LOS ANGELES – Starbucks Corp on Thursday cut its revenue forecast for the year and reported a smaller-than-expected rise in quarterly sales at established restaurants in its Americas region, sending shares down 3.8 percent in extended trade.
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The world's biggest coffee seller said visits to U.S. stores, the heart of the Americas region, were down in a sign the Seattle company may be succumbing to the stubborn slump bedeviling the broader restaurant industry.
Starbucks Chief Operating Officer Kevin Johnson told Reuters the disappointing Americas results were due to operational challenges caused by congestion at drink pickup sites after adoption of mobile order-and-pay doubled to 1,200 restaurants from the fourth to first quarters.
Sales in the Americas region were up 3 percent for the fiscal first quarter that ended Jan. 1, lower than analysts' average estimate of a 3.9 percent rise, according to research firm Consensus Metrix.
U.S. comparable store sales also rose 3 percent, driven exclusively by higher spending, while the actual number of transactions was down. Starbucks attributed some of that decline to a change in its loyalty club rules and said that transactions were flat, excluding that factor.
Starbucks forecast 2017 revenue would rise 8 to 10 percent, down from its target issued three months ago of a double-digit rise for the year.
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Johnson also pinned some of the blame on macroeconomic weakness that is causing pain throughout the restaurant industry.
Revenue in the fiscal first quarter of $5.7 billion was shy of the $5.8 billion average target of analysts compiled by Thomson Reuters I/B/E/S. Adjusted earnings per share of 52 cents met expectations.
"We view this as a reminder that, despite (Starbucks') relative consistency and outperformance vs. peers, it isn't completely immune to a meaningful deterioration in retail traffic," Stephens analyst Will Slabaugh said in a client note.
The Americas region contributed 62 percent of Starbucks' total net revenue in the latest fiscal year.
Much of that came from the United States, where Starbucks and other chains have been battling direct rivals as well as unusually low grocery prices.
(Reporting by Lisa Baertlein in Los Angeles and Peter Henderson in San Francisco; Editing by Matthew Lewis)