Posted: Nov 03, 2018
Starbucks investors are finally seeing a turnaround taking hold in the U.S.
The coffee giant's big focus this year has been to draw people into its cafes in the afternoon.
This holiday, the brand will offer fewer retail items, at lower prices, and six holiday beverages to encourage more customers to shop in its cafes.
Shares of Starbucks skyrocketed Friday as investors finally see a turnaround taking hold in the U.S.
For about two years, the coffee chain had lost momentum. While same-store sales have been positive, growth had not been fast enough for shareholders. That was until Thursday.
The company reported that U.S. same-store sales growth had been 4 percent in the fourth quarter, the result of more customers buying Starbucks beverages. This was well ahead of the 2.7 percent growth Wall Street had forecast for the period.
"If you think about our traffic this quarter, we saw continued growth in our a.m. hours," Kevin Johnson, CEO of Starbucks, said on CNBC's "Squawk on the Street" Friday. "In the afternoon daypart, after 2:00 p.m., where we have been focused, we actually closed the gap a little bit on transaction."
Starbucks shares hit an all-time high on Friday. The stock also had its best day of growth since March 10, 2011, when it gained more than 9.9 percent.
Starbucks' big focus this year has been to draw people into its cafes in the afternoon, which it saw as an opportunity for sales growth. To accomplish this, the company has been offering more cold beverages and new lunch items as well as leveraging its rewards program to entice customers with "happy hour" deals.
Starbucks' loyalty program, which accounts for 14 percent of all its transactions, now has 15.3 million members, a 15 percent jump from last year, the company said. Starbucks Rewards members drove nearly 40 percent of sales in the U.S.
"We saw not only a one-, but a two-year traffic comp improvement," Johnson said. "There is still more to do. We are seeing good trends."
Starbucks also moved a number of "remedial tasks" that baristas were doing during the day to be done during closing so that they would have more time to work with customers, Roz Brewer, chief operating officer, told CNBC Thursday.
"The more we can enable our Starbucks partners to focus on the customer, the better our stores perform," Johnson said.
This will be particularly important as Starbucks moves into the first quarter of 2019. Last year, the company's sales were hampered by holiday beverages and merchandise that failed to draw in customers. Johnson said the brand will offer fewer retail items, at lower prices, and six holiday beverages to encourage more customers to shop in its cafes.
By Sarah Whitten
November 3, 2018
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