Investors are lightly concerned on the current pace that Starbucks growth has been treading. According to several market analysts on the third quarter performance; the coffee giant continues to grow but on a much slower pace than what the market has expected. On the brighter side, the infrastructural change the company continues to push has been paying off until today.
The company reported a 1% increase in the quarter’s expansion pace; this may sound like stellar performance but on the bleaker side, the company’s customer traffic grew weaker in the quarter and is well below most forecasts and expectations.
Analysts’ Speculations and Predicaments
In the most recent quarterly performance report, Starbucks graced us with; they managed to improve their revenue by stellar figures of 8%. The great revenue increase was mainly because of the continuous expansion that the company managed to pull off; although one of the caveats for last quarter’s results was the sales result which was at 7% and is well below the management’s annual target which was at the 10% mark.
One of the biggest reason why the company’s sales were plunging well below expectations is that of the radical customer traffic change that occurred last quarter; the slowdown on the quarter’s customer traffic may not be denting and daunting in papers, but the figures are highly marking on the long-term trend for Starbucks.
On a yearly figure on Starbucks’ customer traffic; 2012 and 2013 were the prime years on the company’s customer traffic surge at the 5% mark while having to plummet to 1% last year even with the continuous infrastructural growth they had. What’s more bothering is this 2017’s fiscal which is tallying to be dipping at the negative figures rate.
Starbucks’ Silver Lining
One good thing that every company, consumer related business or a similar coffee chain, can get through the success of Starbucks is the overwhelming attention to structural changes throughout the years. One analyst noted that Starbuck’s main attention grabber is as follows; exceptional brand name, strong profitability, immense pricing power and incredible cash flow generation.
Although United States sales and growth were lagging behind this quarter, one thing that saved the company is China’s surprising growth and sales this quarter.
Latest Promotional Debacle
One of the recent problems that the giant coffee chain has stumbled upon is the surfacing of a rumor or a fake promotion that lurks on the internet about discounted beverages and foods for undocumented immigrants this month. The company is quick to disperse the running rumors and the false promotion; their global communication vice president John Kelly said in an email that, "completely false. One hundred percent fake." Also, the official Starbucks Twitter said that the "We're sorry you've been misinformed," and "This is completely false. Starbucks is not sponsoring any such event."
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