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Starbucks shares slid in after hours trade after the US coffee chain said a key sales metric grew at a slower pace than analysts had forecast.
Shares in the Seattle-based company fell 3.6 per cent in extended trading after the company said like-for-like sales, a key industry metric, rose 3 per cent in the second quarter, shy of analysts estimates of a 3.6 per cent rise.
Meanwhile, net revenues rose 6 per cent to a record $5.3bn, but missed Wall Street estimates of $5.4bn
Starbucks said profits rose to $652.8m or 45 cents a share, compared with $575.1m or 39 cents a share in the year ago period. Adjusting for one-time items, the company reported earnings of 45 cents a share in line with estimates.
Starbucks’ shares took a hit last year as the company struggled to maintain sales momentum and after its long-time chief executive Howard Schultz announced that he would he stepping down and just retaining his titles as executive chairman.
In an effort to boost sales overseas, the company partnered with Weixin in China earlier this year to launch a new social gifting feature in February that enables customers to gift a Starbucks beverage or digital card — in keeping with the local gift giving culture.
And industry tracker NPD projects that US restaurant industry traffic is likely to remain stalled this year much like 2016. In the domestic market, Starbucks has been turning to its membership programme to help shore up sales.
Indeed, the latest quarterly results show that active US membership in Starbucks Rewards rose 11 per cent from a year ago to 13.3m members and the programme accounted for 36 per cent of US company-operated sales.
But the coffee-chain continues to face stiff competition from Dunkin Donuts and McDonald’s at the low end and premium coffee-roasters like La Colombe, Stumptown and Blue Bottle.
Starbucks was also upbraided by some customers in January after its Mr Schultz pledged to hire 10,000 refugees around the world over five years after US president Donald Trump signed an executive order imposing a travel ban on predominantly Muslim countries.