Starbucks sales grow at slowest pace in a year
STARBUCKS sales rose at their slowest pace in a year and earnings missed Wall Street’s estimates as customer check sizes expanded at a more sluggish pace.
Same-store sales at company-operated locations open for more than a year rose 5 per cent in the company’s fiscal first quarter, which ended Dec 31. That’s lower than the 6.4 per cent analysts expected, and represents the slowest growth rate since a year earlier, a sign that Starbucks’ momentum may be fading.
While missing on most financial metrics, Starbucks reported same-store sales in North America that were largely in line with expectations, in part to positive store traffic. North America operating margin, a measure of profitability, also beat estimates.
Investors shrugged off the results, suggesting they found reasons for optimism despite the weaker performance. The shares rose 3.2 per cent at 4.50 pm in late trading in New York. The stock has lost 13 per cent over the last 12 months, versus a 23 per cent gain in the S&P 500 Index.
Investors had been bracing for a muted report after third-party sales data pointed to a slowdown in the United States, weighing on the shares. Fears of lowered demand, in part due to boycotts in the Middle East over the company’s perceived support of Israel – which Starbucks has repeatedly denied – also damped sentiment. Analysts had already lowered their same-store sales and profits estimates.
Earnings, excluding some items, were 90 US cents a share, while analysts expected 93 US cents. Net revenue of US$9.4 billion fell short of the US$9.6 billion average forecast.
Adjusted operating margin rose 130 basis points to 15.8 per cent, in part due to higher efficiency in stores. It was partially offset by higher wages and new benefits for workers. BLOOMBERG
Share with us your feedback on BT's products and services
