Starbucks Whiffs On Holiday Sales

It was not a holly jolly Christmas at Starbucks in 2017, as the firm warned yesterday that sale growth would be at the low end of the forecast after all its traditional holiday drinks whiffed with the public this year.

The holiday quarter is generally a big one for Starbucks.

Shares slipped 4.6 percent on the announcement.

Starbucks was adamant that the slipping sales figures were not a result of cannibalization due to over saturation of stores, nor competition from other lower-priced players in the caffeine slinging game. But, whatever the root, sales rose 2 percent during the quarter that ended December 31 and did not pick up to the expected 3.3 mark.

“Holiday (limited-time offers) and merchandise did not resonate with our customers as planned,” Chief Executive Kevin Johnson said on a conference call with analysts.

The people this year were not feeling the Chestnut Praline Latte or the gift cards, mugs, coffee and tea gift boxes that generally charm the Starbucks holiday shopping crowd.  Johnson noted that some of the shift came from online shopping, as well as waning customer interest in the afternoon and evening hours.

Starbucks said it now expects 2018 global same-store sales growth at the low end of its previously-issued view of 3 to 5 percent. To push a bounce back, CFO Scott Maw noted the firm plans to “streamline” operations by dropping underperforming merchandise and pulling out of non-profitable business lines like Tevana and Tazo.

Starbucks raised its fiscal 2018 earnings forecast to a range of $2.48 to $2.53 per share, excluding items, from $2.30 to $2.33 per share previously.

The firm has also increasingly been looking to China as a potential growth engine, as the nation is scheduled to see its total number of stores triple to 9,000 or so within a decade. China’s same-store sales were up 6 percent, and the company’s acquisition of 1,300 stores in China helped net income in the quarter to rise to $2.25 billion.


Featured PYMNTS Study:

More than 63 percent of merchant service providers (MSPs) want to overhaul their core payment processing systems so they can up their value-added services (VAS) game. It’s tough, though, since many of these systems date back to the pre-digital era. In the January 2020 Optimizing Merchant Services Playbook, PYMNTS unpacks what 200 MSPs say is key to delivering the VAS agenda that is critical to their success.