Starbucks sees 2018 cafe sales growth at low end of forecast

Reuters News
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Posted: Jan 25, 2018 4:18 PM

By Lisa Baertlein

(Reuters) - Starbucks Corp <SBUX.O> on Thursday warned that 2018 global cafe sales growth would be at the low end of its forecast after missing Wall Street's expectations for the U.S.-dominated Americas region, where traffic was flat during the key holiday quarter.

Shares of the world's largest coffee chain slid 3 percent following the announcement to $58.75, after closing at $60.55 in regular trade.

Citing a lower U.S. tax rate, Starbucks raised its fiscal 2018 earnings forecast to a range of $2.48 to $2.53 per share, excluding items, up from $2.30 to $2.33 per share previously.

However, sales at established Americas region cafes in the quarter to Dec. 31 were up just 2 percent, falling short of the 3.3 percent rise expected by research firm Consensus Metrix.

Starbucks now expects 2018 global same-store sales growth at the low end of its previously-issued view of 3 to 5 percent.

Starbucks' U.S. cafe sales growth has cooled as it continues to add stores and competition from high and low-priced coffee sellers mounts. It is also grappling to eliminate bottlenecks that can happen when users of its industry-leading mobile app flood crowded cafes with orders. Starbucks has turned to China for growth, planning to more than triple its over 3,000-store network within a decade. But for the time being, investors want new Chief Executive Kevin Johnson, still overshadowed by his predecessor and current Executive Chairman Howard Schultz, to deliver more robust growth in Starbucks' home market, with roughly 14,000 stores. The stock is up 3.2 percent from a year ago, versus the 44 percent, turnaround-fueled gain at McDonald's Corp <MCD.N>. China same-store sales were up 6 percent. Starbucks recently opened a massive, showcase Reserve Roastery in Shanghai. Net income was $2.25 billion, or $1.57 per share, up from $751.8 million, or 51 cents per share, a year ago. The large increase was related to the company's acquisition of 1,300 stores in China.

(Reporting by Lisa Baertlein in Los Angeles, Editing by Rosalba O'Brien)