Fewer US customers and venti-sized costs for closing poorly performing stores led to lower sales and profit in the fourth quarter at Starbucks Corp, the company said on Monday.
Seattle-based Starbucks said profit fell 97 percent to US$5.4 million, or a US$0.01 a share, from US$158.5 million, or US$0.21 per share, a year earlier. The coffee retailer earned US$0.10 per share when the costs from closing about 600 stores in the US and 61 locations in Australia are excluded.
Analysts expected profit of US$0.13 per share, according to a poll by Thomson Reuters.
Starbucks began shutting the US and Australian stores this summer as part of a campaign to reverse slowing sales and falling profits at the company. That turnaround began at the start of the year when former chief executive Howard Schultz took back the reins of the company to again fill the CEO and chairman posts.
Besides closing the stores, Starbucks has cut more than 1,000 positions — many of which were unfilled — and introduced a slew of new products, including Vivanno smoothie drinks and breakfast pastries.
The company also replaced aging espresso makers and launched new single-cup Clover brewing machines in some markets.
But all the changes did little to boost sales in the fourth quarter, particularly in the US, where the turmoil in the economy during the summer months took a gulp out of consumer spending. Revenue rose 3 percent to US$2.52 billion from US$2.44 billion.
Analysts expected sales of US$2.58 billion. Same-store sales, or sales at locations open at least a year, dropped 8 percent in the US as fewer customers came into the stores. Those that did also spent less, the company said. Same-store sales were flat overseas.
Despite the sales slowdown, Schultz said the company was doing what it needed to get back on track.
“We appear to be more resilient than many other premium brands,” Schultz said in a statement. “And while we cannot call isolated signs of improving sales a trend, we are encouraged by our ability to drive increased traffic at a relatively low cost, as we did on Election Day” when the company offered customers a free “tall” drip coffee.
For the current fiscal year, Starbucks earned US$315.5 million, or US$0.43 per share, down from US$672.6 million, or US$0.87 per share last year. Revenue rose to US$10.38 billion from US$9.41 billion.
Starbucks said it expects next year’s profit excluding one-time costs between US$0.71 and US$0.90 per share depending on how steeply same-store sales decline during the year. Analysts predict profit of US$0.87 per share for the year.
The company also said it will open about 700 net new stores overseas during the next year. In the US, the company said it will close about 225 stores and open 205 new ones.
Shares fell US$0.13 to US$10.07 in electronic after-hours trading after dipping US$0.35, or 3.3 percent, to close at US$10.20.
CLASH OF WORDS: While China’s foreign minister insisted the US play a constructive role with China, Rubio stressed Washington’s commitment to its allies in the region The Ministry of Foreign Affairs (MOFA) yesterday affirmed and welcomed US Secretary of State Marco Rubio statements expressing the US’ “serious concern over China’s coercive actions against Taiwan” and aggressive behavior in the South China Sea, in a telephone call with his Chinese counterpart. The ministry in a news release yesterday also said that the Chinese Ministry of Foreign Affairs had stated many fallacies about Taiwan in the call. “We solemnly emphasize again that our country and the People’s Republic of China are not subordinate to each other, and it has been an objective fact for a long time, as well as
‘CHARM OFFENSIVE’: Beijing has been sending senior Chinese officials to Okinawa as part of efforts to influence public opinion against the US, the ‘Telegraph’ reported Beijing is believed to be sowing divisions in Japan’s Okinawa Prefecture to better facilitate an invasion of Taiwan, British newspaper the Telegraph reported on Saturday. Less than 750km from Taiwan, Okinawa hosts nearly 30,000 US troops who would likely “play a pivotal role should Beijing order the invasion of Taiwan,” it wrote. To prevent US intervention in an invasion, China is carrying out a “silent invasion” of Okinawa by stoking the flames of discontent among locals toward the US presence in the prefecture, it said. Beijing is also allegedly funding separatists in the region, including Chosuke Yara, the head of the Ryukyu Independence
‘VERY SHALLOW’: The center of Saturday’s quake in Tainan’s Dongshan District hit at a depth of 7.7km, while yesterday’s in Nansai was at a depth of 8.1km, the CWA said Two magnitude 5.7 earthquakes that struck on Saturday night and yesterday morning were aftershocks triggered by a magnitude 6.4 quake on Tuesday last week, a seismologist said, adding that the epicenters of the aftershocks are moving westward. Saturday and yesterday’s earthquakes occurred as people were preparing for the Lunar New Year holiday this week. As of 10am yesterday, the Central Weather Administration (CWA) recorded 110 aftershocks from last week’s main earthquake, including six magnitude 5 to 6 quakes and 32 magnitude 4 to 5 tremors. Seventy-one of the earthquakes were smaller than magnitude 4. Thirty-one of the aftershocks were felt nationwide, while 79
MARITIME SECURITY: Of the 52 vessels, 15 were rated a ‘threat’ for various reasons, including the amount of time they spent loitering near subsea cables, the CGA said Taiwan has identified 52 “suspicious” Chinese-owned ships flying flags of convenience that require close monitoring if detected near the nation, the Coast Guard Administration (CGA) said yesterday, as the nation seeks to protect its subsea telecoms cables. The stricter regime comes after a Cameroon-flagged vessel was briefly detained by the CGA earlier this month on suspicion of damaging an international cable northeast of Taiwan. The vessel is owned by a Hong Kong-registered company with a Chinese address given for its only listed director, the CGA said previously. Taiwan fears China could sever its communication links as part of an attempt
RSS