Financial Performance

Starbucks Sales Top $6B But Shares Drop 2%

The coffee giant's U.S. store traffic was flat in the second quarter despite heavy Happy Hour discounting.
Matthew HellerApril 26, 2018

Starbucks’ top-line quarterly results beat analysts’ estimates but its shares fell more than 2% in extended trading amid investor concerns over the pace of its U.S. sales growth.

For the second quarter, the coffee giant reported Thursday that global same-store sales rose 2%, with comp sales up 2% in the U.S.-dominated Americas region and up 4% in China. Analysts had expected 1.8% growth in the U.S.

Customers spent more per visit in the U.S., but customer visits, or traffic, were flat even though stores offered 15% off new blonde espresso drinks and half-price espresso drinks during afternoon Happy Hour. Starbucks’ home market of the United States is its largest, with more than 14,000 stores.

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In Thursday’s after-hours trading session, the company’s shares fell 2.1% to $58.10.

“Starbucks has struggled with sales in the U.S. for several quarters, as new beverage concoctions continued to fall flat with consumers and in-store merchandise remained on shelves unsold,” Reuters reported.

Starbucks CEO Kevin Johnson said the second-quarter results were “highlighted by accelerating momentum across our Americas business — particularly in the U.S., continued strong performance in China and our strongest comp growth in Japan in five quarters.”

“At the same time, we made measurable progress against each of the strategic initiatives that position Starbucks to continue delivering best-in-class operating and financial results long into the future,” he added.

Starbucks’ revenue rose 14% to a record $6.03 billion, beating estimates of $5.9 billion, while adjusted earnings came to 53 cents per share, in-line with estimates.

“Importantly, we saw comps accelerate in both the U.S. and China throughout the quarter, giving us confidence in both our full year and long-term guidance,” CEO Kevin Johnson said.

All the chain’s U.S. stores, however, will be closed on the afternoon of May 29 for racial tolerance training as Starbucks tries to repair the damage from the arrests of two black men in a Philadelphia cafe two weeks ago. “The event will likely result in a multi-million dollar hit from lost sales,” CNBC said.