Starbucks reports cooling quarterly growth and pares outlook
NEW YORK (Reuters) – Starbucks Corp (SBUX.O) lowered its guidance for full year same-store sales growth on Thursday, saying it now sees growth just below its previous target range.
FILE PHOTO: A Starbucks store is seen inside the Tom Bradley terminal at LAX airport in Los Angeles, California, U.S. on October 27, 2015. REUTERS/Lucy Nicholson/File Photo
The Seattle-based company, the world’s biggest coffee retailer, reported that same-store sales rose 1 percent globally and in its U.S. cafes in its fiscal third quarter, while growth in the once-robust China market slipped 2 percent amid fierce competition and stricter regulations on delivery services.
Starbucks said a 3 percent increase in average tickets drove the rise in same-store sales for quarter ended July 1.
In the year-ago quarter, Starbucks’ same-store sales grew by 5 percent in the United States and Americas and 4 percent globally. The sales dip in China is an even steeper departure from the 7 percent growth rate reported in last year’s quarter.
Wall Street had been braced for a disappointing quarter from the ubiquitous coffee brand. Starbucks last month warned of lower quarterly sales growth and announced plans to close about 150 U.S. cafes in the next fiscal year, triple the typical number of closures, as it seeks to enter under-served markets in the U.S. South and Midwest.
Same-store sales in China, which has been Starbucks’ biggest growth driver, declined by 2 percent, versus growth of 4 percent and 6 percent in the prior two periods.
Starbucks’ report comes exactly one month after Howard Schultz, the brand’s elder statesman and former chief executive, stepped down as executive chairman, in a move that stoked investor concerns on how the company would evolve after nearly four decades of Schultz’s near-constant presence.
Reporting by Alana Wise; Editing by Leslie Adler
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