Starbucks 'latest quarterly results fell short of expectations, so it sold another tea brand

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Starbucks, the world's largest coffee chain, reported its latest quarterly results on Thursday that fell short of market expectations, while the group announced that it would sell its Tazo tea brand to Unilever for $384 million.

The latest quarterly results showed that Starbucks had revenue of $5.7 billion and net profit attributable to the company fell 1.6 per cent to $788.5 million, with adjusted earnings per share of 55 cents per share and same-store sales up 2 per cent. Starbucks shares fell nearly 6 per cent in after-hours trading on the US stock market as the data fell short of market expectations.

Sales at nearly 1100 Starbucks stores in North America fell sharply as a result of Hurricane Harvey and Emma, and sales at Starbucks stores in the United States fell 2% in the year to Oct. 1. However, the hurricane is only one of the reasons for the decline in Starbucks' same-store sales in North America.

Starbucks has been suffering from weak same-store sales in recent quarters, and its U. S. stores have seen a decline in customer traffic. In the conference call to announce the results, some analysts pointed out that the increase in mobile phone orders and complex menu settings are also the reasons for the decline in same-store sales.

Same-store sales in Chinese mainland rose 8 per cent in the most recent quarter, but growth in the Asia-Pacific region was just 2 per cent, below market expectations of 3.2 per cent. The group expects sales in China to blow out in the next quarter after the completion of the acquisition in China.

At the end of July, Starbucks announced that it would buy a 50% stake in Starbucks' joint venture in eastern China, Shanghai Unified Starbucks Coffee Co., Ltd., for $1.3 billion in cash. Upon completion of the acquisition, Starbucks will achieve full direct management of the mainland market and acquire ownership of 1300 stores in eastern China. The deal is expected to close in early 2018.

Along with the results, Starbucks announced that it had agreed to sell its tea brand Tazo to Unilever for $384 million. The company said it would focus on its only tea brand, Teavana, and planned to expand the business to more than $3 billion over the next five years. In July, Starbucks announced that it would close all its 379 Teavana tea stores in the coming year, but would continue to sell the brand of tea in Starbucks stores.

Tazo was founded in 1994 and was acquired by Starbucks in 1999 for $8.1 million. It is currently sold mainly in packaged and bottled drinks in grocery and convenience stores. The Tazo brand had sales of $112 million last year.