Starbucks China sales grow – with a but

Net revenues for Starbucks China and Asia-Pacific region soared 45 per cent in the first quarter to US$1.2 billion. While a change of ownership in the East China business at the end of the first quarter of the previous year boosted the figure, the company says the opening of a net 1010 stores during the 12 months – a 13 per cent increase in the network – and a 3 per cent increase in same-store sales also played a part.

First-quarter Starbucks China operating income rose 13 per cent to US$225.1 million, from $196.8 million. But the company’s operating margin declined 530 basis points to 18 per cent, primarily due to the impact of the East China ownership change.

CEO Kevin Johnson said the company delivered solid operating results in the first quarter, demonstrating continued momentum in the business, as it drives a growth-at-scale agenda “with focus and discipline”.

“Comprehensive efforts to streamline our business have allowed us to focus on three key strategic initiatives that position Starbucks for long-term success: accelerating growth in our targeted markets of the US and China, expanding the global reach of the Starbucks brand through our Global Coffee Alliance with Nestle, and increasing shareholder returns.

“Combined with our efforts to build and amplify the Starbucks brand, we expect these initiatives will position the company to drive predictable, sustainable growth and shareholder returns for years to come,” concluded Johnson.

In the 13-week first quarter, which ended December 30, global comparable-store sales increased 4 per cent, driven by a 3 per cent increase in the average sale. Americas and US comparable-store sales increased 4 per cent, with transaction numbers flat.

China-Asia-Pacific comparable-store sales increased 3 per cent, including 1 per cent transaction growth, with China comparable-store sales up 1 per cent, but the number of transactions down 2 per cent.