Happy Holidays for Starbucks

Convershaken Staff
January 28, 2016

Starbucks cards are the gift that keep on giving. One in six American adults received one in the last three months of 2015, as the coffee chain's US and Canadian customers loaded a record $1.9bn onto the plastic tokens.

Starbucks chief Howard Schultz praised the cards as a way for customers "to give the gift of choice”. It's also a key source of deferred revenue, with an estimated $500m sitting on gift cards as well as the brand's mobile app.

The recent terrorist attacks in Paris weighed on trading in Europe, meaning transactions were flat or slightly down across France, Germany and the UK. Nonetheless, Starbucks posted an 8 per cent rise in worldwide sales, driving operating profits up 16 per cent to a record $1.1bn.

Starbucks, which has close to 23,600 outlets worldwide, has opened 885 net new stores in the past 12 months. It plans to open 1,800 more this fiscal year, including 700 in the Americas and about 900 in China and Asia Pacific. Moreover, it continues to squeeze more income out of existing stores: exclude new store openings and sales rose by more than 5% in the period.

Starbucks' directors cheered a 4 per cent rise in store traffic, especially as "there isn't a retailer in the country that is putting up anything close (to that), let alone 9 per cent in the US business."

Starbucks was quick to adapt to the rise of e-commerce and smatphone shopping, after its directors spotted a "seismic change in consumer behavior" three years ago.

They attribute the brand's continued outperformance to "the experience that we’ve created, the innovation, both in product, partner investments and technology.”