- THE MAGAZINE
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Starbucks Coffee Co., Seattle, reported its financial results for the third quarter of its fiscal-year 2014. Its net revenue increased 11 percent, totaling $4.2 billion, driven primarily by 6 percent growth in global comparable store sales and incremental revenues from 1,654 net new store openings during the past 12 months. During the third quarter, the company opened 344 net new stores globally, ending the quarter with 20,863 stores across 64 countries.
Global comparable store sales increased 6 percent in the quarter, making it the 18th consecutive quarter of global comparable growth of 5 percent or greater, the company notes. Consolidated operating income increased 25 percent to $769 million. Earnings per share increased 22 percent to a third-quarter record $0.67 per share.
In the Americas, revenue increased 10 percent to $3.1 billion. Similar to the company’s overall revenue increase, this increase was driven by 6 percent growth in comparable store sales and incremental revenues from 759 net new store openings in the region during the past 12 months.
In Europe, the Middle East and Africa, revenue increased 13 percent to $32.5 million. This growth primarily was due to favorable foreign currency exchange and a 3 percent increase in comparable store sales. Incremental revenues from 161 net new store openings in the region during the past 12 months also contributed, the company says. In the China/Asia-Pacific region, revenue increased 23 percent to $287.6 million. This increase primarily was driven by incremental revenues from 740 net new store openings in the region during the past 12 months. A 7 percent increase in comparable store sales, driven by strong traffic, also contributed to the net revenue growth, it adds.
Net revenues for Starbucks’ channel development segment increased 13 percent to $375.3 million during the quarter, primarily driven by increased sales of premium single-serve products and higher sales volumes of packaged coffee in the United States.
“Starbucks’ Q3 represents another quarter of outstanding operating performance in which each of our segments contributed to record results,” said Howard Schultz, chairman, president and chief executive officer of Starbucks Coffee Co., in a statement. “The increasing power of the Starbucks brand, the success of our best-in-class mobile, social and digital technologies, and our greatest asset — over 300,000 partners who deliver the Starbucks experience to over 70 million customers around the world each week — position us to continue growing our business around the world and into the future.”
Following this strong performance year to date, the company is updating its fiscal 2014 targets. For instance, earnings per share now are expected to be in the range of $2.70 to $2.72, or $2.65 to $2.67 when excluding an estimated net benefit of $0.05 for certain fiscal-year 2014 non-GAAP adjustments, the company says. Fourth-quarter earnings per share now are in the range of $0.76 to $0.78, or $0.73 to $0.75 when excluding a $0.03 estimated net benefit, it adds. Additionally, approximately 1,550 new stores are expected to open later this year.
Furthermore, in 2015, Starbucks expects to experience at least 10 percent revenue growth; global comparable store sales growth in the mid-single digits; an additional 1,600 new stores globally; and earnings per share growth of between 15 and 20 percent compared with fiscal-year 2014, calculated based on non-GAAP earnings per share.
“Starbucks’ record Q3 results demonstrate both the power of our innovation and the opportunities for growth, globally and in the U.S., that lie ahead,” said Starbucks Chief Financial Officer Scott Maw in a statement. “Importantly, record revenues and operating margin reflect an acceleration of top-line growth and meaningful contributions from all operating regions and our channel development segment. Our Q3 results give us confidence in our ability to deliver on our full-year fiscal 2014 targets and support the strong 2015 revenue and profit growth targets we introduced today, despite continued challenging economic and consumer headwinds in many of the global markets in which we operate.”