Starbucks serves up record revenue result

By Nick Hall | 02 Nov 2018 View comments

Global coffee franchise, Starbucks Corporation (Starbucks) has reported its end of year results, revealing a huge boost in network revenue.

The Q4 results showed a rise in Consolidated Net Revenue of 11 per cent, to a record USD$6.3b, buoyed by strong growth in Comparable Store Sales in the U.S., up four per cent, resulting in a three per cent global boost.

While total sales rose by 10.6 per cent for Q4, boosted by a 7.9 per cent lift in the Americas, operating income fell by 6.4 per cent and net earnings by 4.1 percent, however, much of this was down to higher salary costs and organisational changes relating to the ownership change in East China.

Kevin Johnson, Starbucks CEO said the strong Q4 performance capped off a period of innovation and improvement for the global chain.

“Starbucks record Q4 performance reflected meaningful improvement in virtually every critical operating metric compared to Q3,” Johnson said.

“As we enter fiscal 2019, we are executing against a clear growth agenda, with a focus on our long-term growth markets of the U.S. and China. We are also excited about the long-term growth potential of our new Global Coffee Alliance with Nestl_. I’m incredibly proud of our 350,000 Starbucks partners around the world and pleased with the continued progress in our growth agenda.”

The drive in global revenue was primarily due to the Starbucks ownership change in East China at the end of Q1, as well as the 1997 new store openings over the past 12 months and the recently announced licensing partnership with Nestle.

Neil Saunders, managing director of GlobalData Retail said the results were positive for Starbucks, with the brand leveraging innovation to improve bottom line.

“From our consumer data, it is evident that the healthy consumer economy has stimulated higher spend on small treats and indulgences – including coffee and snacks,” Saunders said.

“The ongoing remodelling and refurbishment of Starbucks stores are encouraging more consumers to linger for longer. We still maintain our view that Starbucks has a lot more work to do on refining its foodservice proposition, but the store changes are a necessary first step that will give the company a platform to offer a more premium and comprehensive food offer.”

“As such, we support the plans to fully license out operations in a number of European markets; this should allow more focus and prove less distracting as Starbucks focuses more on new markets and ventures.”

Starbucks also outlined its fiscal 2019 targets, announcing the brand expects to add approximately 2100 net new Starbucks stores globally.