Starbucks reports cooling growth in third quarter, pares outlook

Starbucks Corp on Thursday forecast slower growth for the current fiscal year of 2018 as boutique coffee chains and fast-food retailers won business in the US and other established markets and the bloom came off oncebooming China.

Wall Street had been braced for a disappointing quarter from the chain, and its shares were relatively unchanged in aftermarket trading.

Seattle-based Starbucks in June warned of lower quarterly sales growth and announced plans to close about 150 US cafes in the next fiscal year, triple the typical number of closures, as it seeks to enter under-served markets in the US South and Midwest.

Starbucks, the world’s biggest coffee retailer, reported revenue rose to a record high in its fiscal third quarter. The company also pledged a $10 billion increase in its share buyback and dividend commitment, to $25 billion through fiscal 2020.

Starbucks said its same-store sales rose just 1 percent globally and in its US cafes in its third quarter ended July 1. Same-store sales in China slipped 2 percent amid fierce competition and stricter regulations on delivery services.

“While acknowledging a disappointing third quarter, I want to be clear that we have 100 percent confidence in our growth strategy and the sustainability of the leadership position we have built in the market,” Chief Executive Officer Kevin Johnson said in the company’s quarterly earnings call.

Starbucks blamed a combination of cannibalization of its own stores and problems in its China delivery program for much of the slowdown in the country.

In the year-ago quarter, Starbucks’ same-store sales grew by 5 percent in the US and Americas and 4 percent globally.