Starbucks, the world’s largest commercial property coffee-shop chain has posted a 10 per cent rise in profits for the three months to 1 January 2012, as consumers bought more speciality beverages during the holidays.
The update comes as commercial property chain Starbucks reports that sales of special festive menus, items such as gingerbread and eggnog lattes and its 12 days of Christmas festive campaign helped drive the highest quarterly profits in the firm’s history.
Net profit jumped 10 per cent to $382.1m (£243.7m) compared with $346.6m profit in the same period a year previously, while total revenue in the three months to 1 January increased 16 per cent to $3.4bn (£2.2bn). This is the first time the Seattle based company has reported financial results since restructuring the business around three geographical divisions.
The commercial property firm opened 241 new stores during the quarter, including its 500th in mainland China. Chief Executive Howard Schultz spent more than a year developing merchandise and beverages for the festive season. The chain sought to increase sales with a low-calorie peppermint mocha that was new this year, along with Keurig brand single-serve capsules and Via instant coffee.
Chief Financial Officer, Troy Alstead said in a telephone conversation: “It was the most successful holiday season in our history. Customers loaded $500 million onto Starbucks gift cards in December.”
Sales from Starbucks commercial property cafes, that only opened 13 months ago, were up just 2 per cent for the Middle East, Africa and Europe region, versus the 9 per cent gain for the much larger American unit, largely from the United States. The China Asia Pacific region reported strongest growth with transactions up 20 per cent in the period.
The commercial property business has also grown its consumer products division, which includes Starbucks branded produce sold through supermarkets. Net revenue increased 72 per cent to $353.8 million (£214.2m) while profit increased to $79.7m (£50.8m), up from $71.1m (£45.3m) in the same period last year.
Starbucks, which has more than 10,700 U.S cafes and 6,200 abroad, receives more than 20 per cent of revenue from international stores.
The commercial property company plans to open 100 new cafes in the UK over the next five years. In addition to 100 new High street commercial property coffee shops, the company aims to increase the number of drive-through commercial property outlets, typically found at motorway service stations, from nine to 200.
Starbucks announced its UK expansion in December 2011, with a total of 5,000 jobs expected to be created in the UK over the next five years. Speaking of the plans, Chief Executive, Schultz said: “Starbucks continues to expand our global footprint and accelerate the innovation and momentum in our consumer product group business.”
Meanwhile, the coffee shop giant has revealed it will open its first franchise stores in the UK later this year, following one of its best December trading periods. Managing director of Starbucks UK and Ireland, Kris Engskov, said: “I hope by the end of the calendar year we will have the first franchise in the South of England. That will be our first franchise anywhere in the world.”
Engskov described the decision as “significant”, as it would enable the coffee chain to open up commercial properties in smaller towns and villages where local knowledge would be vital to the success of operations.
Starbucks believes the franchise model will work in Britain, however Engskov did stress that franchises would remain a small part of its overall business, with the bulk of its commercial property stores continuing to be company-owned.
The coffee chain has also revealed that it will invest £8m in revamping an additional 70 London commercial property branches ahead of this summers’ Olympic Games, including six more high-profile renovations at shops in the capital’s West End and City.
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