NEW YORK >> Starbucks expressed confidence Thursday that an overhaul of its rewards program will drive up sales over the long term, but warned that the transition could be bumpy.
The comments came after the company reported sales growth for the first three months of the year that fell short of Wall Street expectations. The Seattle-based chain said global comparable sales rose 6 percent, including a 7 percent increase in its flagship U.S. market.
While it’s still early, Starbucks said spending is up across loyalty members, including those who stood to lose out from the change. The change in the U.S. went into effect just last week, with people earning rewards “stars” based on the amount of money they spend, rather than how often they visit. That means that people who only buy a plain $2.50 coffee would have to spend more to earn a free drink or food item.
Starbucks’ total revenue, which factors in new store openings, rose 9 percent to $4.99 billion. That was short of the $5.03 billion analysts expected, according to FactSet. Profit for the quarter rose 16 percent to $575.1 million, or 39 cents a share, in line with expectations.
Google’s parent spells gains for investors
SAN FRANCISCO >> Larry Page’s five-year tenure as CEO of Google — and its newish corporate parent Alphabet — is reminding investors that patience pays off, despite a letdown in the first quarter.
After lagging its peers in the early stages of Page’s reign, the company has since delivered returns that trounced both the Standard & Poor’s 500 and Apple shares. Since Page took the helm in 2011, Alphabet’s stock has soared 163 percent, creating an additional $300 billion in shareholder wealth.
Alphabet’s earnings rose 20 percent from last year to $4.2 billion, fueled by a massive advertising network that includes Google’s dominant search engine, Android’s ubiquitous operating system for smartphones, YouTube’s widely watched video service and Gmail. Revenue for the first three months of the period, after subtracting ad commissions, climbed 18 percent to $16.5 billion.
GM profits double as North America rolls
DETROIT >> General Motors’ first-quarter profit more than doubled as all of its business units posted improved numbers including record pretax earnings in North America.
The Detroit automaker earned $1.95 billion, or $1.24 a share, even after a $500 million cash investment in ride-sharing company Lyft. After paying $60 million to settle stockholder lawsuits over an ignition switch debacle, GM earned $1.26 a share. That soundly beat Wall Street forecasts of $1 per share. The company also paid $300 million in restructuring costs, mainly for union worker early-retirement buyouts in the U.S.
Southwest Airlines soars to record profit
DALLAS >> Southwest Airlines packed even more people on its planes, notched a record first-quarter profit of $511 million and said solid bookings have continued into April.
Southwest has been adding flights and bigger planes, contributing to investor concern about fast growth leading to lower prices. Indeed, Southwest’s average fare dipped 3 percent to $153.75 each way.
Sears to close 78 stores this summer
NEW YORK >> Sears Holdings Corp. will close another 78 stores — 68 Kmart units and 10 Sears stores — as it looks to restore profitability.
That accounts for about 5 percent of its store base, which is nearly 1,700 stores.
The ailing company, based in Hoffman Estates, Ill., had said in February that it would accelerate the closing of unprofitable stores following a “challenging” holiday season. The move announced Thursday is expected to generate a “meaningful level” of cash from the liquidation of store inventories and from the sale or sublease of some of the related real estate, it said Thursday.
All 10 Sears stores and nearly all the Kmart stores will close in late July. Two Kmart stores will close in mid-September. The Kmart store in Iwilei closed last month, but none of the stores on this most recent list are in Hawaii.
ON THE MOVE
OpTerra Energy Services has announced the following two new appointments to its team:
>> Ana Hassegawa has joined the company as a project engineer. She was previously serving as a project engineer and photovoltaic designer for Sunetric and Hawaii Energy Connection.
>> Deanna Ramos-Kia Tupua has joined the OpTerra team as a project coordinator and will assist with the ongoing Ka Hei program. She was previously an employee of Johnson Controls Honolulu.
PBS Hawaii has hired Jason Suapaia as its new vice president of creative services. He is leaving his position as president and executive producer at 1013 Integrated, an isle creative media agency.
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Star-Advertiser staff
