September 4, 2019 / 12:56 PM / 3 months ago

Starbucks sees slower profit growth in 2020

FILE PHOTO: A Starbucks logo hangs outside of one of the 8,000 Starbucks-owned American stores that will close around 2 p.m. local time on Tuesday as a first step in training 175,000 employees on racial tolerance in the Brooklyn borough of New York, U.S., May 29, 2018. REUTERS/Lucas Jackson

(Reuters) - Starbucks Corp (SBUX.O) said on Wednesday it expects 2020 adjusted profit growth to be lower than 2019 as it factors in the impact of a one-time tax benefit that has inflated its bottom line this year.

Chief Financial Officer Patrick Grismer told a consumer retail conference hosted by Goldman Sachs that he expected adjusted per-share profit growth for 2020 to be lower than the current 10% rate, pushing shares in the coffee chain down 4%.

Grismer said the tax benefit recorded in 2019 could be a “significant headwind” to profit growth in 2020.

He also added that the company had brought forward its plans to buy back $2 billion worth of shares to 2019 from 2020 and hinted at fewer share repurchases next year.

Wall Street analysts currently forecast adjusted earnings of $3.12 per share for 2020, implying a growth rate of 10.45%, according to IBES data from Refinitiv.

The company will be providing the outlook for the next year on October 30, when it reports its fourth-quarter results.

The coffee chain reported its best quarterly sales growth in three years in July, boosted by an expanded line up of beverages and food offerings in the United States and China, prompting the company to raise its profit forecast for the current year.

Grismer remained confident in boosting sales growth, driven by beverages such as its cold brew and Nitro cold brew as well as seasonal beverages.

Reporting by Nivedita Balu in Bengaluru; Editing by Arun Koyyur and Patrick Graham

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