Marketing drive boosts profits at Starbucks
26 July 2010 11:11
Starbucks has seen its profits rise by more than a third in the last quarter, following a massive investment in marketing. US store traffic increased by 6%, 4% internationally, lifting quarterly profits by 37% to $207.9 million (£136 million) in the 13 weeks to June 27th.
Starbucks debuted its Via brand of instant coffee in supermarkets in September and the product is now on track for $100 million in sales in its first year. In addition, the group achieved a 3% increase in the average amount spent by customers.
Revenue rose by nearly 9% to $2.61 billion, despite the closure of 144 underperforming US stores. The group is looking to open around 250 new stores this year and 500 next year, mostly overseas.
"Starbucks' third quarter results reflect a continuation of the strong performance and momentum we have been driving across our businesses around the world," said Howard Schultz, chairman, president and CEO. "I'm particularly pleased to report that the significant Q3 increases in store traffic occurred at the same time as we posted the highest levels of customer satisfaction in Starbucks' history and despite the challenging global economic environment. Strong performance is enabling us to deliver record results and increase the dividend to shareholders while continuing to innovate and invest in our businesses."
He added: "Supported by the most significant marketing investment in the company's history, in Q3 we successfully launched Starbucks Via into the grocery channel in the U.S., announced upcoming launches in the grocery channel in Japan and the U.K., brought innovation to the blended beverage category and reenergized our $2 billion Frappuccino beverage platform by creating real consumer and retailer excitement in this important growth category. Our Q3 investments provide us with a very solid foundation for growth in fiscal 2011 and beyond."
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