News

Starbucks reports record Q4, ends 12-year Kraft distribution deal

November 4, 2010

On the heels of reporting a third quarter revenue increase of 17.2 percent, Starbucks announced it was ending its 12-year packaged goods distribution partnership with Kraft Foods.

According to various news reports, the agreement was severed by Starbucks about a month ago for reasons the company has chosen not to disclose.

"Since 1998, Starbucks packaged coffee has been distributed to grocery stores and other outlets by Kraft Foods," according to a statement from Starbucks. "A month ago Starbucks informed Kraft of its intention to end that distribution arrangement. The details and timing around any transition will be subject to further private dialogue."

The company also said it will continue to work with Kraft to ensure an "orderly transition" and that the company intends to keep any resulting discussions private.

In related news, Starbucks has reported record fourth quarter earnings for its fiscal year 2010, ended Oct. 3, 2010.

Overall same-store sales increased 8 percent for the coffee chain, driven by a 5 percent increase in traffic and a 2 percent average ticket increase.

Comps in the U.S. rose 8 percent, driven by a 6 percent increase in traffic and a 2 percent rise in average ticket. International same-store sales spiked 7 percent, driven by a 4 percent increase in traffic and a 3 percent increase in average ticket.

For the year, comps increased 7 percent, driven by a 4 percent increase in traffic and a 3 percent increase in average ticket.

U.S. same-store sales increased 7 percent, driven by a 3 percent increase in traffic and a 4 percent increase in average ticket. International comparable store sales increased 6 percent, driven by a 5 percent increase in traffic and a 1 percent increase in average ticket

Total net revenues increased 17.2 percent to $2.8 billion; on a 13-week basis, total net revenues increased 8.6 percent to $2.6 billion.

For the year, total net revenues increased 9.5 percent to $10.7 billion.

The company also returned approximately $460 million to shareholders through share repurchases and dividends.

"These results are a credit to the hard work and dedication of Starbucks partners around the world every day, and are particularly gratifying in light of the formidable economic challenges that our customers and we continue to confront in virtually every country and every market in which we operate," Howard Schultz, chairman, president and CEO, said in a company statement.