Starbucks | $SBUX Stock | Shares Lower By 6% After Dismal Earnings

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starbucks

Starbucks Corporation (NASDAQ: SBUX)

 

After reporting less-than-stellar earnings numbers on Thursday July 27, 2017, SBUX shares sold off in the aftermarket by about 6% – closing at $55.90.

This equates to being down 6.05% or $3.60 from the closing price of $59.50. Shares had been up  +2.69 % or $1.56 in the regular trading session. Revenues came in

at $5.66 billion dollars – well below the $5.74 billion which had been anticipated. After adjustments for one-time events, Starbucks earned  $.55 cents per share which compares with $0.49 per share in the same period one year ago.

The company made it known that they were looking toward China for more earnings growth to add to the bottom line. This comes as the company is abandoning their tea division.

According to some estimates, SBUX paid $620 million dollars for the tea chain Teavana in 2012 ( 379 retail establishments) and currently employs 3,300 people which will be impacted by the developments.

Starbucks Comments

In a previous investor discussion, Scott Maw, Starbucks CFO stated,

“Over the last several years many mall-based retailers have been adversely impacted by reduced foot traffic, resulting from the accelerating shift of consumer behavior away from brick-and-mortar retail and changes in consumer retail activity overall,” and just today added, “Our Teavana mall stores have not been immune, with many reporting negative comps and operating losses for some time.”-BusinessInsider

As reported on the Q2 call, many of the company’s principally mall-based Teavana retail stores have been persistently underperforming,” Starbucks said in a statement. “As a result, Starbucks will close all 379 Teavana stores over the coming year, with the majority closing by Spring 2018.

Meanwhile, CFO Scott Maw said in the company’s earnings release that “the combination of trends in the quarter and ongoing macro pressures impacting the retail and restaurant sectors has us a bit more cautious going into Q4.”

 

Analyst Comments

Prior to the earnings release, RBC Capital Markets analyst David Palmer wrote:

“Starbucks may increasingly become a China growth story in the minds of investors,” “The market is a deep invested capital opportunity with high returns, and now Starbucks will own more of these future returns.”

 

The Charts

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The above price chart shows SBUX during the regular trading session on Thursday on the left and on the right the after-hours trading session.

 

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The above price chart shows the daily action going back to the beginning of 2017. Note on the right side of the chart the yellow dots which indicate the 50 day moving average and is major resistance.

 

Company Profile

Starbucks Corporation, together with its subsidiaries, operates as a roaster, marketer, and retailer of specialty coffee worldwide. The company operates in four segments: Americas; China/Asia Pacific; Europe, Middle East, and Africa; and Channel Development.

Its stores offer coffee and tea beverages, packaged roasted whole bean and ground coffees, single-serve and ready-to-drink coffee and tea products, juices, and bottled water; an assortment of fresh food and snack offerings; and various food products, such as pastries, breakfast sandwiches, and lunch items, as well as beverage-making equipment and accessories.

The company also licenses its trademarks through licensed stores, and grocery and national foodservice accounts. It offers its products under the Starbucks, Teavana, Tazo, Seattle’s Best Coffee, Evolution Fresh, La Boulange, Ethos, Frappuccino, Starbucks Doubleshot, Starbucks Refreshers, and Starbucks VIA brand names.

As of November 3, 2016, the company operated 25,085 stores. Starbucks Corporation was founded in 1971 and is based in Seattle, Washington.YahooFinance

 

 

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