Starbucks Corporation reported on Thursday an increase in quarterly sales at a rate higher than what was initially expected as prices of commodities and goods in the United States continue to soar. Meanwhile, the company also reaps benefit on a rebound in China, sending its shares in the market at new heights this year at nearly 9 percent.
According to Reuters, the coffee chain has recently been facing a stiff competition in its own turf in the US coming from both high-end coffee establishments and fast-food chains like Dunkin Donuts and MacDonald's.
To gain leverage in this intense competition, the green and white company decided to close a number of its relatively underperforming outlets in the country, a move deemed by analysts as necessary.
All the while, Starbucks has been working with firms like Nestle to license its retail business in its bid to reach the much greater populace.
A report from Business Times back in August indicated a $7 billion deal between Starbucks and Nestle. The agreement would give the Swiss food company perpetual rights to market the coffee maker's packaged goods outside Starbucks cafes.
The products included in the merchandising deal are Seattle's Best Coffee, Teavana TM/MC, Starbucks VIA Instant, Torrefazione Italia coffee and Starbucks-branded K-cup pods.
Nestle, however, weren't given the rights to market ready-to-drink products sold within a Starbucks outlet.
New Offerings
During an earnings call, the news agency cited company executives confirming the boost of sales in the quarter due to the company's move to push cold drink offerings such as nitro cold coffee and caffeinated fruity beverages. The two products proved to be a huge hit among avid patrons especially during slow afternoon hours.
According to the executives, this has been the best growth the company has seen in its drinks business for 2018.
Soaring High
Business Wire reports impressive sales growth in the fourth quarter by 4 percent, which is well above what analysts and experts initially expected. There also an increase in the amount spent by Starbucks customers on average by 5 percent, the highest in five quarters.
Another huge contributing factor to Starbucks' remarkable quarter is the same-store sales in China which rose by 2 percent. This has been a welcoming development for the company ever since the decline from the third quarter.
Amidst fierce competition in the overseas coffee market, and the tricky regulations on delivery services which proved to be a challenge for the company, Starbucks' chain business in China continues to flourish.
Adding more to the success of the two-tailed mermaid was its partnership with Alibaba Group Holding Ltd. in the delivery sector.
