Starbucks has reported a 1% decline in like-for-like sales in its second quarter across its EMEA division.
The coffee chain behemoth saw global like-for-like sales rise 3%, aided by a 3% rise in sales in the US and a 7% increase in China.
Total revenue in the quarter climbed 6% to $5.3bn.
The group, which operates 26,161 stores in 75 countries, said that mobile order & pay now makes up 8% of its revenues. It opened a net 427 new stores in the quarter.
The company said that margin reached a record 17.7% with EPS +15% to 45c.
Net revenues for the EMEA segment were $231.7m in the second quarter of FY17, a 14% decrease versus the second quarter of FY16. The decrease was primarily driven by the absence of revenue related to the sale of the Germany retail operations in the third quarter of FY16 as part of the company’s ongoing shift to more licensed stores in the region as well as unfavourable foreign currency translation. Partially offsetting these decreases were incremental revenues from the opening of 304 net new licensed stores over the past 12 months.
“With our US business accelerating throughout the quarter and strong performance in China, we are poised to deliver strong revenue growth in the second half and into the future,” said Kevin Johnson, Starbucks president and chief executive. “Our success in opening over 2,000 stores around the world annually, delivering record AUV and profit, despite a very difficult period for many brick-and-mortar retailers is a testament to the 330,000 partners who proudly wear the green apron.”
“Starbucks US comp sales accelerated sequentially through the quarter - culminating with a 4% U.S. comp in March - and we’re seeing further acceleration into April,” said Scott Maw, Starbucks chief financial officer. “Investments we are making to increase throughput and further premiumize the Starbucks brand are paying off. And increased capacity combined with accelerating momentum and the beverage, food and technology innovation we will be introducing in the months ahead gives us great confidence in our ability to deliver strong comp sales and revenue growth in the back half of fiscal 2017.”
Earlier this month, the company reported that gross profit across its UK operation fell to £81m in the 53 week period ended October 2nd 2016 from £107.2m in the 2015 financial year.
Like-for-like sales climbed 1%, but profit before tax fell from £34.2m in 2015 to £13.3m in 2016. Operating margin fell from 6.9% to 1.7%.
Martin Brok, president, Starbucks Europe, Middle East and Africa (EMEA), said: “Whilst there are undoubted challenges presented by a more cautious consumer environment, lower high street footfall, and adverse currency impacts, we are investing significantly to drive innovation in our food and coffee offering, and are greatly encouraged by our customers’ response.
“We also continue to focus on strategically remodelling our store portfolio to reflect changing customer demands. The UK remains one of the most important EMEA markets for us and we will continue to grow where our customers want to find us.”