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Starbucks Sub Par Sales Growth Weighs on Stock Price

Starbucks (NASDAQ: SBUX) has bolstered its loyalty program and maintained steady same-store sales growth, but it still hasn’t been able to grow at a fast enough pace to placate investors.

In the quarter ended April 1, the company said that net income in the second quarter rose to $660.1 million, or 47 cents per share, from $652.8 million, or 45 cents per share.

Excluding items, the coffee giant earned 53 cents per share, in-line with analyst expectations

The company’s revenue grew 14% to $6.03 billion, better than the $5.9 billion analysts had expected.

Same-store sales were 2% growth in the U.S. vs. 1.8% growth expected Traffic, however was flat, according to COO Rosalind Brewer.

Starbucks has struggled with sales in the U.S. for several quarters, as new beverage concoctions continued to fall flat with consumers and in-store merchandise remained on shelves unsold.

Global same-store sales also outpaced expectations, rising 2%, buoyed by a 3% increase in average ticket. Analysts had expected global same-store sales to rise 1.8%.

During the quarter, Starbucks added 1.6 million members to its loyalty program in the U.S., up 12% from a year ago. These customers accounted for 39% of sales at company-owned stores in the U.S., according to Starbucks.

The coffee giant has been working on a number of initiatives to turn around these weak sales, including offering more cold beverages, which are now 50% of its business, and new lunch items to draw people into its cafes in the afternoon.

Shares sagged $1.31, or 2.2%, to $58.07 Friday morning.





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