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Starbucks Shows Impressive Same-Store Sales Growth

By Daniel B. Kline - Feb 12, 2020 at 10:06AM

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The coffee chain does face Coronavirus concerns for its Chinese stores going forward.

Starbucks (SBUX 2.03%) CEO Kevin Johnson has invested heavily in improving the in-store experience for the chain's customers. That has included a conscious effort to take tasks away from in-store personnel that distracts them from interacting with customers or producing orders.

Those efforts have paid off as the company reported that global comparable-store sales were up by 5% in the first quarter. That came from a 3% increase in the size of an average sale and a 2% increase in transactions. Stores in North America reported a 6% increase split between new customers and existing ones spending more.

Starbucks CEO Kevin Johnson wears one of he company's trademark aprons.

Johnson sometimes takes a shift at one of the chain's stores. Image source: Starbucks.

A strong mix

It should be encouraging for investors that the chain not only got existing customers to spend more, it also lured in new people to try its beverages and food. Johnson lauded the chain's results in a press release.

"Building on solid business momentum from fiscal 2019, Starbucks performed very well throughout the first quarter, including one of the strongest holiday seasons in the history of our company," he said.

A note of caution in China

While Johnson was optimistic overall, he did acknowledge that the coronavirus situation could cause some short-term disruption in the chain's business in China.

As events unfold, we will be transparent with all stakeholders in communicating how we are responding to these extraordinary circumstances and the implications for our near-term business results. We remain optimistic and committed to the long-term opportunity in China, building on our brand heritage and 20-year legacy of profitable growth.

The impact of the virus could negatively affect Q2, but should not impact any long-term plans Starbucks has in China. It's an unfortunate situation that investors should be aware of, but not overly concerned about. 

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