Starbucks Misses on Revenue Despite Record Quarter -- Update

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 [e-mail]

(END) Dow Jones Newswires

January 25, 2018 17:57 ET (22:57 GMT)

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