Same-store sales rose by 7.1% in North America - where the company has closed 242 stores since the same period last year, representing 1% of its footprint - and by 2.6% internationally, where it continues its expansion at a now more reasonable pace.
On a consolidated basis, revenue increased by 8.8%, a feat some would have deemed unlikely given the premium pricing for which the brand has long been notorious. Moreover, such growth has been essential to offset severe inflation within its cost structure.
Starbucks, which retreated from China after failing to compete in a price war initiated by rivals such as Luckin Coffee, has probably reached a plateau in terms of growth and expansion over the past three years.
Consequently, efforts must now focus on network optimization. Appointed CEO last year following Laxman Narasimhan's unsuccessful stint, and bolstered by his spectacular turnaround of Chipotle, Brian Niccol has made a powerful start to his mandate, implementing measures that some might have considered unrealistic.
The increase in both the average receipt and foot traffic has enabled Starbucks to return to solid operating profits, while cash flows have eased following the partial divestment of Chinese operations and a slowdown in the local investment program.
Indeed, it is quite remarkable that Starbucks - a brand that traditionally polarizes public opinion between fans and those who hate it - has managed to raise prices in an ultra-competitive market where it was already frequently criticized for its high bills. Such a development appears to reflect the unwavering loyalty of its customer base.
It should be noted that investors have long maintained a similar loyalty towards the company. After hitting a low in the summer of 2024 at a multiple of 20x operating profit, the group's valuation has returned to flirt with historical highs of 40x operating profit.
Also refer to Starbucks wants to break with five years of stockmarket stagnation, which we published last year.
