In the latest indication that the brand’s relevance with customers remains as strong as ever, Starbucks today announced its Q4 FY20 earnings results that point to a continued business recovery and an optimistic outlook for FY21.

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Leveraging rapid innovation while keeping partner (employee) safety as a central focus through the COVID-19 pandemic, the company has shown a new level of resilience through one of the most challenging years for the retail industry.

As part of Starbucks quarterly earnings <a href="https://investor.starbucks.com/ir-home/default.aspx" target="_blank" rel="noreferrer noopener">call</a>, Starbucks president and ceo Kevin Johnson provided specifics on the improving business results and the company’s continued confidence in the path ahead.

“The guiding principles we established at the onset of the pandemic, combined with our industry-leading digital platform and our ability to innovate rapidly, continue to fuel our recovery and provide confidence in a robust operating outlook for fiscal 2021.&nbsp;Our strategies are working and I am optimistic that we will emerge from the COVID-19 pandemic as a stronger and more resilient company,” said Kevin Johnson, president and ceo.&nbsp;

Full details on Starbucks financial results can be found <a href="https://stories.starbucks.com/press/2020/starbucks-reports-q4-fiscal-2020-results/" target="_blank" rel="noreferrer noopener">here</a>.

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1. Starbucks recovery strategy is working with the company reporting better-than-expected sales and profits in the fourth quarter. In the U.S., the company finished the quarter with a comparable store sales decline of 4% for the month of September, a vast improvement from the approx. 60% decline experienced at the depth of the pandemic only five months ago.

For the month of September, China’s comparable store sales were up 1%, building on the positive momentum seen in Q3 and reflecting continued sequential improvement. The company opened almost 260 stores in China in the fourth quarter alone, contributing to 14% growth in the market over the last 12 months.

2. Elevating and expanding customer experiences continues to be top of mind for the company. As communities continue to adapt to new routines, including working from home and remote schooling, Starbucks continues to provide familiar experiences, as well as introduce even more convenience including the expansion of Curbside Pickup and introduction of handheld POS devices. Staying ahead of customer trends has resulted in high customer connection and partner engagement scores throughout the pandemic.

3. Seasonal favorites and new innovations continue to delight customers, including the highly-anticipated return of popular Pumpkin Spice products. Sales of the company’s Pumpkin Cream Cold Brew and Pumpkin Spice Latte saw record high in average daily units, and the company’s cold beverage platform also saw strong performance, led by Refreshers and Cold Brew which delivered double-digit growth in Q4. With the holiday season approaching, the company is gearing up for the return of beloved Holiday menu items, including the Peppermint Mocha which is returning for its 18th year.

4. Expanding digital customer connections including convenient and contactless experiences have been key driver to the company’s recovery. In Q4, approx. 75% of U.S. sales volume came from drive-thru and Mobile Orders, balanced with expanded in-store seating in stores where it is safe to do so. The company also saw a rebound in the number of active Starbucks Rewards (SR) members, which grew 10% year over year to 19.3 million members in the U.S with the SR program driving 47% of U.S. company-operated tender for the second straight quarter. Also in Q4, the company launched “<a href="https://www.starbucks.com/rewards" target="_blank" rel="noreferrer noopener">Stars for Everyone</a>” which removed the Stored Value Card requirement to join the SR loyalty program.

In China, Starbucks saw continued strength in the mobile platform with mobile order sales mix more than doubling in the past 12 months to 26% in Q4. The digital innovations launched in China throughout fiscal 2020 include a new WeChat Mini-program and the enhanced Starbucks Rewards program, as well as a digital partnership with Alibaba, have fueled customer engagement and strong sequential growth in active Rewards members in the market.

5. Looking ahead to fiscal 2021, the company shared guidance on what investors can expect moving forward, including:

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Starbucks president and ceo Kevin Johnson provided specifics on the improving business results and the company’s continued confidence in the path ahead.

Key takeaways from Starbucks Q4 FY20 earnings results

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As part of Starbucks quarterly earnings call, Starbucks president and ceo Kevin Johnson provided specifics on the improving business results and the company’s continued confidence in the path ahead.

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Starbucks today announced its Q3 FY20 earnings results, providing insight into the company’s continued road to recovery from the COVID-19 pandemic. Full details on the company’s financial results, can be found <a href="https://stories.starbucks.com/press/2020/starbucks-reports-q3-fiscal-2020-results/" target="_blank" rel="noreferrer noopener">here</a>.

