Starbucks Misses on Revenue Despite Record Quarter -- Update
January 25 2018 - 6:12PM
Dow Jones News
By Aisha Al-Muslim
Starbucks Corp. fell short of sales expectations in its latest
quarter despite reporting record revenue as it has sought to
accelerate growth in China and boost sales in its home market.
The coffee giant on Thursday affirmed its commitment to open
2,300 net new stores globally in fiscal 2018 as analysts have
raised concerns about the U.S. coffee market being too crowded as
traffic growth to large coffee chains has slowed.
Starbucks said it added 1.4 million active Starbucks Rewards
members in the U.S., bringing the total up 11% year-over-year to
14.2 million. The company has been trying to use its loyalty reward
program, mobile ordering and digital marketing to increase the
frequency of guests' visits. The chain also has been trying to draw
people in during the slower afternoon period with discounted items
and special promotions.
"Today, Starbucks has two powerful, independent but
complementary engines driving our global growth, the U.S. and
China," Chief Executive Kevin Johnson said in prepared remarks.
"Our work to streamline the company is sharpening our focus on our
core operating priorities."
Excluding items such as a tax benefit and proceeds from the sale
of its Tazo brand to Unilever, Starbucks earned 58 cents a share,
beating analysts' expectations. Revenue rose 6% to $6.1
billion.
Starbucks shares fell more than 3% to $58.56 in post-market
trading.
Starbucks posted a 2% rise in same-store sales in its home
market and globally in its first quarter. Analysts polled by
FactSet expected Starbucks to post a 3% increase in global
same-store sales for the quarter, with a 3.2% increase in the
Americas.
China, the company's fastest-growing market, generated 6%
same-store sales growth, while revenue grew 30%.
Starbucks reported a first-quarter profit of $2.25 billion, or
$1.57 a share, compared with $751.8 million, or 51 cents a share,
in the year-ago period.
Starbucks's per-share earnings got a 79-cent boost from its move
to acquire the remaining 50% stake in its East China joint venture.
At year-end, Starbucks had more than 3,100 company-owned stores in
China. The company also late last year closed a deal to sell its
interest in a Taiwan joint venture, which helped its bottom
line.
The company also reiterated its target of comparable-store sales
growth between 3% and 5% globally and revenue growth in the high
single digits.
Write to Aisha Al-Muslim at aisha.al-muslim@wsj.com
(END) Dow Jones Newswires
January 25, 2018 17:57 ET (22:57 GMT)
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