Starbucks Declines After Coffee Promotions Fail to Invigorate Sales

• April 26 2018
• Leslie Patton

Starbucks Corp.’s half-off drink deals and extra rewards offers helped it meet expectations in the latest quarter, but the shares dropped -- a sign investors were expecting more.

Starbucks Corp.’s half-off drink deals and extra rewards offers helped it meet expectations in the latest quarter, but the shares dropped -- a sign investors were expecting more.

The coffee giant said adjusted profit met estimates, while comparable sales -- a key metric -- also showed growth slightly above projections. Chief Financial Officer Scott Maw assured investors in a statement that the company is investing “strategically and with a ‘long game’ mentality.”

Wall Street may be getting impatient, however. The shares fell as much as 3.2 percent to $57.49 at 4:34 p.m. after the end of regular trading in New York. The stock had been up 3.4 percent since the start of the year though Thursday’s close.

Starbucks has seen sales growth slow recently, especially in its home market. Along with extra rewards, marketing emails and a branded Visa credit card, Starbucks is looking to new cold drinks to help its U.S. business, especially in the slower afternoon period.

Same-store sales increased 2 percent in the Americas region, while analysts estimated a gain of 1.8 percent, according to Consensus Metrix. They also rose 2 percent in the prior quarter. Earnings excluding certain items amounted to 53 cents a share in the quarter, matching analysts’ projections.

— With assistance by Brandon Kochkodin