Starbucks Lowers Long-Term Target, Selling Tazo to Unilever
November 02 2017 - 5:20PM
Dow Jones News
By Austen Hufford
Starbucks Corp. said it would sell its Tazo brand of teas in the
coffee seller's latest move to focus on its core operations.
The company also on Thursday lowered its forecast for long-term
profit growth, sending shares down 6.5% in post-market trading, as
it also recorded same-store sales growth below its benchmark target
and posted an unexpected revenue decline.
Starbucks now expects to have earnings per share growth of 12%
or greater in the years to come. It had previously targeted 15% to
20% growth.
The sale of Tazo comes just months after Starbucks closed the
last of its Teavana tea shops. Unilever PLC is paying $384 million
for the Tazo brand, which is sold primarily in grocery and
convenience stores.
Starbucks bought the brand for $8.1 million in 1991. The deal is
expected to close later this year and Starbucks then plans to start
selling packaged Teavana tea next year.
For its fourth quarter, the company had comparable-store sales
growth of 2% globally, driven by increases in the average order
price and the number of transactions.
The company reported a U.S. same-store sales increase of 2%,
below the company's benchmark of 5% growth.
Hurricanes Harvey and Irma also cut into sales growth, shaving 1
percentage point off both global and U.S. growth.
Still, the company also reported success in its efforts to drive
consumer habits through technology and perks. Membership in its
rewards program grew 11% to 13.3 million in the U.S. as mobile
orders reached 10% of transactions in U.S. company-operated
stores.
Starbucks also reported some success in China, where it
increased same-store sales by 8%, driven by a 7% increase in
transactions. This year, the company has worked to increase its
control over stores in the country.
In all for the quarter, the company reported revenue of $5.7
billion, down 0.2% from a year ago. It reported a profit of $788.5
million, or 54 cents a share, compared with $801 million, or 54
cents a share, in the year-ago period.
On an adjusted basis, earnings per share came in at 55
cents.
Analysts polled by Thomson Reuters had expected revenue of $5.8
billion and adjusted earnings per share of 55 cents.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
November 02, 2017 17:05 ET (21:05 GMT)
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