Starbucks credits loyalty programme for global sales boost

Starbucks has credited its ‘best-in-class’ loyalty programme for helping to boost global sales at its coffee shops but revealed that sales at its UK business fell for the first time in 16 years as it shut a number of unprofitable stores.

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Starbucks has promised further updates to its mobile, loyalty and digital platforms in the coming months.

The coffee seller said global like-for-like sales were up 6 per cent in the three months to 30 March, an improvement on the previous quarter and ahead of analyst estimates. Total sales were driven by a 6 per cent rise at its Americas and US business, as well as the highest growth in the EMEA region for three and a half years.

Starbucks also recorded record operating profit of £644.1m, with chief executive Howard Schultz citing its “reimagination of the Starbucks Experience” through its payment and loyalty programmes, “reinvention” of tea brand Teavana and continued investment in its staff for the increase.

Starbucks claims that sales on its Starbucks Card programme now accounts for a third of transactions in the US and Canada, while 10 million Starbucks customers actively use the mobile app, double the number a year ago. Adam Brotman, Starbucks’ chief digital officer, speaking on a conference call yesterday evening (24 April) said the rewards programme is helping drive up incremental revenue at its core business through personalised offers and more relevant communications.

The firm says it will look to find new ways to develop and monetise new social and mobile platforms, although it does not detail any specific plans. It has already said it will introduce mobile ordering by the end of the year

Troy Alstead, chief operating officer, said on the same call: “We are in very early stages of building out this entire digital programme, understanding how to connect with customers across multiple channels through the loyalty programme, the experiences they have in stores and with the power of the [rewards] stars that we’re already seeing.”

Meanwhile, in the UK, Starbucks suffered its first ever drop in total sales last year, which it says was down to the closure of a number of unprofitable stores. It claims sales at stores open for more than a year were up and expects this to continue as the UK economy improves this year.

Accounts for the group’s UK subsidiary, Starbucks Coffee Company (UK), filed at Companies House show that turnover for the year to 30 September 2013 was down to £399m, from £413m the previous year.

Starbucks come in for widespread criticism in October 2012 for telling the UK tax authority that its British business was loss-making while at the same telling investors it was profitable. Responding to the concerns, Starbucks offered to pay a voluntary £20m in tax over two years and last month committed to move its European headquarters from the Netherlands to Britain in what is seen as an attempt to assuage its critics.

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