Starbucks Q1 sales growth disappoints

Starbucks posted disappointing sales growth for its first quarter, citing “a challenging environment for restaurant retailers overall.”



The coffee giant reported that its consolidated net revenues increased 7% in the quarter, ended January 1, 2017, to $5.73 billion, less than analysts had expected.



Same-store sales in the United States increased 3%, comprised of a 5% increase in average ticket and a 2% decrease in transactions. (Adjusting for the estimated impact of order consolidation related to the Starbucks revamped loyalty program, average ticket grew 3% with transactions flat to prior year.)



Globally, same-store store sales increased 3%, with a 3% increase in the Americas, a 5% increase in CAP (China Asia Pacific), and a 1% decrease in EMEA (Europe, Middle East and Africa). The increase in the CAP region is significant as Starbucks has committed to significant expansion in the region going forward.



Net income was $751.8 million, or 51 cents per share, up from $687.6 million, or 46 cents per share, in the year-ago period. Adjusted earnings of 52 cents a share met the FactSet consensus.



In other key metrics, Starbucks said that mobile order and pay represented 7% of U.S. company-operated transactions in the quarter, up from 3% in the prior year. Mobile payments reached 27% of U.S. company-operated transactions



“We are pleased with the record Q1 financial and operating results we announced today, particularly given that the results were delivered in the face of a challenging environment for restaurant retailers overall,” said Scott Maw, CFO, Starbucks.



In other news, Starbucks nominated three new directors to its board Rosalind Brewer, CEO of Sam’s Club (she steps down from the role on Feb.1); Jorgen Vig Knudstorp, executive chairman of the Lego Brand Group; and Microsoft Corp. CEO Satya Nadella.



Starbucks opened 649 net new stores in the quarter, bringing total stores to 25,734 in 75 countries worldwide.