While its tax woes have dominated headlines in the UK, coffee giant Starbucks is posting fantastic profits in the United States. The café chain, which is the world’s largest by outlet count, announced a 25-percent rise in third-quarter earnings – a figure that beats analysts’ expectations and sent the company’s stock flying.
Starbucks net earnings during the third quarter were $417.8 million – an increase of 55 cents per share. Analysts had predicted that the company would earn 53 cents on each share. The higher-than-expected income led to a 6-percent surge in Starbucks’ share price as investors celebrated the increase in revenue.
The café chain benefited from an 8 percent increase in sales at its established stores – cafes that had been open for at least 13 months. Starbucks earns about 75 percent of its revenue from US-based stores, which benefited from a higher-than-average amount of return customers and a creative new menu that prompted return visits.
Starbucks’ new menu includes a greater range of baked goods and fruit juices, which have helped to expand the company’s image beyond simply selling coffee. Starbucks has also experienced great results from its ‘Refresher’ brand of energy drinks, which have helped the company position itself as a one-stop refreshment destination.
Other key tools in Starbucks’ corporate arsenal include its loyalty card programs, which CEO Howard Schultz claims are responsible for increasing the company’s earnings from repeat customers. Others include an increase in revenue from its stores overseas, particularly its cafés throughout China and the South Pacific.
In recent years, Starbucks has expanded beyond cafés into retail stores and a large presence in convenience stores. The company recent bought tea retailer Teavana, leading many to believe that it will expand the Starbucks brand into a portfolio of retail tea and coffee products to be distributed in grocery stores.
