Starbucks brewed up its first $6 billion sales quarter ever, though Wall Street analysts weren’t waking up to smell the profits.
The Seattle-based coffee chain reported its record-breaking revenues when it released its first-quarter earnings report after the markets closed on Thursday.
“Today, Starbucks has two powerful, independent but complementary engines driving our global growth — the U.S. and China,” said CEO Kevin Johnson.
Starbucks net earnings were up 199.4% to $2.25 billion, 58 cents per adjusted share, on total revenue of $6.07 billion for the quarter ending Dec. 31. In the first quarter of the last fiscal year, Starbucks’ total net revenues for the same period last year were $5.73 billion, or 5.9% lower than this year’s.
The company missed analyst expectations. Thomson Reuters I/B/E/S had forecast revenues of $6.18 billion and adjusted earnings per share of 57 cents.
The news caused Starbucks stock to drop 3.19% — down $1.93 to $58.62 — in after-hours trading.
Investors likely had been buoyed by the many developments during the last quarter, including a strong emphasis on growth in China, two major product line shifts and a stream of limited-time-offer drinks.
Starbucks sold the Tazo tea brand to Unilever for $384 million, as it refocused its tea attention on the Teavana brand, though without the mall-based Teavana stores. Another area of focus the coffee giant announced was on growing its lunch business. The recent Mercato menu, which features foods like avocado salads and herbed chicken and fig-spread sandwiches, launched in April in Seattle and expanded to Chicago in September. Starbucks hopes to double its food business by 2021.
The chain, which took a share in the upscale Italian bakery and café company Princi, brought its food to the U.S. for the first time at Starbucks Reserve Roastery in Seattle, with plans to add it to other locations in the U.S. and Asia, too.
Still excited by the success of the colorful Unicorn Frappuccino last spring, Starbucks continued to draw lots of social-media attention with short-term promotional offerings like the Zombie Frappuccino around Halloween, the Christmas Tree Frappuccino in December and its tuxedo-inspired Black and White Mocha collection right before New Year’s Eve. The chain also had two holiday cups in December.
Starbucks has 3,000-plus stores in 136 cities in China, including more than 600 in Shanghai. In December, the chain opened its largest store ever there. Shanghai’s upscale Starbucks Reserve Roastery is 30,000 square feet and includes bells and whistles like tea curators and an augmented-reality tour for in-store customers.
The commitment in China can be seen in moves like Starbucks buying out its joint venture partners’ share of the East China business for about $1.3 billion in July.