Starbucks Americas sales disappoint on softer traffic

Fri Oct 31, 2014 3:41am EDT
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(Reuters) - Starbucks Corp's early re-launch of its popular Pumpkin Spice latte drink failed to heat up business at its U.S. cafes, disappointing Wall Street and sending the company's shares down almost 5 percent.

The world's biggest coffee chain said a 1 percent increase in traffic contributed to a 5 percent gain in sales for Americas-region cafes open at least 13 months.

But that result fell short of the 6.2 percent same-store sales gain expected by analysts polled by Consensus Metrix.

The U.S.-dominated Americas region contributes the majority of Starbucks revenue. Sales for the region rose 6 percent for the third quarter, bolstered by a 2 percent increase in traffic.

"We grew traffic, but it was at a bit of slower clip," Troy Alstead, Starbucks' chief operating officer, told Reuters.

Free coffee giveaways and other battles for breakfast customers were not to blame for Starbucks' traffic deceleration, Chief Executive Officer Howard Schultz said on a call with analysts.

"This is not a Starbucks issue. There is nothing external in terms of competitive issues," said Schultz, who added that the rise of online and mobile shopping has resulted in fewer people visiting shopping malls and other retail areas during the winter holiday season and the weeks leading up to it.

To that end, the company said it plans to roll out food and drink delivery service in certain markets during the latter half of next year, and integrating ordering into its mobile app.

"Imagine the ability to create a standing order that Starbucks delivered hot or iced to your desk daily," Schultz said during the call.   Continued...

Pedestrians walk past a Starbucks store in the Manhattan borough of New York January 24, 2014.  REUTERS/Lucas Jackson