Starbucks reported a record $6 billion in revenue during the second quarter of fiscal year 2018, a 14 percent increase over last year.
During an earnings call with investors on Thursday, CEO Kevin Johnson partially attributed the company’s growth during the quarter to its $384 million sale of Tazo Tea to Unilever in November, as well as the strategic decision to close Teavana cafes in order to focus on that brand’s CPG products.
“We are evaluating more streamline actions to come as we further position Starbucks for sustained long-term profitable growth,” Johnson said. “It has been an active first year for me as CEO of Starbucks. I’ve been focused on building a world-class leadership team, streamlining our business to better focus on value creation, and executing against a clear strategy to drive growth and long-term value creation for our shareholders.”
According to several market analysts, quarterly earnings were in line with most expectations. Wells Fargo Securities beverage analyst Bonnie Herzog wrote she was encouraged to see accelerated comp growth during the quarter, rising from 1 percent in January to 3 percent in March.
Little of the call was dedicated to Starbucks’ CPG offerings; instead Johnson focused on how the company is innovating in its cafes, including increased focus on digitalization via coupons, promoting its mobile order and pay options, and building its registered customer base by several million members.
Starbucks COO Rosalind Brewer said the company will leverage its digital resources to refine its personalized marketing efforts, including a revised “Happy Hour” program.
“The new program will be used to sign customers up for direct digital relationships and to promote the great variety of beverages that we offer all year long,” Brewer said. “This one-to-one offer will leverage our personalization capabilities and drive significant incrementality.
During the call, Johnson also addressed the controversy surrounding a Philadelphia Starbucks store where earlier this month two African-American men were arrested for trespassing as they were waiting to meet an acquaintance. Johnson said sales were not impacted by the incident, but that the company has apologized to the men. Starbucks will be closing all of its stores nationwide on May 29 for employee training on racial bias, which Johnson said was “a small piece of a set of ongoing actions that will systematically be woven into our processes, training, and culture moving forward.”
Starbucks call was held at 5 p.m. EST on Thursday after the stock market closed with the company’s stock up 2 points at $59.38 per share. As of publication the stock has dropped to roughly $57 per share, where it has roughly sat for the past week.