For the second quarter of its fiscal year, Starbucks reported sales that were the best of any non-holiday quarter ever. Sales increased 9.4 percent to $4.99 billion, from $4.56 billion in the year-ago quarter. This was still slightly lowered than analysts’ expectations, which predicted sales of $5.03 billion in the quarter, according to S&P Global Market Intelligence.
Starbucks reported that same-store sales increased 6 percent globally in the second quarter. Sales increased 7 percent in the U.S. and Americas, with the company reporting that it served 12 million more customer occasions in the U.S. in the quarter. In China and Asia Pacific, same-store sales rose 3 percent. In Europe, the Middle East and Africa, the company saw a 1 percent sales increase.
The increase in sales led Starbuck to report a 16.2 percent increase in second quarter earnings. Overall, net income rose to $575 million, or 39 cents per share, from $495 million, or 33 cents per share, recorded in the same quarter a year ago. Starbucks predicting earnings of 47 cents to 48 cents for the third quarter, slightly lower than the 49 cents per share projected by analysts. Shares of Starbucks are up 26 percent over the last 12 months.
Starbucks has seen considerable benefits from the revamping of its customer loyalty program. The program recently changed to reward customers for dollars spent instead of number of visits. The company says that the number of people who have signed up for the loyalty program increased 16 percent year-over-year to 12 million active members. Mobile ordering and payment has doubled since a year ago, with the company processing nearly eight million digital transactions a month.
In recent months, Starbucks has focused intently on its plans for growth. The company opened a net total of 350 stores in the quarter, bringing its global total to 23,921. This includes its first store in the South African market and its aggressive expansion in China. Starbucks plans to open 500 new locations a year in China for the next five years. The company also recently announced plans to open outposts in Italy and Germany and plans to open between seven and 10 high-end roasteries, modeled after the one recently opened in Seattle.
Starbucks is also increasing its focus on its grocery products. At the company’s annual shareholders meeting last month, Starbucks executives revealed that its channel development segment sales increased 8 percent in the quarter, mainly driven by Starbucks single-serve products. The company is now planning to roll out new versions of its popular K-cups for Keurig coffee machines, introduce bottled cold brew coffee, and increase advertising for its bagged coffee products.