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Starbucks China Comp Sales Drop 3 Pct Amid Pandemic

Starbucks Corp. reported on Thursday (Oct. 29) as part of its Q4 earnings that comparable-store sales dropped 3 percent in China, with comparable transactions lower by 7 percent, partially offset by a 5 percent rise in average ticket.

Starbucks President and CEO Kevin Johnson said on a call with analysts that China’s mobile order sales mix increased by over double in the last 12 months to 26 percent in Q4, with 13 percent originating from delivery and 13 percent from mobile order and pay, well above the mid-teen levels the company saw before the pandemic.

“The digital innovations we launched in China throughout fiscal 2020, including a new WeChat mini program and the enhanced Starbucks Rewards program, along with our digital partnership with Alibaba, have fueled customer engagement and strong sequential growth in active Starbucks Rewards members,” Johnson said on the call.

Starbucks Rewards 90-day active members in China in Q4 climbed 36 percent over Q3 to 13.5 million, representing 34 percent growth over the past year.

Johnson also reported a “rapid re-acceleration” of new store development in China, which he said is its “number one driver of growth” in the country.

“Despite the challenging environment imposed by the pandemic, we crossed both the 4,600 and the 4,700-store milestone in Q4, opening almost 260 stores in the fourth quarter alone,” Johnson said.

Growth In Mobile Orders, Rewards In The US

Johnson noted that about 75 percent of U.S. sales volume in Q4 was drive-thru and mobile orders.

“Although this was meaningfully down from 90 percent in Q3, reflecting a sizeable shift to on-premise occasions in Q4 as we progressively restored seating in our cafes, this is notably higher than pre-COVID levels at approximately 60 percent of sales,” Johnson said.

Furthermore, Johnson noted that the coffee chain’s mobile order transactions continue to grow, rising from 18 percent in Q2 to 24 percent in Q4.

Johnson indicated that the growth is supported by ongoing improvements to its mobile app and increased messaging throughout its marketing channels to fuel further awareness.

The company reported that the Starbucks Rewards loyalty program 90-day active members in the U.S. rose to 19.3 million, marking a 10 percent year-over-year rise.

As for its overall results, Starbucks reported non-GAAP earnings per share (EPS) of 51 cents on consolidated net revenues of $6.2 billion. The results exceeded analyst estimates of 31 cents earnings per share on $6.06 billion in revenues.

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