Starbucks, the No.1 coffee shop chain in South Korea, saw a 14.9 percent jump in operating profit in the quarter ended June on physical expansion as well as high-end additions.
The 50:50 joint venture between Starbucks and Korea’s retail conglomerate Shinsegae Group’s big-box store unit E-Mart Inc. reported an operating profit of 40 billion won ($32.8 million) in the April-June period, up 14.9 percent from a year ago, according to E-Mart on Tuesday.
Net profit rose 12.6 percent on year to 30.3 billion won, and sales added 23.8 percent to 457.9 billion won during the period.
Shares of E-Mart on Tuesday rose 6.64 percent to close at 112,500 won in Seoul.
For the full first six-month period, the coffee house raked in an operating profit of 74.7 billion won, up 28.1 percent from the previous year. Net profit gained 22.1 percent to 56.3 billion won, with sales up 25.2 percent to 887.7 billion won.
The sales growth is largely owed to robust demand for new beverages and products and the company’s fast addition of new outlets including upscale Reserve Bar locations, market experts said. It launched limited editions of beverages and specially-made products containing its previous 1999 logos to celebrate the 20-year anniversary of its business in Korea.
Starbucks operated 1,308 stores across Korea as of the end of June after adding 46 from late last year. The number of Starbucks Reserve Bar featuring an interactive coffee bar that serves premium small-lot Starbucks Reserve beverages also rose to hit 50 recently on rising demand for the limited, small-batch coffee brand in the coffee-loving country.
Markets are now raising expectations that the company would achieve the annual sales milestone of 2 trillion won this year for the first time since the business in Korea. It earned 1.26 trillion won in 2017 and 1.52 trillion won in 2018.
By Kim Ha-kyung and Lee Ha-yeon
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