5 November 2018 | US

Starbucks bounces back with strong fourth quarter results

World's largest coffee chain bucks recent sales decline trends in the US and China, posting stronger-than-expected fourth quarter results

Starbucks President and CEO, Kevin Johnson, praised the coffee chain's "clear growth agenda"

In the US, where comparable sales growth dipped to 1% in the third quarter, Starbucks achieved 4% growth. In China, a key growth market for the Seattle-based coffee chain, comparable sales rose 1%, reversing a 2% decline in the third quarter. The world’s largest coffee shop chain enjoyed an 11% rise in group revenues to $6.3bn, while global comparable sales rose 4%.

The results will come as a relief to Starbucks after a turbulent year which saw sales stagnant across the US, Europe and Asia and the departure of former CEO and chairman, Howard Schultz. In June 2018, President and CEO, Kevin Johnson, lambasted Starbucks’ performance as ‘unacceptable’ as he announced a strategic plan to bolster global growth.

2018 also saw Starbucks embark on significant business strategies to retain dominance in the global coffee market. In May, food and beverage giant, Nestlé, paid $7.1bn for perpetual rights to market Starbucks products, including branded capsules and packaged coffee. The ‘global coffee alliance’ will bolster both brands’ prominence in the out-of-home coffee sector. In China, where Starbucks faces stiff competition from domestic upstart, Luckin’ Coffee, the Seattle based firm announced a ‘deep strategic partnership’ with e-commerce giant, Alibaba, to develop a customised food and beverage delivery network.

“Starbucks record Q4 performance reflected meaningful improvement in virtually every critical operating metric compared to Q3," said Starbucks CEO, Kevin Johnson. “As we enter fiscal 2019, we are executing against a clear growth agenda, with a focus on our long-term growth markets of the U.S. and China,” he added.

Starbucks opened 604 net new stores in Q4, bringing their global total to 29,324 stores across 78 markets. The coffee chain is reported to be targeting 2,100 news stores in 2019.
 

 
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