Asia Pacific experienced the most growth in sales and revenue out of Starbucks’ three regions. Credit: Pixabay.

Starbucks has reported a 2% increase in global sales and a 14% growth in consolidated net revenue to a record total of $6bn for the second quarter (Q2) of 2018. Asia Pacific experienced the most growth in sales and revenue out of Starbucks’ three regions.

Asia Pacific recorded a 3% increase in sales, with China experiencing higher growth of 4%. The Americas saw 2% sales growth and Europe, the Middle East and Africa (EMEA) saw sales decline 1%.

Net revenue in Asia Pacific increased by 54% to $1.19bn in Q2 from $768.9m in the second quarter of 2017. The Americas saw an 8% rise in net revenue to $4bn from $3.72bn and EMENA saw an increase of 15% to $266.1m from $231.7m.

Asia Pacific’s success was attributed by Starbucks to incremental revenues from the impact of ownership change in East China and from 759 new store openings in the past 12 months, as well as favourable foreign currency translation. However, this was partially offset by the absence company-owned store revenue due to the sale of its Singapore retail operations in the fourth quarter of 2017.

EMENA also benefitted from favourable foreign currency translations and incremental revenues from the opening of 385 new licencing stores in the past 12 months. These gains were partially offset by a decrease in comparable store sales.

The opening of 966 stores in the Americas explains the increase in revenues in that region.

Starbucks opened a total of 468 stores and closed 298 Teavana stores in the second quarter of 2018, so it now operates 28,209 stores across 76 markets.

Starbucks president and CEO Kevin Johnson said: “Starbucks Q2 of fiscal 2018 represented another quarter of record financial results, highlighted by accelerating momentum across our Americas business – particularly in the US, continued strong performance in China and our strongest comparable growth in Japan in five quarters.

“At the same time we made measurable progress against each of the strategic initiatives that position Starbucks to continue delivering best-in-class operating and financial results long into the future.”

The company’s operational income declined by 17% from $935.4m in Q2 2017 to $772.5m in Q2 2018. General Accepted Accounting Principles (GAAP) operating margin declined by 490 basis points to 12.8% and non-GAAP operating margin fell by 170 basis points to 16.2%.

Asia Pacific was the only region to experience a growth in operating income during the second quarter of 2018. The region’s operating income rose 16% from $175.9m to $204.6m. However, its operating margin did not grow; it declined by 570 basis points to 17.2%.

The company recorded an operating loss in EMEA of $4.3m, which represents a 116% decline on Q2 2017’s figure of $27.7m. This was attributed to the partial decline in goodwill related to Starbucks’ Swiss retail business and salves deleverage on its stores.

The Americas experienced a 3% decline in operating income from $826.1m to $801.3m and a drop of 220 basis points in operating margin to 20%. The latter is attributed to higher investments in store partners and food-related mix shift.

GAAP earnings per share increased by 4% to $0.47 and non-GAAP earnings per share increased by 18% to $0.53. The company returned $2bn to shareholders during the quarter through dividends and share repurchases.

The company reiterates its 2018 fiscal targets, including opening 2,300 new stores globally, 3-5% sales growth globally, consolidated revenue growth in high single digits and GAAP earnings per share ranging between $3.32 and $3.36.