News

Starbucks reports its strongest holiday season ever

January 26, 2011

Starbucks Corporation reported financial results for its fiscal first quarter 2011, ended Jan. 2. The results featured plenty of highlights, including a 7 percent increase in global comparable store sales; a record 21.9 percent in U.S. operating margins; a record 16.3 percent in international operating margins; and the strongest holiday season in the company's history.

"Our holiday lineup, bolstered by Christmas Blend and Starbucks Christmas VIA, along with the world-class service of our partners, resonated well with customers and led to record results for the quarter," said Howard Schultz, chairman, president and CEO. "The strength in our top line — combined with continued improvement in operations — continues a recent trend of record quarterly operating profits and margins, enabling us to more than offset the impact of unusually high coffee costs."

With increased traffic and higher ticket totals both domestically and globally, the Seattle-based company's total net revenue increased by approximately 8 percent to $3 billion.

Along with international growth and a holiday boost, also lifting the quarterly results was the completion of the company's restructuring program, which was in effect during the fiscal 2008-10 period. With this effort achieved, there were no restructuring charges reflected in 1Q11.

A rundown of fiscal first quarter 2011 highlights includes:

• Total net revenues increased 8 percent to a record $3 billion;
• Comparable store sales increased 7 percent, driven by a 5 percent increase in traffic and a 2 percent increase in average ticket;
• U.S. comparable store sales increased 8 percent, driven by a 6 percent increase in traffic and a 2 percent increase in average ticket;
• International comparable store sales increased 5 percent, driven by a 2 percent increase in both traffic and average ticket;
• Consolidated operating margin improved to a record 17 percent: up 400 basis points on a GAAP basis and up 340 basis points over the prior-year period's non-GAAP results;
• U.S. operating margin improved to a record 21.9 percent: up 450 basis points on a GAAP basis and up 410 basis points over the prior-year period's non-GAAP results;
• International operating margin improved to a record 16.3 percent: up 900 basis points on a GAAP basis and up 720 basis points over the prior-year period's non-GAAP results;
• EPS increased 41 percent to a record 45 cents in 1Q11, compared to 32 cents in 1Q10.

Starbucks' board of directors declared a 13 cents-per-share cash dividend to shareholders of record as of Feb. 9, which will be paid on Feb. 25.

This news bodes well to kick off 2011, as Starbucks approaches its 40th anniversary in March.

"Starbucks delivered another record-breaking quarter as our customers continue to respond favorably to new offerings and an improved store experience," commented Troy Alstead, CFO. "Through the strength of our global retail business and the exciting future growth opportunities in consumer products and Seattle's Best Coffee, we are on track with our plans to grow and diversify Starbucks and pursue a larger share of global coffee consumption."