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Increased customer traffic lifts Starbucks earnings

A woman samples the winning drink at a Starbucks contest in Seattle on Aug. 20. The US coffee chain reported improved profits in the last quarter of the fiscal year. PHOTO: AFP

More people visited Starbucks Corp coffee shops in the last quarter compared with a year ago, and they spent more money when they did, an executive said on Thursday.

But it was the company’s cost-cutting that boosted its profit. It had fewer stores than a year earlier, and its revenue fell slightly.

Chief financial officer Troy Alstead said the average amount customers spent in each visit to Starbucks rose in the fourth quarter that ended in September.

Sales at shops open at least a year recovered from the third quarter and from last year, Alstead said.

“We are seeing consumers coming in and spending and we’re seeing the improvement across all parts of our day,” he said.

“We’re very encouraged by what we saw in the second half of the [fiscal] year. It gives us some encouragement for the quarter coming up,” he said.

The gourmet coffee chain earned US$150 million, or US$0.20 per share, during the three-month period.

Excluding one-time items, that amounted to US$0.24 per share. Last year, it earned US$5.4 million, or US$0.01 per share.

But the Seattle company’s revenue dipped almost 4 percent to US$2.42 billion.

Analysts polled by Thomson Reuters predicted a profit of US$0.21 per share on revenue of US$2.39 billion for the quarter. Those estimates typically exclude one-time items.

For the full year, Starbucks earned US$390.8 million, or US$0.52 per share. That’s up nearly 24 percent from last year. Revenue for the year slipped 6 percent to US$9.77 billion.
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