Starbucks Q4 disappoints; to launch credit card
Starbucks is feeling the heat from higher-end and lower-end competitors.
The coffee giant cut back its profit forecast on the heels of disappointing fourth quarter sales, which were impacted in part by two back-to-back hurricanes. Starbucks also announced deals to sell its Tazo tea brand to Unilever and to launch a credit card with Chase.
Starbucks posted total revenue in the quarter, ended Oct. 1, of $5.7 billion, flat with the year-ago period. Analysts had expected $5.80 billion.
Global same-store sales increased 2%, fueled by a 2% increase gain in the average ticket and a 1% increase in the number of transactions. Excluding the impact of Hurricanes Harvey and Irma, global comparable sales rose 3%. In the U.S., same-store sales rose 3%.
Starbucks' performance in the overall Asian region, which it has targeted as its biggest growth opportunity, disappointed analysts. Same-store sales in the region increased 2%, missing analysts' predictions of a 3.2% gain. However, same-store sales rose 8% in China, the Asian country that is Starbucks' major expansion target.
Excluding some items, profit came in at 55 cents a share, which was in line with analysts’ forecast.
"Starbucks delivered solid top and bottom line growth -- and our strongest quarterly traffic number in the U.S. since mid-2016 -- despite a difficult operating environment in both the quarter and year,” said Scott Maw, CFO.
On the company's quarterly call, Starbucks said it would launch a co-branded Chase Visa credit card this winter. It will enable customers to receive Starbucks Rewards with company purchases they make in and out of Starbucks' stores. A prepaid card is also in the works, and will come out later.
The chain trimmed its long-term earnings target to growth of 12% or greater per share compared with its previous estimate of 15% to 20%. It also cut its global long-term same-store sales growth forecast to 3% to 5% from 4% to 6%
Starbucks put its total store count at 27,339 across 75 countries.
The coffee giant cut back its profit forecast on the heels of disappointing fourth quarter sales, which were impacted in part by two back-to-back hurricanes. Starbucks also announced deals to sell its Tazo tea brand to Unilever and to launch a credit card with Chase.
Starbucks posted total revenue in the quarter, ended Oct. 1, of $5.7 billion, flat with the year-ago period. Analysts had expected $5.80 billion.
Global same-store sales increased 2%, fueled by a 2% increase gain in the average ticket and a 1% increase in the number of transactions. Excluding the impact of Hurricanes Harvey and Irma, global comparable sales rose 3%. In the U.S., same-store sales rose 3%.
Starbucks' performance in the overall Asian region, which it has targeted as its biggest growth opportunity, disappointed analysts. Same-store sales in the region increased 2%, missing analysts' predictions of a 3.2% gain. However, same-store sales rose 8% in China, the Asian country that is Starbucks' major expansion target.
Excluding some items, profit came in at 55 cents a share, which was in line with analysts’ forecast.
"Starbucks delivered solid top and bottom line growth -- and our strongest quarterly traffic number in the U.S. since mid-2016 -- despite a difficult operating environment in both the quarter and year,” said Scott Maw, CFO.
On the company's quarterly call, Starbucks said it would launch a co-branded Chase Visa credit card this winter. It will enable customers to receive Starbucks Rewards with company purchases they make in and out of Starbucks' stores. A prepaid card is also in the works, and will come out later.
The chain trimmed its long-term earnings target to growth of 12% or greater per share compared with its previous estimate of 15% to 20%. It also cut its global long-term same-store sales growth forecast to 3% to 5% from 4% to 6%
Starbucks put its total store count at 27,339 across 75 countries.