Please ensure Javascript is enabled for purposes of website accessibility

3 Must-See Quotes From Starbucks' Earnings Call

By Daniel Sparks – May 16, 2019 at 5:51PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Management talks digital customer relationships, customer connections, and China.

For Starbucks (SBUX -0.85%), the fiscal second quarter was solid, bolstered by strong comparable-store sales growth in the U.S. and a 17% year-over-year increase in stores in China. This translated to a nice 13% year-over-year increase in non-GAAP earnings per share.

These strong quarterly results, combined with Starbucks' fiscal first-quarter results reported earlier this year, have helped the coffee giant's stock easily beat the market this year. Shares are up about 23% year to date, with the S&P 500 up 15% over the same time frame.

To better understand what has investors so optimistic about Starbucks recently, here's a look at three key quotes from management during the company's fiscal second-quarter earnings call.

A woman using Starbucks' mobile loyalty program

Image source: Starbucks.

1. Digital relationships are a key growth driver

In the second quarter, we expanded our active member base by half a million customers [sequentially], a 13% [year over year] increase that takes active Rewards membership to 16.8 million. This momentum has a positive impact on our results, with Starbucks Rewards members accounting for 41% of sales in U.S. stores in Q2. 

-- CEO Kevin Johnson

Since Starbucks started expanding its digital relationships with customers beyond active Starbucks Rewards members in 2018, these new relationships have helped fuel growth in active Starbucks Rewards members. This trend continued in fiscal Q2, Johnson said.

2. Improving customer satisfaction

Enhancing the in-store experience encompasses building customer connections and creating those best moments that keep customers coming back time and time again. We saw continued improvement in our customer connection scores this quarter, driven by the actions we are taking to enable our store partners to better connect with customers.

-- Johnson

In Starbucks' continuing multi-quarter effort to help employees create better customer experiences in stores, the company said it made measurable progress during fiscal Q2. Some of the ways Starbucks has helped employees make better customer connections include simplifying employees' work and reducing hours spent on noncustomer-facing tasks.

3. Starbucks' loyalty program is working in China

The phenomenal growth of the Starbucks rewards program in China is a testament to the power of the brand.

-- Johnson

About four months ago, Starbucks initiated an attempt to replicate its U.S.-based success with a digital rewards program in China. Momentum with the rewards program is impressive; the company's member acquisition accelerated during the quarter, and 90-day active rewards members rose to 8.3 million. Starbucks plans to leverage this momentum by launching mobile order and mobile pay in China by the end of fiscal 2019.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Starbucks. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Starbucks Corporation Stock Quote
Starbucks Corporation
$89.35 (-0.85%) $0.77

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.