Starbucks loses kick

The coffee chain posted disappointing sales growth in all its major regions on Thursday, signalling that it now has bigger problems than an overly saturated US market. The results from the quarter that ended December 31 sent shares down the most in six months on Friday.

“Our holiday merchandise and limited-time offers did not perform to expectations,” CEO Kevin Johnson said in an interview. In the US, the chain also saw “a little bit of softness in the afternoon, which may be a reflection of fewer people out shopping”.

While Starbucks expanded its holiday gift items this year to include tech gadgets and small games, sales of those products were weak, he said.

Starbucks may also be seeing more competition from fast-food chains that are heavily pushing value menus — McDonald’s recently began advertising cappuccino, mocha and macchiato coffees for just $2. And the java giant has fewer wide open spaces to expand into, now that coffee culture and other chains have spread.

Starbucks global samestore sales rose 2% last quarter, missing the 3% average of analysts’ estimates, according to Consensus Metrix. Comparable-store sales also trailed projections in the Americas region, which includes the US. They declined in Europe, the Middle East and Africa.

“It’s the second consecutive quarter of an underwhelming global comp,” said A.B. Mendez, senior equity analyst at Frost Investment Advisors, referring to comparable sales. “Investors expect better than that.”

Keeping expenses down helped Starbucks post slightly better earnings than projected. Excluding tax benefits and other items, profit was 58 cents a share, compared with the 57 cent estimate. The shares fell as much as 5.2% to $57.40 in New York, the biggest intraday decline since July. They had gained 5.4% this year through Thursday’s close. China remained a bright spot: same-store sales there rose 6%. – Bloomberg