Starbucks Misses Growth Expectations in U.S. Stores
April 27 2017 - 5:14PM
Dow Jones News
By Julie Jargon
Starbucks Corp. still hasn't made good on its pledge to return
its critical U.S. business to 5% same-store sales growth.
The coffee giant missed sales expectations again in its home
market and globally, with sales up 3% overall and in the U.S. in
its second quarter. Analysts were expecting 3.7% growth globally
and 3.5% in the Americas, of which the U.S. is by far the largest
market.
Shares fell 3.6% to $59.09 in after-hours trading.
The company said its earnings report will no longer contain
forward-looking targets but that it will provide further details on
its business outlook during the call with investors.
The coffee giant said same-stores rose 3% globally in its fiscal
second quarter, with a 3% rise in both the U.S. and the overall
Americas segment. Analysts surveyed by FactSet were expecting a
3.7% rise in global same-store sales and 3.5% growth in the
Americas segment, of which the U.S. is the largest market. Growth
in Starbucks's critical U.S. market has slowed in recent quarters
and executives have pledged to return the U.S. back to its historic
growth rate of 5% or more, but haven't specified when that will
happen.
The U.S. same-store sales increase was driven by a 4% increase
in average check; transactions declined by 2%. Adjusting for the
estimated impact of order consolidation related to its new loyalty
program, average check grew 3% and transactions were flat.
Starbucks in recent quarters has blamed its sales slowdown on
political and economic uncertainty as well as a bottleneck caused
by customer crowding related to mobile orders. Chief Executive
Kevin Johnson, who took over from Howard Schultz earlier this
month, has said the company is addressing the mobile order issues
and that he is focused on deriving more sales at lunch with new
food offerings.
The company said sales in the U.S. improved as the quarter
progressed and that it has seen further acceleration in April.
Increased capacity and the "food and technology innovation we will
be introducing in the months ahead gives us great confidence in our
ability to deliver strong comparable sales and revenue growth in
the back half of fiscal 2017," Chief Financial Officer Scott Maw
said in the press release.
Starbucks earned $653 million, or 45 cents a share, up from $575
million, or 39 cents, the year before.
Revenue rose 6% to $5.3 billion. Analysts surveyed by FactSet
had forecast earnings of 45 cents a share on $5.4 billion in
sales.
Same-store sales in Europe, the Middle East and Africa declined
1% from a year ago. The China and Asia Pacific region posted a 3%
increase in same-store sales, with China same-store sales up
7%.
Write to Julie Jargon at julie.jargon@wsj.com
(END) Dow Jones Newswires
April 27, 2017 16:59 ET (20:59 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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