Starbucks, the global coffee chain, reported an 18% rise in second quarter profits to $309.9m (£191.7m), despite a 1% fall in sales in Europe, the region’s first decline in same-store sales since 2009.
The group, which saw revenue for the quarter rise 15% to $3.2bn, said that whilst it had “comped positively” in the UK and France, it wasn't enough to offset softness in Germany and Ireland.
Net revenues in Europe grew 14% year-over-year, which the group said was due in the majority to the consolidation of the Switzerland and Austrian markets.
Speaking about Europe’s economy, chief executive Howard Schultz, said: “The situation is very, very tough. We will turn the Europe business around in the same way we turned the US business around.”
Troy Alstead, chief financial officer, said: “In March, we launched the Renaissance Plan, our blueprint for turning around performance in that important region, which is modelled after the success of our transformation agenda in the US. Already, our efforts are resonating with customers. In the second quarter, we saw the largest quarterly gain in our customer satisfaction scores in more than two years. We're sharpening our focus on in-store execution, including taking the steps to retrain all partners on preparing the perfect beverage each and every time.
“Adjustments are being made to the long-term business model, including revamping our distribution model in the UK and increasing visibility to our strong digital marketing capabilities. These changes were largely the result of extensive customer research in the region and our beginning steps in the long road of cresting our course there.”
The European “Renaissance Plan” is being led by veteran Starbucks executive Michelle Gass, who helped oversee the turnaround in the US.
The group said that sales of latte and cappuccino in the UK had risen by more than 9% compared to the same period a year ago.
Starbucks, which has c740 stores in the UK is investing £8m on refurbishing its London sites ahead of the Olympics. It is also planning to rollout a new franchising model in the UK this year and open a further 60 sites in the country.
Kris Engskov, Starbucks UK & Ireland managing director, said: “There’s no doubt that British customers are under real pressure right now, so offering more value when it’s needed most has proved very popular. That means giving an extra shot at no extra cost, not charging extra for being 100% Fairtrade or only using the best Arabica beans. We can see that the changes have struck a chord, and the independent research gives us more confidence that we have made the right changes to suit customers’ tastes here in the UK and Ireland.”
