Starbucks returns to sales growth in Q4 amid turnaround plan
Net international revenues during the period rose 9% to $2.1bn (£1.59bn), driven by a 5% boost in company-operated stores over the past 12 months
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Starbucks has reported that global store sales rose 1% in the fourth quarter to 28 September with consolidated revenues rising 5% year-on-year to $9.6bn (£7.5bn), as the group’s “Back to Starbucks” turnaround plan continues.
This marks a return to global sales growth for the first time in seven quarters at the coffee chain. While North America and US sales were flat, international comparable sales increased 3% with the support of a 2% rise in China.
For the full fiscal year, Starbucks’ revenues rose 3% to $37.2bn (£28.2bn). Global comparable sales fell 1%, with weaker performance in North America offset by gains in international markets.
However, during the fourth quarter profits were hit by restructuring costs linked to the closure of more than 600 stores – mostly in North America – as well as higher labour and inflation expenses.
Net international revenues during the period rose 9% to $2.1bn (£1.59bn), driven by a 5% boost in company-operated stores over the past 12 months and a 3% rise in comparable sales. According to Starbucks, this was partly supported by the acquisition of a licensed business partner in the UK and higher licensed store revenues.
Meanwhile, operating income for the segment fell to $223.2m (£169.3m) from $282.9m (£214.7m) a year earlier, with operating margin contracting to 10.8% from 14.9%. The group largely attributed this to restructuring costs and increased promotional activity.
Across the group, Starbucks closed a net 107 stores during the fourth quarter, ending the period with 40,990 outlets worldwide. Stores in the US and China accounted for 61% of its global portfolio.
Brian Niccol, chief executive of Starbucks, said: “We’re a year into our ‘Back to Starbucks’ strategy, and it’s clear that our turnaround is taking hold. Our return to global comp growth and the momentum we’re building give me confidence we’re on the right path.”
Cathy Smith, chief financial officer of Starbucks, added: “Q4 was a milestone quarter in getting ‘Back to Starbucks’, having delivered global comp growth for the first time in seven quarters. We know this continues to be a multi-year turnaround. We remain focused on driving our topline while managing the costs that are within our control.”
