Buying a coffee at a store before heading to the office is a dying trend in America. According to Wine and Food magazine, 7.3 percent of coffee shops in the country will have closed before the end of the year.
However, Seattle-founded Starbucks Coffee, which has become within a decade an international company hiring dozens of thousands of employees across the world, announced this week it has opened more than 260 stores within the past three months.
While optimizing its mobile app – which generates 25% of its total orders, Stabucks has posted promising Q4 earnings results – with a quarterly profit of $392.6 million.
This shows a strong comeback of its clients by the end of this year – and forecasts even stronger results for the beginning of next year.
In the U.S. and in China, Clients Are Back
Coffee chain Starbucks has never been so pumped. With a year hitting hard in its home country, America, with more than 500 stores planned to be shut down, the Seattle-founded listed company has shared “better-than-expected” results for its fourth quarter.
While many European countries have resumed a strict lockdown – sometimes with a curfew, such as in France – Starbucks sales in the United States have “decreased year over year by 9% (versus a 41% year-over-year drop in Q3 ), on a 25% decrease in transactions, which was partly offset by a 21% increase in average ticket.”, shared Motley Fool.
— Yahoo Finance (@YahooFinance) October 30, 2020
Moreover, it has seen a 4% decline in the U.S for September, a sharp recovery compared with the 65% free fall in April, when the country was ordered to shelter-at-home.
In China, sales were “only” down by 3% for the fourth quarter, what the company considers being an improvement with the 19% year-over-year decline during the third quarter of 2019.
Starbucks Has Managed to Adapt Digitally
With a strict no-contact policy across the globe, Starbucks has adapted its services. The mobile app, which has been readjusted and optimized, is now generating 25% of the total orders. In 2016, mobile transactions only represented 3%, but with shelter-at-home orders and limited contact possible, many customers have expressed the need to order online. It seems that Starbucks has managed to do it more efficiently than any other coffee chains.
— KOTOMOTO (@_KOTO_MOTO_) November 3, 2020
With a total of 14,300 locations in the United States, Starbucks quickly transitioned its stores into 800 curb-side pickups and has announced it will do so to 2,000 additional U.S locations.
“We’ve also introduced handheld point of sale devices to about 100 stores with the goal of deploying these devices to approximately 400 additional stores by the end of Q1.”, shared CEO Kevin Johnson during the earning call. A trend that will only grow since 75% of Q4 orders were done either at a drive-through location or online.
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2,150 New Stores in 2021 and Promising Earnings
While the chain has closed 400 current locations – mostly in urban areas in the United States, its chairman has announced it will open more than 2,150 stores early next year, confirmed the Wall Street Journal.
“Shares fell 1.5% to $87 in after-market trading. Its stock was up 1% this year through Thursday’s close.”, added the newspaper.
Starbucks’ S&P index has increased 2.5% since January 2020, while its shares hit $88.30, an evolution of +5% since November 2019. On Thursday, the company announced it is expecting full-year earnings anywhere between $2.70 to $2.90 per share.
The above content is considered to be market commentary information and shall not be perceived as independent investment research or investment advice.
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