Starbucks expanding delivery, nitrogen-infused coffee

Starbucks expanding delivery, nitrogen-infused coffee

SEATTLE — A “solid execution” during the holiday season contributed to strong quarterly results at Starbucks Corp., said Kevin R. Johnson, president and chief executive officer.

Net earnings attributable to Starbucks in the first quarter ended Dec. 30, 2018, were $760.6 million, equal to 61c per share on the common stock, down 66% from $2,250.2 million, or $1.57, in the year-ago period. Excluding one-time items, adjusted earnings per share rose 15% to 75c. Net revenues totaled $6,632.7 million, up 9% from $6,073.7 million.

Global comparable store sales grew 4%, reflecting growth in Starbucks’ largest markets. Americas and U.S. comparable store sales increased 4%, and China/Asia Pacific comparable store sales grew 3%.

“In the U.S., we’re focused on three operating initiatives: enhancing the in-store experience, delivering beverage innovation and driving digital relationships,” Mr. Johnson said during a Jan. 24 earnings call. “We’re also creating a new channel for customers to engage through Starbucks Delivers. Our partnership with Uber Eats is gaining momentum, and we expect to bring delivery to nearly one-fourth of our U.S. company-operated stores by April, including our second market in San Francisco, which launched earlier this week. Our early experience is encouraging and has provided us a blueprint for how to operationalize this new channel, an important step to create a seamless workflow for our partners.”

Beverage innovation, the company’s second priority in the U.S. market, is driven by momentum in cold beverages across multiple dayparts.

Starbucks nitrogen-infused coffee

“The focus of our latest beverage innovation evolves around iced espresso, draft Nitro beverages and Refreshers,” Mr. Johnson said. “We have expanded the deployment of our Nitro offering from about one-third of U.S. company-operated stores last quarter to 40% in just one quarter, and we remain on track to reach our goal of 100% penetration by the end of fiscal ‘19. Draft Nitro beverages represent a significant opportunity for the brand. This platform is differentiated, provides theater and drives incrementality.”

Starbucks also remains focused on expanding its reach through the Global Coffee Alliance, the company’s strategic partnership with Nestle S.A.

“The transition of the North America business to Nestle has gone extremely well, and we are rapidly shifting our attention to growing the share of Starbucks capsules on Nestle platforms, accelerating our leadership position in North America and expanding the presence of Starbucks Coffee into international markets,” Mr. Johnson said. “We remain on track with our go-to-market strategies to bring Starbucks products to life across the Nespresso and Dolce Gusto platforms beginning this spring and progressing throughout the remainder of the year. Naturally, we will focus initially on strategic markets across traditional C.P.G. and food service channels, and we look forward to sharing our progress with you in the months and quarters ahead.”

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