Starbucks share lower: growth expectations muted

Starbucks slower expansionThe Starbucks chain of caterers is increasingly under pressure due to intensified competition.

The performance was recently “unacceptable,” said chief executive Kevin Johnson in the night on Wednesday. “We need to move faster” to meet the ever-changing customer preferences and needs.

Starbucks expects revenue growth of one percent on a comparable basis for the third quarter, with analysts expecting significantly more. On the stock market, this leads to investors fleeing the papers: The Starbucks share is around 9 percent lower.

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What should be considered when Starbucks reports its results?

starbucksStarbucksĀ  will announce the second quarter 2018 results after the close of trading on April 26. With the media rightly focusing on the incident in early April in a Philadelphia store, where one employee called the police and two African-American men were arrested, management is looking forward to making positive headlines this time around.

There will certainly be questions about the incident, especially as the company plans to shut down all its US-owned stores on May 29 to run anti-racism training for all employees. But there are also other things that investors need to be aware of, including whether or not like-for-like sales growth in the US is improving and how China is doing after it has taken over the full operation of all Starbucks stores in the country.

Let’s take a look at these topics and the details that are most important to investors.

The importance of combating racist prejudice
Starbucks’ growth has slowed in recent quarters. Growth in the US was 2% last quarter, the lowest in consolidated terms for nearly a decade. At the teleconference, management said that several factors contributed to the weak performance, including weaker customer traffic in stores, which rely on retail customers for much of their business, and weak footwear sales. The question in the minds of many investors: Can Starbucks reverse the trend?

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