Starbucks going strong in Japan

Starbucks is reporting a parent only pretax profit up 33% to ¥6.85 billion for FY2007. Sales of the chain’s new ranges of breakfasts and healthier food options have, apparently, been the main drivers for the increase. This is also the fourth straight year of profit growth and beast the original forecast of a 28% increase. Better than expected prices on materials and lower shipping costs due to increased local sourcing of some supplies all helped with the increase in profit.

Sales were up by around 14% to ¥90 billion, again higher than expected by some ¥400 million according to one report. Same store sales also outperformed the sector as a whole, up 2% on last year. At the same time, customer traffic was actually down, with competing chains taking away some custom and with the beginnings of brand-saturation even in Japan. Basket prices, or at least ‘tray prices’ were up, however. Starbucks also opened 97 new stores in FY2007 after planning for 90 new outlets. New locations include Starbucks inside hospitals, road side service areas, and a return to a previously less successful rollout of suburban stores.

Nikkei reports that operating profit is up 35% to ¥6.8 billion, beating the company’s forecast by ¥350 million. The newspaper also suggested that Starbucks’ forecasts had been a little conservative as the chain was factoring in rising coffee bean prices.

Starbucks Japan’s gross profit margin is estimated at 71%, almost unchanged from the previous year.

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Japan, Starbucks, JapanConsuming, retail