Shares of Starbucks kill 5 percent in after-hours trading on Thursday after the coffee chain supported another quarter of disappointing sales growth as holiday offerings go to the wall to draw in customers.
Same-store sales came up short in all of the company’s sections. However, growth in China was robust, with same-store sales be equal to 6 percent on the back of a 6 percent increase in transactions.
“China grew receipts 30 percent in Q1, with the strategic acquisition of East China angle us to accelerate our growth in the key China market,” Kevin Johnson, president and CEO, implied in a statement.
- Adjusted EPS: 58 cents ex. items vs. 57 cents awaited according to Thomson Reuters
- Revenue: $6.07 billion compared to $6.18 billion projected, according to Thomson Reuters
- Whole same-store sales: Up 2 percent vs 3 percent growth projected, according to StreetAccount
In the board ended Dec. 31, Starbucks said net income rose to $2.25 billion, or $1.57 per interest, from $751.8 million, or 51 cents per share, a year ago.
Excluding memos, Starbucks earned 58 cents per share in the latest period, which was a penny safer than analysts were expecting. Not included in that number is a 7 cents per division benefit from changes in the U.S. tax law.
The company said that global same-store transaction marked downs rose 2 percent in the quarter, however forecasts had called for same-store yard sales to be up 3 percent, according to StreetAccount. This is the fifth quarter in a row that pandemic same-store sales have been positive, but the company has missed analyst confidences in this metric by 70 basis points or more.
In the U.S., same-store in stocks grew 2 percent driven by a 2 percent increase in the average check largeness.
Johnson attributed disappointing U.S. sales to weak sales of holiday beverages, retail and gift cards.
“Holiday [limited time offers] and merchandise did not resonate with out purchasers as planned,” he said on an earnings conference call Thursday. “To be more well-defined, in Q1, our food comp was 2 percent. Our core beverage comp, excluding festival limited time offers was 1 percent. And together our holiday LTO and lobby articles had a negative impact of over 1 point of comp.”
During the holidays, Starbucks had bid seasonal flavors such as an Eggnog Latte and Chestnut Praline Chai Tea Latte, entirety others.
Starbucks hopes to bolster sales in the U.S. by luring in customers in the afternoon with takes and promotions. It also plans on continuing to leverage mobile ordering and digital marketing to improve the number of times consumers visit the coffee shop.
Starbucks suggested it added 1.4 million Starbucks Rewards members in the U.S. in the last domicile, raising its total number of members to 14.2 million.
Same-store transaction marked downs in Europe, the Middle East and Africa also fell short of expectations, down 1 percent in the habitation. Analysts had expected same-store sales to be up 1.6 percent.
While same-store sales in China were unvarying, the China and Asia Pacific segment saw same-store sales growth of 1 percent. CFO Scott Maw said that sales in Japan were pang by weak sales around Frappuccino offerings.
Starbucks hit the reset button in November on its butts for same-store sales and earnings growth. Johnson said at the time that he was positive about Starbucks’ ability to meet and exceed the new targets.
On Thursday, the coffee confine confirmed that investors can expect annual global same-store transaction marked downs of between 3 and 5 percent growth. However, the company said shareholders should await same-store sales growth near the low end of this range.
In addition, the companionship said that it now expects adjusted earnings in the range of $2.48 to $2.53 per parcel for the full year, up from the previously forecast range of $2.30 to $2.33. This new prediction includes the impact of the new U.S. tax law and reinvestments.
Correction: A previous version of this testimony misstated the earnings forecast.