Stock market experts keep track of the performance and financial health of major companies. In a conference call with analysts, Starbucks revealed its performance figures on Thursday, July 21, 2016.
Starbucks Corp. has missed its sales target for the third consecutive time, and it seems to have a reason for that too. It considers the terror concerns experienced worldwide and the political uncertainty at home for this "anomaly" in the quarter. It claims these factors affected consumer confidence, resulting in Starbucks not living up to its sales target again.
Performance Figures for the Quarter
The company had earlier projected its annual sales to rise 10% or even higher, but now only expects around 10%. It expects sales at stores that have been open for 13 months at least to rise by around 5% which is a bit of a downward revision to the target. The company has increased its forecasted profit by 3 cents, with expectations of making $1.88 to $1.89 per share. It has expressed its commitment to attain an EPS growth of at least 15% each year, including for 2017. Domestic sales for Starbucks did increase by 8% and comparable sales by 4% in the latest quarter. The year-ago period witnessed 13% and 8% increases. It must be remembered that domestic sales account for the big chunk of the business.
Europe and Asia Pacific Regions
Sales for Starbucks fell 1% in Europe, Africa and the Middle East despite the 2.8% increase which analysts had projected. Sales in Europe also fell 7%. This is explained as the result of Brexit-related volatility in the UK, and its stores being sold in Germany. In fact Germany had been Starbucks' largest market in all continental Europe. Overall in Europe though, UK is its largest market.
The Asia Pacific region and China also saw a lesser than projected increase at 3%. China, Starbucks' largest market outside the US may soon overtake the US as Starbucks' largest single market, according to company officials. That is why China figures prominently in the company's international expansion plans. There are now close to 2,300 Starbucks stores in China, and the company targets over 3,400 stores in the country by 2019. In terms of comparable sales, China saw a 7% increase.
Overall Profit Reported Globally
Starbucks reported $754 million profit overall though, which equates to 51 cents per share. That's a good improvement from the previous year when its profit stood at $626.7 million, translating to 41 cents per share. The company’s revenue saw a 7% increase to $5.24 billion.
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