Starbucks’ cafe sales hotter than expected, boost profit

Starbucks has reported higher quarterly profit as new food, drinks and technology helped the world's biggest coffee chain attract more customers.

Sales at Starbucks shops open at least 13 months were up 7 per cent globally in the latest quarter, with an estimated 23 million more customer transactions than in the year-earlier quarter as various sales-boosting projects took hold.

Same-store sales jumped a bigger-than-expected 8 per cent in the Americas unit for the fiscal third quarter ended June 2th8. New drinks like the “Flat White” and the limited-time “S’mores Frappuccino” as well as breakfast sandwiches and bistro boxes helped perk up sales in the region.

Starbucks’ Americas unit, which includes the United States, Canada and Latin America, contributes the majority of company revenue.

Starbucks said its new mobile order and pay technology is boosting sales and profit at the roughly 4,000 US cafes where it has been introduced. The technology has the potential to lure in customers who may have been turned off by long lines and waiting times.

"In those stores where mobile order and pay has been deployed, lines are shorter, service is faster and in-store operations are more efficient," said chief executive Howard Schultz, who added that the service will be available nationwide in time for the important winter holiday season.

Starbucks is also testing smaller-format express stores and delivery in the United States.

The Seattle-based company’s net earnings jumped 22 per cent to $626.7 million, or 41 cents per share, during the quarter as lower costs for key commodities such as milk helped offset rising US labour costs.

Mr Schultz said the company is working to reproduce the results from the latest quarter, but urged analysts to continue targeting same-store sales growth in the mid-single-digit percentages.

Seattle-based Starbucks separately said its board had authorised the buy back of an additional 50 million shares under its ongoing stock repurchase programme.

Shares in the company, which also got a boost from its loyalty programme, rose 4.4 per cent to $59.04 in after-hours trading.

Reuters