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Starbucks Hits Record Revenues in First Quarter 2016

The company plans expansion into China, Europe, and South Africa this year.

Pascal Le Segretain/Getty Images

Starbucks issued its fiscal year first-quarter earnings report Thursday, and it's another banner period for the Seattle-based coffee giant. The company's net revenues grew 12 percent over the same period last year, to a record $5.4 billion.

One of the driving forces behind the record haul appears to be Starbucks cards. Consumers loaded a record $1.9 billion onto the cards in the United States and Canada, an increase of 18 percent. A total of 1 in 6 Americans received Starbucks cards over the holiday season, and membership in the My Starbucks Rewards loyalty program increased 23 percent in the quarter, up to more than 11 million active members in the U.S.

Another major component of Starbucks' success is its attempts to make purchasing coffee easier and faster. The company reported six million transactions on its Mobile Order & Pay app, which expanded nationwide in September and helped make it the fastest-growing coffee company in the U.S. last year. Going forward, Starbucks plans a variety of expansion. It plans to break into the South Africa market this year, and it will open more reserve stores in the United Kingdom and elsewhere in Europe. An estimated 1,800 new stores will open this year in the Americas, and 700 are on track in China.

In the United States, Starbucks will expand its delivery operation beyond the initial launch in Seattle and New York City. The company will explore additional media projects similar to the Spotify partnership that was recently announced.

Despite the rosy earnings report, financial analysts aren't too impressed with Starbucks at the moment. The company's stock slid in after-hours trading Thursday after a soft projection for 2016's second quarter.

Starbucks stock

In a Q-and-A session with executives and investors Thursday evening, Starbucks CEO Howard Schultz shared more details on the company's expectations for the coming year. Mobile Order & Pay will expand to China, and Shultz expects its adoption will be significantly quicker than it was in the U.S. He also pointed to education opportunities and salary increases for employees as factors that decreased turnover and improved profits. However, when asked if technological advances are resulting in a labor reduction, one executive offered a non-answer.

"We're continuing to see acceleration of Mobile Order & Pay. We anticipate that growth will continue, we are just scratching surface."

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