Starbucks US sales jump over holidays; outlook disappoints
SEATTLE -- An alleged war on Christmas by Starbucks apparently didn't dampen the chain's holiday sales, but its outlook going forward fell short of Wall Street expectations.
The Seattle-based company said Thursday that sales rose 9 percent in its flagship U.S. market during the final three months of the year. The jump was the result of an increase in customer visits as well as spending on items like breakfast sandwiches.
The higher sales came despite an online backlash from some corners when Starbucks unveiled its minimalist red cups for the holidays bearing only its logo. That was a change from past years, when the company's holiday cups were decorated with reindeer, snowflakes and Christmas ornaments.
Its performance overseas was weaker. In Western Europe, the company said it noticed a "dramatic decline in consumer and tourist activity" after the terrorist attacks in Paris in November. Sales for the unit including Europe, the Middle East and Africa rose 1 percent at established locations, down from growth of 5 percent in the prior quarter.
"We have quite recently begun to see the effects of that region's resilience and recovery," the company said in an email.
For its Asia region, Starbucks said sales rose 5 percent, down from 6 percent the previous quarter. The company said it did not expect a material impact from the attacks this month in Indonesia that resulted in temporary store closures.
During a conference call with analysts Thursday, Starbucks CEO Howard Schultz also expressed confidence in the company's long-term investment in China, where it already has about 2,000 stores and plans to have 3,400 by 2019.
Back at home in the U.S., Starbucks has been pushing up sales by getting more customers to sign up for its mobile payment app. It's also rolling out pricier drinks like the "Flat White" and different food options. Sales of breakfast sandwiches were up 40 percent during the quarter from a year ago, the company said.
Over the holidays, the company said 1 in 6 American adults received a Starbucks gift card, up from 1 in 7 a year ago, and 1 in 8 two years ago.
The company apparently wasn't affected by the warm weather, which hurt retailers that sell items such as winter coats and boats. Starbucks sells both hot drinks and cold drinks like Frappuccinos.
For the current quarter ending in April, Starbucks expects its per-share earnings to range from 38 cents to 39 cents. That's below the average analyst estimate of 40 cents per share, according to FactSet. The company expects full-year earnings in the range of $1.87 to $1.89 per share, compared with the FactSet estimate of $1.89 per share.
Shares of Starbucks fell 4.7 percent to $56.25 in after-hours trading.
For the quarter ended Dec. 27, the company earned $687.6 million, or 46 cents per share. That was a penny more than Wall Street expected.
Total revenue was $5.37 billion, short of the $5.38 billion analysts had forecast, according to Zacks Investment Research.
Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research. Access a Zacks stock report on SBUX at http://www.zacks.com/ap/SBUX
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