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3 Must-See Quotes From Starbucks' Earnings Call

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

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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.

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