As part of Starbucks quarterly earnings call, Starbucks president and ceo Kevin Johnson will provide specifics on the improving business results the company is driving through COVID-19 as well as details of how Starbucks is playing offense by accelerating key strategic initiatives that further differentiate Starbucks and reinforce the long-term, sustainable growth opportunity ahead.

“We are pleased to share that the vast majority of Starbucks stores around the world have reopened and our global business is steadily recovering, demonstrating the relevance of the Starbucks brand and the trust we have built with our customers,” said Johnson. “As we continue to drive the recovery, we are also building resilience for the future by accelerating the transformation of our business in ways that will elevate the customer and partner experience and drive long-term growth. We firmly believe that we are well positioned to regain the positive business momentum we had before the pandemic began and look forward to reigniting our 'Growth at Scale' agenda.”

1. Starbucks recovery strategy is working as company sees meaningful improvements in both sales and profitability as the quarter unfolded: At the close of Q3,96% of Starbucks company-operated stores were open in the U.S. (up from 44% at the beginning of the quarter), and the company saw weekly U.S. comps steadily improve throughout the quarter. Through the quarter, the company posted all-time-high customer connection scores as customers returned, indicating the strength of the recovery across the businesses.

On the call with investors, Johnson shared, “With the vast majority of stores around the world now reopened, we saw meaningful improvements in both sales and profitability as the quarter unfolded. Additionally, customer affinity for Starbucks is very strong as demonstrated by improvements in our customer connection scores, growth in customer loyalty, and market share gains.&nbsp; While we anticipate these improvements to continue, our balance sheet and the strategic actions we have taken have positioned Starbucks to weather a more protracted disruption in global economic activity.”

2. Company stays ahead of evolving customer behaviors with flexible store and digital experiences: Today, customers are seeking safe, familiar, and convenient experiences in many aspects of their lives—and in that regard, Starbucks digital assets have proven to be a competitive advantage. Mobile Order and Pay reached a record 22% of transactions in Q3, thanks in part to the contactless approach in stores. Delivery usage tripled in Q3 from the prior quarter and, Starbucks has begun rolling out curbside pickup with positive early results. Further, with plans for 700-1,000 Curbside locations and 50 new Starbucks PickUp locations, the company is well positioned to drive further recovery by increasing throughput.

Johnson further noted, “In response to clear shifts in consumer behavior and preferences, we are now accelerating strategic initiatives for the future and positioning Starbucks for continued long-term growth.&nbsp; We have moved aggressively to advance our evolution of the store base to accommodate trends that we have long seen emerging in our business that were only exacerbated by COVID-19.

3. Starbucks sees growing customer loyalty and readies to enhance the program this Fall: In Q3, the Starbucks Rewards™ loyalty program as a percentage of tender rose four percentage points from a year ago to 46% - above the pre-COVID trend – with year-over-year sales growth from Starbucks Rewards customers turning positive in early July. Earlier this month, the company <a href="https://stories.starbucks.com/stories/2020/starbucks-to-offer-rewards-members-more-ways-to-pay-and-earn-stars/">announced plans to build on this momentum in the Fall</a>, when it introduces a new, pay-as-you-go option for Starbucks Rewards members in the U.S. and Canada.

To investors, Johnson offered, “In every industry, there are periods of disruption that create great opportunity for those businesses that adapt to the disruption, invest in relevant ways, and strengthen their differentiation and competitive advantage. Those businesses that fail to evolve, typically fall behind. Given the strength of our brand, our advanced digital capabilities and our strong balance sheet, I believe this is one of those rare opportunities to move aggressively and further differentiate Starbucks from our competition.”

4. Demand for Starbucks at-home coffee soars: In a quarter where at-home coffee consumption has soared, Starbucks Channel Development business has gained market share as customers adjust to their at-home routines. Through the Global Coffee Alliance with Nestlé, combined with the company’s ready-to-drink partners Pepsico and Tingyi, Starbucks has extended the ability to meet customers where they are.

“This has been a quarter where demand for at-home coffee has soared and our Channel Development business has demonstrated tremendous resilience and gained market share as customers adjust to their at-home routines,” Johnson said.

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Starbucks today announced its Q3 FY20 earnings results, providing insight into the company’s continued road to recovery from the COVID-19 pandemic.

Starbucks provides financial report for Q3 Fiscal Year 2020 results

Key takeaways from Starbucks Q3 FY20 earnings results

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