Starbucks reports stagnant store traffic, shares slip

A Starbucks store inside the Tom Bradley terminal at LAX airport in Los Angeles October 27, 2015. — Reuters pic
A Starbucks store inside the Tom Bradley terminal at LAX airport in Los Angeles October 27, 2015. — Reuters pic

LOS ANGELES, April 27 — Starbucks Corp yesterday reported stagnant store traffic at established cafes for the second fiscal quarter, stirring concerns about intense competition from upscale coffee houses as well as fast-food chains and convenience stores.

Shares in the world's biggest coffee chain, which repeatedly has said that it is not losing business to rivals, fell 2 per cent in extended hours as investors worry that growth in the company's most important, the United States, and around the world market is cooling.

Global sales at established stores rose 2 per cent, but the rise was fuelled exclusively by higher sales per transaction.

Store traffic was flat in the Americas and China-dominated China/Asia Pacific region. It fell 4 per cent in the Europe, Middle East and Africa region. The value per transaction, or how much each customer spends, rose 3 per cent in all regions and globally.

The United States is Starbucks' largest market with more than 14,000 stores.

Same-store sales in China, the fast-growing market where Starbucks expects to one day have more cafes than in the United States, were up 4 per cent for the quarter. Starbucks has 3,200 cafes in mainland China.

Total revenue rose almost 14 per cent to US$6 billion (RM23.5 billion).

Starbucks' quarterly net income was US$660.1 million, or 47 cents per share, compared with US$652.8 million, or 45 cents per share, a year ago. Excluding items, profit of 53 cents a share matched expectations.

The company said its board authorizsd buying back 100 million shares, which is worth more than US$5 billion at current prices.

The results come as Starbucks is working to limit or avoid reputational damage from the arrests of two black men in a Philadelphia cafe two weeks ago. A bystander video of the incident went viral, fuelling protests and calls to boycott the chain.

Starbucks apologised for the incident, which was set in motion when a manager called police to report the two men who were waiting for a friend and had not made purchases. It plans to close 8,000 company-owned cafes on the afternoon of May 29 for racial tolerance training. — Reuters

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