First-quarter net earnings grew 25% for Starbucks Coffee Co. Howard Schultz, chairman, president and chief executive officer, pointed to on-line sales as a reason for the growth.
“Holiday 2013 was the first in which many traditional bricks-and-mortar retailers experienced in-store foot traffic to give way to on-line shopping in a major way,” he said in a Jan. 23 earnings conference call. “Customers researched, compared prices and then bought the brands and items they wanted on-line, frequently using a mobile device to do so. This was also the first holiday in which consumers embraced the convenience and flexibility afforded by physical and digital gift cards with a passion. Instead of giving a particular item, many consumers instead chose to give the gift of choice.
“Starbucks is prepared for both of these shifts, having invested over many years in the creation and development of proprietary, world-class digital and mobile payment and card technology and expertise.”
Seattle-based Starbucks processed more than 40 million new Starbucks card activations, valued at more than $610 million, in the first quarter in the United States and Canada alone, he said. Almost 10 million customers use the company’s mobile payment app, he said.
In the first quarter ended Dec. 29, 2013, Starbucks reported net earnings of $540.7 million, or 71c per share, which compared with $432.2 million, or 57c per share, in the first quarter of the previous year. Net revenues increased 12% to $4,239.6 million, which compared with $3,793.2 million in the first quarter of the previous year.
Global comparable store sales grew 5%. Starbucks opened 417 net new stores globally in the first quarter, bringing total store count to 20,184.
In the Americas segment in the first quarter, revenues of $3,073 million were up 8% from $2,840.7 million in the first quarter of the previous year and operating income of $732.1 million was up 24% from $590.3 million.
In the EMEA (Europe, Middle East and Africa) segment in the first quarter, revenues were up 11% to $339.5 million from $306.1 million and operating income rose 50% to $33.5 million from $22.3 million. In the China/Asia Pacific segment in the first quarter, revenues rose 25% to $266.9 million from $214.1 million and operating income was up 12% to $81.1 million from $72.1 million.
In the channel development segment in the first quarter, revenues increased 7% to $401 million from $374.3 million and operating income increased 23% to $118.8 million from $96.8 million.
“The strong direct selling relationship we have built with retailers is enabling us to elevate and differentiate our brand, increase our presence and enhance our product position,” Mr. Schultz said. “And the deepening and strengthening of these retail relationships combined with new product offerings and initiatives currently under way gives us confidence that channel development growth will accelerate as the year progresses, and at the same time it will deliver both double-digit top- and bottom-line growth in fiscal 2014 and beyond.”
For fiscal 2014 companywide, Starbucks expects earnings per share in the range of $2.59 to $2.67 and revenue growth of 10% or greater.
