Bloomberg News

Starbucks Falls 5% After Same-Store Sales Trail Estimates

April 27, 2012

The Starbucks Corp. logo is displayed outside a store. Photographer: Nelson Ching/Bloomberg

The Starbucks Corp. logo is displayed outside a store. Photographer: Nelson Ching/Bloomberg

Starbucks Corp. (SBUX:US), the world’s largest coffee-shop chain, fell the most in more than eight months after reporting second-quarter same-store sales that trailed analysts’ estimates amid weaker demand in Europe.

The shares (SBUX:US) dropped 6 percent to $57 at 9:55 a.m. in New York, after falling 6.7 percent for the biggest intraday decline since Aug. 18. The Seattle-based company’s stock gained 32 percent this year before today.

Sales at stores open at least 13 months rose 7 percent globally in the quarter, Starbucks said yesterday in a statement. Analysts projected a gain of 8.2 percent, the average of 17 estimates compiled by Consensus Metrix. Such sales fell 1 percent in Europe, the Middle East and Africa amid “slight decreases” in transactions and average check, Starbucks said.

Customers in Europe “are just cautious, as you would expect, not unlike what they were like in the U.S. three and four years ago,” Chief Financial Officer Troy Alstead said in an interview. Starbucks “is not immune from that,” he said.

Second-quarter net income (SBUX:US) advanced 18 percent to $309.9 million, or 40 cents a share, from $261.6 million, or 34 cents, a year earlier, the company said. Analysts projected 39 cents, the average of 28 estimates compiled by Bloomberg.

Starbucks raised its forecast (SBUX:US) for fiscal 2012 profit excluding certain items to as much as $1.84 a share, compared with a previous estimate of up to $1.82. Analysts estimate $1.86, on average. Full-year revenue growth will be in the “low teens,” Starbucks said in the statement.

Turnaround Effort

Chief Executive Officer Howard Schultz recently has sought to boost the company’s flagging business in Europe by increasing advertising and changing its drink recipes there. Schultz, 58, returned to the CEO position in 2008 amid declining sales to engineer a U.S. turnaround after the company opened stores too quickly.

Starbucks is “optimistic” that Europe can be a profitable market for the company, Schultz said yesterday on a conference call. Still, the rebound “won’t happen overnight,” he said.

The company has raised menu prices in some markets this year because of higher costs for coffee beans. Commodities will add about $230 million to costs in fiscal 2012, the company said yesterday.

Same-store sales climbed 18 percent in China and Asia Pacific, matching analysts’ estimates, according to a survey by Consensus Metrix, a researcher owned by Wayne, New Jersey-based Kaul Advisory Group. Comparable or same-store sales are considered an indicator of a retailer’s growth because they include only established locations.

Starbucks is accelerating unit growth in China and Asia, where it has more than 3,000 cafes, and will open 400 stores there this year, it said in the statement.

Revenue advanced 15 percent to $3.2 billion during the quarter ended April 1, compared with analysts’ average estimate of $3.19 billion.

Starbucks has about 17,400 locations worldwide and plans to open about 1,000 net new stores this year.

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net


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Companies Mentioned

  • SBUX
    (Starbucks Corp)
    • $78.73 USD
    • -0.01
    • -0.01%
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