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Last night Starbucks released their first quarter results for the period ending 31 December. Remember that Starbucks went through a slump in the US which resulted in a 2-year share price lag. However, since June last year the share is up 28% and was extremely resilient during the end of year sell-off. It does pay to be patient.
The numbers looked very good. Revenues were up 9% to a record $6.6bn. Same-store sales bucked the trend in the US and grew by 4%. Sales in China grew 18% but most of that was from new stores. Same-store sales there grew by 1%. For the quarter, Starbucks returned $5.5bn to shareholders via dividends and buybacks. Earnings per share were up by 15% to $0.75. The company now trades at 24 times 2019 predicted earnings.
A big highlight for the quarter was the 14% growth in loyalty members in the US to 16.3 million. As we have seen with programs like Amazon Prime, these types of clients spend much more than other clients, and are very loyal.
Starbucks now has 29 865 stores. The company hopes to open 2 100 more in 2019, 600 in The Americas, 600 in China, 500 in the rest of Asia and 400 in other markets (that would include SA). Remember that they bought back a whole load of licensed stores in China last year too.
This company continues to expand, innovate and stay ahead of the game in terms of staff treatment and social trends. They also have a boat load of money to return to shareholders over the years after that juicy Nestle deal. We continue to buy and hold Starbucks as a core position in our portfolios.