Starbucks stock slips after profit forecast misses Street estimates
(Reuters) - Starbucks Corp (SBUX.O: Quote) forecast current-quarter earnings below Wall Street estimates and reported slower growth in Asia than many had hoped, sending its shares down nearly 4 percent in extended trade despite a strong holiday performance.
Investor expectations are usually high for the company after a more than 46 percent run-up in its stock in 2015, and Starbucks is betting heavily on China expansion despite some signs of cooling growth in the Asian market.
The company's shares slipped to $56.35 in extended trade from a close of $59.03.
Global sales at cafes open at least 13 months rose 8 percent in the first quarter, while it rose 9 percent in the Americas division, its largest. Both handily beat analysts' estimates.
But sales in Europe were hit on a drop in tourists following the November Paris attacks and the strong dollar, which also hurt sales in its Asia/Pacific region, Chief Operating Officer Kevin Johnson said on an earnings call.
Sales at cafes open at least 13 months rose 5 percent in Asia/Pacific in the first quarter ended Dec. 27, missing the 6.10 percent increase expected by analysts polled by research firm Consensus Metrix.
"The concern is that some of this is related to a general slowdown in China which, if part of a longer term trend, could harm company earnings," Carter Harrison, analyst at research firm Conlumino said.
Operating margins also declined 240 basis points to 19.4 percent in the region, primarily due to the impact of the company taking full ownership of Starbucks Japan in the quarter.
Starbucks' new mobile order and pay technology has boosted sales and profit in recent quarters. The technology has the potential to lure in customers who may have been turned off by long lines and waiting times. Continued...