. They increased 4.7 percent in 2014, the sixth straight year of gains.

Photographer: Ron Antonelli/Bloomberg

Customers sit inside a Starbucks in New York.

Sales at stores open at least 13 months rose 5 percent in the Americas, which includes the U.S., Canada and Latin America. Analysts had estimated a 4.8 percent gain, on average, according to Consensus Metrix, a firm in Wayne, New Jersey.

Sandwich Sales

Breakfast-sandwich sales surged 29 percent in the U.S. for the quarter while lunch-food sales were up 15 percent, Chief Financial Officer Scott Maw said in a telephone interview.
“We want to make sure we have the right kind of food offerings for customers that want to attach something to their coffee,” Maw said. “It’s a pretty natural purchase.”
Global same-store sales advanced 5 percent in the quarter, compared with a projection of 4.7 percent.
Sales in Starbucks’ Asia-Pacific region, which includes China, grew 8 percent, topping the estimated 5.9 percent increase. Starbucks plans to open a new store in China every 18 hours this year, with a goal of more than doubling its store count there to about 3,400 by 2019.
Starbucks said this month that Chief Operating Officer Troy Alstead would take an unpaid sabbatical beginning March 1. Alstead, a 23-year veteran of the company who took over day-to-day operations in 2014, has been widely cited as a potential successor to Schultz as CEO.