Starbucks release Q2 report; profits climb as sales increase

Starbucks posted higher earnings for the second fiscal quarter as customers across the world showed no sign of limiting their daily spend on speciality coffees, other hot drinks and baked goods.

Globally, same-store sales grew 6% which came in above the predicted figure of 5.4% gain that city analysts had been predicting.

However this positive news coming out of Seattle masked the dip that was occurring in the United Kingdom where sales for the year to September 29 came in at £399m, a decline of 3.4% when compared to the previous period. A pre-tax loss of £20.4m was also recorded.

UK commentators jumped on that announcement proclaiming that the drop in sales was a result of Starbucks’ much document tax affairs, though rather predictably the Seattle chain claimed otherwise, stating it was as a result of the company closing many unprofitable outlets.

The truth probably lies somewhere in between.

A drop in sales in Britain, their first in 16 years of business, was not replicated across the EMEA region where profitability has tripled year-on-ear and revenue has grown by around 13%.

But looking at the entire operations it has been a good financial report for the global coffee outlet.

In recent years Starbucks has begun to diversify away from solely focusing on coffee by expanding their beverage options. One highly talked about move is their upcoming entrance into the ‘evening market’ where they will be offering a range of alcoholic drinks to their menu whilst, amidst talks of an investment with SodaStream, own-brand carbonated beverage Fizzio will be rolled out in a number of stores across America and in Asia in the coming months.

The pursuit for global dominance continued too, it was revealed. 335 new stores opened up in the quarter, bringing the total count of Starbucks outlets to a staggering 20,519. According to the accompanying document the chain expects to open a further 600 coffee shops in America, 750 in the Asia and Pacific regions and a further 150 across Europe, the Middle East and Africa.

Commenting on this, chief financial officer, Scott Maw, said what was “significant is the fact that [Starbucks] delivered strong, and balanced, revenue and profit growth across all [their] reportable segments.”

The positive results mean that the company are expected to reach their fiscal 2014 targets of revenue growth by 10%, or greater, and a global competitive grown in the mid-single single digit range. Shares increased by nearly 2% on this news.

photo: 15216811@N06 (Nicola), Flickr