The Canadian Press - ONLINE EDITION

Starbucks 2nd-quarter profit rises as food offerings become a bigger driver to cafes

  • Print

NEW YORK, N.Y. - Starbucks said Thursday its revamped breakfast sandwiches and other food offerings helped boost sales at its U.S. cafes.

The Seattle-based coffee chain posted a higher quarterly profit, as sales rose in regions around the world. In its flagship U.S. market, sales at established cafes increased 7 per cent. Earlier in the day, Dunkin' Donuts had reported a disappointing increase of just 1.8 per cent, with executives citing intensifying competition in the breakfast category.

In a conference call with analysts, Starbucks CEO Howard Schultz said food has become a strength and drives traffic to cafes, and that the company was just getting started in its efforts in improving its lineup.

"Food at Starbucks, I think we can all admit, for many, many years was a weakness and a challenge for us," Schultz said.

Starbucks, like Dunkin' Donuts, is trying to convince more customers to get something to eat when they come in for a drink. It's also trying to draw people into its cafes later in the day, when stores are typically less busy after the morning rush. The push has included the introduction of new salad boxes, and more recently two new lunch sandwiches, including a grilled cheese variety.

Troy Alstead, chief operating officer for Starbucks, said in a phone interview that sales of breakfast sandwiches are up 40 per cent from a year ago. Starbucks has also been rolling out new baked goods in its cafes, although the change has run into hiccups. After customers complained about the new shape and size of its cake loaves, Starbucks brought back sliced varieties.

During the quarter, Starbucks also introduced its "Oprah Chai," a version of chai tea marketed with Oprah Winfrey. To boost the beverage business in the later parts of the day, the company also introduced its "Fizzio" sodas in cafes throughout the Sunbelt. Alstead said the Fizzio offering should be expanded throughout much of the U.S. by next summer.

Globally, Starbucks said sales at established locations rose 6 per cent for the quarter. That also included a 7 per cent increase in the Asia region. The unit encompassing Europe, the Middle East and Africa saw a 3 per cent increase.

The company now expects to earn $2.70 to $2.72 per share this year. It previously said it expects to earn $2.62 to $2.68 per share.

For its fiscal 2015, Starbucks said it expects global comparable sales to increase in the "mid-single digits." Earnings per share are expected to grow 15 to 20 per cent from its core earnings for fiscal 2014.

For the quarter, Starbucks Corp. earned $512.6 million, or 67 cents per share, a penny more than analysts expected.

A year ago, it earned $417.8 million, or 55 cents per share.

Revenue rose to $4.15 billion, above the $4.14 billion Wall Street expected, according to FactSet.

Fact Check

Fact Check

Have you found an error, or know of something we’ve missed in one of our stories?
Please use the form below and let us know.

* Required
  • Please post the headline of the story or the title of the video with the error.

  • Please post exactly what was wrong with the story.

  • Please indicate your source for the correct information.

  • Yes

    No

  • This will only be used to contact you if we have a question about your submission, it will not be used to identify you or be published.

  • Cancel

Having problems with the form?

Contact Us Directly
  • Print

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

You can comment on most stories on winnipegfreepress.com. You can also agree or disagree with other comments. All you need to do is be a Winnipeg Free Press print or e-edition subscriber to join the conversation and give your feedback.

Have Your Say

New to commenting? Check out our Frequently Asked Questions.

Have Your Say

Comments are open to Winnipeg Free Press print or e-edition subscribers only. why?

Have Your Say

Comments are open to Winnipeg Free Press Subscribers only. why?

The Winnipeg Free Press does not necessarily endorse any of the views posted. By submitting your comment, you agree to our Terms and Conditions. These terms were revised effective April 16, 2010.

letters

Make text: Larger | Smaller

LATEST VIDEO

Bowman pledges increased support for arts

View more like this

Photo Store Gallery

  • STDUP ‚Äì Beautiful West End  begins it's summer of bloom with boulevard s, front yards  and even back lane gardens ,  coming alive with flowers , daisies and poppies  dress up a backyard lane on Camden St near Wolseley Ave  KEN GIGLIOTTI  / WINNIPEG FREE PRESS  /  June 26 2012
  • MIKE DEAL / WINNIPEG FREE PRESS 060711 Chris Pedersen breeds Monarch butterflies in his back yard in East Selkirk watching as it transforms from the Larva or caterpillar through the Chrysalis stage to an adult Monarch. Here an adult Monarch within an hour of it emerging from the Chrysalis which can be seen underneath it.

View More Gallery Photos

Poll

Do you think the Jets' three pre-season losses in a row are a sign of things to come?

View Results

View Related Story

Ads by Google