Starbucks Corporation (SBUX -1.17%) did it again. The coffee king delivered another stellar quarterly earnings report last week.
Among the highlights included 8% global comparable sales growth, and an increase of 15% in adjusted EPS to $0.46. Despite the strong quarter, the stock actually sold off following the report as investors were scared away by lower-than-expected guidance for the fiscal second quarter of 2016. Management projected earnings per share of $0.38-$0.39 for the current quarter, below the analyst consensus at $0.40.
Still, the long-term picture has never looked better for Starbucks. Below are several surprising facts about the company's holiday quarter that show why.
1. Record comparable sales growth streak
For the 24th quarter in a row, Starbucks posted a comparable sales increase of 5% or more. That's six years. A streak like that is virtually unheard of in the restaurant/retail industry, especially for a company of Starbucks' maturity and size. For comparison, Dunkin Donuts (DNKN) hasn't seen same-store sales that strong since 2012. McDonald's Corporation (MCD 0.20%) is doing backflips after posting comp sales growth of 5%, following negative growth of seven straight quarters in the U.S. Even at Chipotle Mexican Grill (CMG -0.54%), which was the growth darling in the restaurant industry before the recent E. coli scare, comps had slowed to 2.6%.
Starbucks' growth came roaring back following the recession, and it's remained consistent since. It's a testament to the quality and popularity of the business, and a reminder to naysayers who claim a recession is around the corner. As a company in the business of selling affordable luxuries, Starbucks offers as clear a window into the American pocket book as any other enterprise. No one needs to spend $5 on a latte, after all, and there are plenty of cheaper substitutes for a quick buzz if money's tight. Business continues to boom, however, a sign that discretionary income is growing. By contrast, Starbucks' comps started to plummet as early as the first quarter of 2008 in the run-up to the financial crisis.
2. Starbucks is betting on China like never before
More than half of the company's store openings this past quarter were in the China-Asia Pacific region, setting a new precedent, and Starbucks expects half of its 1,800 openings this year to be in the China region.
At 5%, comparable sales growth in Asia was slower than in the Americas, but management has never been more bullish on growth in China. In the recent earnings call, CEO Howard Schultz said that despite already having 2,000 stores in the country, "I am convinced more than ever that we are just getting started in that important country." He also noted that China's middle class is expected to expand to 600 million people within the next five years, more than double that of the United States. As Starbucks' expansion plans make clear, China will be the company's growth engine for the foreseeable future.
3. Starbucks is America's favorite gift
Did you receive a Starbucks gift card over the holidays?
If not, chances are at least a few people you know got one. 1 in 6 American adults received a gift card this holiday season, up from 1 in 7. Starbucks cards are becoming almost as ubiquitous as its stores. Not only were more than 30 million cards gifted this holiday season, but more than $1.9 billion was loaded onto Starbucks cards in the quarter, the equivalent of 15% of the company's revenue. That ability to bring in cash before providing the requisite service is a windfall for Starbucks' cash flow, and gives it a dream business model.
All signs indicate that the program should only strengthen, as membership in the My Starbucks Rewards loyalty program increased 23% in the quarter. Starbucks also extended its Mobile Order & Pay program internationally for the first time, taking it to Vancouver and its 130 locations in that city.