Starbucks Loses its Sizzle After a Weak Earnings Report

January 26, 2018

Shares of Starbucks took a dive after delivering weaker-than-expected sales results for the latest quarter. Jason Moser, Analyst at Motley Fool, joined us to break down the numbers.

Global same-store sales rose 2%, below estimates of 3%. Despite raking in over $6 billion in a quarter for the first time, investors were disappointed that the company fell short of the $6.18 billion projected. Moser thinks it is a bit of an overreaction for investors to believe the company is a business in decline. The analyst added that China will continue to be a major growth opportunity for Starbucks. Same-store sales in China grew 6%, while revenue in Q1 grew 30%.

Starbucks added 1.4 million rewards members in the quarter, bringing the total to 14.2 million. With 75 million unique visitors, Moser questions Starbucks' ability to capitalize on the program. He also noted that Kevin Johnson needs to step it up before Wall Street loses confidence in his ability to lead the company.