Starbucks posted a huge 82% jump in quarterly profits Thursday as the coffee giant recorded a huge gain tied to a recent acquisition in Japan. Here are the most important points from the fiscal first-quarter earnings report.
What you need to know: Though the profit growth was largely helped by the acquisition-related item (more on that in a minute), Starbucks also reported fairly solid sales at its stores. Same-store sales in the Americas climbed 5% while also gaining abroad from more customers. The growth was stronger than expected, analysts had expected a 4.8% in the Americas, according to a poll by Consensus Metrix. In China and Asia Pacific, same store sales increased 8%. That growth in customer traffic and sales are important as the results were for the key holiday season ending December 28.
Starbucks (SBUX) has been lauded for a handful of savvy moves that has kept it trendy among food and beverage aficionados. The company pushing into the high-end coffee market, adding more food to its menu, and testing sodas and alcohol in some stores – all in a bid to move beyond its roots in basic coffee. Analysts mostly praise these moves, saying they see a clear path for Starbucks to continue growing revenue from existing stores. One notable blip, however, was the announcement earlier this month that Chief Operating Officer Troy Alstead, who previously served as CFO, was taking an unpaid leave of absence beginning in March. JPMorgan called that news a “surprise” to Wall Street, especially after Alstead played a high profile role in the company’s analyst day presentation in December.
The big number: The coffee company’s profits were lifted by a $390.6 million gain related to the acquisition of Starbucks Japan that the company didn’t already own. But even excluding that gain and other items, adjusted profit climbed 16% to 80 cents a share. That’s right on the money with what Starbucks had predicted last year when it saw earnings between 79 cents to 81 cents. Total revenue exceeded expectations, climbing 13% to more than $4.8 billion.
What you might have missed: Starbucks’ outlook for the second quarter was a little lighter than expected, with adjusted profit between 64 cents to 65 cents a share versus the 68 cents that analysts expected.
Starbucks also showed some promise from its early push into mobile payments. The coffee company said its shoppers loaded a record $1.6 billion on Starbucks cards during the quarter, a huge 17% jump from last year. That indicates that the company’s investments in mobile have paid off, and it is showing up in sales. Transactions at comparable stores were up 2% for Starbucks-owned stores opened at least 13 months. That’s an increase by nearly 9% in the U.S. from a year ago, and the growth is an acceleration from the prior quarter.
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