Starbucks to focus on labor, product choices in bakery
by Jeff Gelski
SEATTLE — Starbucks Coffee Co. will renew its emphasis on La Boulange bakery items now that the holiday season is over.
“La Boulange took a pause in terms of the roll-out of the new stores in the first quarter (ended Dec. 29, 2013) to allow us really to focus on the big holiday period for us,” Troy Alstead, chief financial officer for Seattle-based Starbucks, said in a Jan. 23 earnings conference call. “That will resume here in the beginning of the second quarter, and we continue to expect to be fully rolled out with the first wave of this bakery program full across the U.S. by the end of the fiscal year.”
He said Starbucks continues to fine-tune labor deployment and routines in warming food. Since customers want a broader product assortment, Starbucks will respond through the rest of this year.
“There have been very significant successes thus far, including croissant sales that have doubled versus our prior offering,” Mr. Alstead said. “Make no mistake, however. This is a very complex roll-out. We are significantly up-levering our core food offering across more than 10,000 U.S. stores in two years’ time.
“To accomplish that, we’re leveraging the learnings from the introduction in many markets in fiscal ’13 to quickly optimize implementation of stores launched this year. This includes labor deployment strategies, product assortment choices, and marketing and display optimization. Overall, we are as optimistic as ever about this opportunity.”
Starbucks in 2012 bought San Francisco-based Bay Bread, L.L.C. and its La Boulange bakery brand from Next World Group. In an Oct. 30, 2013, earnings conference call, Howard Schultz, chairman, president and chief executive officer, said La Boulange products were available in more than 3,500 Starbucks stores in the United States. At that time he added the company was on track to offer La Boulange products in all 7,000 company-operated stores in the United States by the end of fiscal 2014.
Starbucks gave financial results for the first quarter of fiscal 2014 on Jan. 23. Starbucks reported net earnings of $540.7 million, or 71c per share, which marked a 25% increase from $432.2 million, or 57c per share, in the first quarter of the previous year. Net revenues increased 12% to $4,239.6 million, which compared with $3,793.2 million in the first quarter of the previous year.
Global comparable store sales grew 5%. Starbucks opened 417 net new stores globally in the first quarter, bringing total store count to 20,184.