Fashion
Starbucks China sales grew 30 per cent in the first quarter, overshadowing a lacklustre performance in the US company’s home market.
Same-store sales in the core Asian market rose a respectable 6 per cent, with the majority of the growth down to new store openings: 700 new Starbucks stores opened, taking its global network to 28,039.
US same-store sales rose by 2 per cent, driven by a similar increase in the average transaction value. Global revenue reach US$6 billion in the 13 weeks to December 31.
Neil Saunders, MD of GlobalData Retail, said the strong Chinese result “hides an underlying softness – although we would stop short of saying problem – in the rest of the business”.
“Barring last quarter – which was affected by one less week of trade than the prior year – Starbucks’ growth trajectory has slowed. This is most noticeable in the US, where both overall and comparable sales growth is trending lower,” said Saunders.
“This slowdown does not mean the domestic business is broken. Instead, it is a function of maturity and saturation which has made both adding new stores and driving performance from existing locations steadily more challenging. Given that this dynamic will only worsen over time, it raises a question as to how Starbucks intends to remedy the issue.”
Kevin Johnson, president and CEO of Starbucks, said the strategic acquisition of East China positioned the company to accelerate its growth in the key China market.
“Today, Starbucks has two powerful, independent but complementary engines driving our global growth, the US and China. Our work to streamline the company is sharpening our focus on our core operating priorities.”
