Starbucks Shares Falter After Holiday Drinks Disappoint

American coffee company, Starbucks Corp, announced on Thursday that their 2018 global café revenue would be lower than expected, due to lackluster holiday profits in the US. Starbucks shares fell 4.6 percent to $57.75 in after-hours trading on Thursday, closing at $60.55 in regular trade.

However, company executives assured investors that business growth in China remained steady, as same-store sales rose 6 percent on another accumulated 6 percent increase in transactions. They also said that Starbucks was still on top of many rising competitors from both low-end and high-end coffee businesses.

“China grew revenues 30 percent in Q1, with the strategic acquisition of East China positioning us to accelerate our growth in the key China market,” Starbucks president and CEO, Kevin Johnson, said in a statement.

Back home, café ventures rose by only 2 percent in the first quarter which ended on December 31, yet the number of café visitors did not increase even with the addition of food to menus.

Johnson states that holiday drinks and merchandise did not manage to sway customers into visiting Starbucks shops. According to the CEO, the quarter’s lackluster same-store sales was due to the ongoing shift towards online shopping and less customer interest in the afternoon and evening hours.

Starbucks opened a range of limited-time offers to the public during the holidays including the Chestnut Praline Latte and Gingerbread Latte. The company wanted to tap into the holiday shopper market by adding cards, mugs, coffee, and tea gift boxes and teddy bears.

Starbucks registered a $2.25 billion income in the first quarter translating to $1.57 per share, a noticeable increase from last year’s $751.8 million revenue, or 51 cents per share.

The world’s largest coffee chain hopes to resonate with its U.S. customers by offering afternoon discounts and promotions. In addition to this, they will also continue to expand their stake in the online medium by continuing with mobile ordering and digital marketing.

Image Source: Pixabay

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