Starbucks Shares Drop Despite Rosier Forecast


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Starbucks on Tuesday missed their quarterly sales estimate. This led to a fall in shares by 2%.

Still, the mega coffee franchise raised its annual forecast for revenue and profit, expecting more customers after they get vaccinated.

Moreover, the government had restricted travel and shut down cafes due to the pandemic. So, its global comparable sales were affected as a part of international business.

Despite the restrictions, the company raised its 2021 revenue forecast between $28.5 billion and $29.3 billion. Adjusted earnings per share are expected to be between $2.90 and $3.

Chief Executive Officer Kevin Johnson, in an interview, said that the U.S. sales returned to pre-pandemic levels.
“When you look at the progress we’re making on vaccinations, certainly in the U.S., that’s a proxy for what’s going to happen around the world,” he said.

Unlike other restaurants and cafes, Starbucks has struggled the most. This was because the target audience worked from home and prepared their coffee and breakfast.

Starbucks is a Seattle-based company. China is its biggest growth market. Sales in China, almost doubled from the same period a year ago, when the stores were forced to close during the health crisis.
This sudden increase in sales was not enough for its markets abroad. That is if they want to beat Wall Street expectations.

According to IBES data from Refinitiv, the surge rose 35% in the company’s international markets. But it missed the expectation of48.25% growth.

Since the United States is recovering from the pandemic, its comparable sales rose by 9%. The return of all vaccinated consumers to the stores or ordering their daily cup of coffee online really helped.

Active Rewards Loyalty Program members of the company reached 22.9 million. An 18% increase year over year.
“I believe we have an opportunity to double that number,” Johnson said. “I’m not going to give a time frame, it might take a couple of years.”

The company’s revenue rose by 11%. It was 6.67 billion for the second quarter ended March 28. This amount was less than the estimated $6.82 billion.

Many analysts believe that Starbucks will soon recover when it will reopen as people crave social interactions. Being locked in their own houses has made them miss their social life.

“It is still going to be a while before people are both able to and comfortable with doing this again,” said Euromonitor International consultant Matthew Barry.


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