Starbucks shares tumble on lowest same-store sales growth since 2009

Starbucks says overcrowding at counters hurt sales
Starbucks says overcrowding at counters hurt sales

Starbucks earnings hit Wall Street's target in the latest quarter, but shares fell 3.5 percent in aftermarket trading on Thursday after the company posted its lowest same-store sales growth since 2009.

The coffee giant said same-store sales grew 3 percent during the fiscal first quarter, lower than analyst's expectations of 3.8 percent.

Same-store sales in the Americas rose 3 percent for the quarter, which was shy of the 3.9 percent estimate. President Kevin Johnson noted that same-store sales growth was hindered, in part, by growing mobile pay and ordering.

The soon-to-be CEO said during an earnings conference call that the bump in mobile ordering had caused many stores to experience congestion at the hand-off counter. Despite lines at the register being short, incoming customers would see the crowd and leave without making a purchase.

"We are now laser-focused on fixing this problem, but the nature of it, too much demand, is an operational challenge we have solved before and I can assure you we will solve again," CEO Howard Schultz said on a conference call.

The story was brighter at the company's China/Asia Pacific segment, where same-store sales rose 5 percent during the quarter, outpacing analyst expectations of 2.9 percent.

Starbucks' Europe, the Middle East and Africa segment saw same-store sales fall 1 percent during the quarter. Analysts expected the segment to grow 1.7 percent.

Despite the softer-than-expected sales, Starbucks posted adjusted earnings of 52 cents per share on $5.73 billion in revenue. For the first quarter, Starbucks was expected to earn 52 cents a share on $5.85 billion in revenue, according to a consensus estimate from Thomson Reuters.

"We are pleased with the record Q1 financial and operating results we announced today, particularly given that the results were delivered in the face of a challenging environment for restaurant retailers overall," Scott Maw, CFO of Starbucks said in statement Thursday.

The company said that it now expects revenue growth to be between 8 percent to 10 percent this year. Previously, the company's five-year strategic plan called for 10 percent revenue growth.

Starbucks reiterated its same-store sales forecast, projecting growth in the mid-single digits range globally. It also expects GAAP EPS in the range of $2.09 to $2.11 and non-GAAP EPS in the range of $2.12 to $2.14 for 2017.

Investors have been concerned with the company's decelerated same-store sales in the back-half of 2016 and Schultz's sudden departure as CEO of the company.

"Over the next six to 12 months, particularly as Starbucks begins to lap less difficult year-over-year same-store sales comparisons, we believe that investors' nervousness about these two factors will lessen," Mark Kalinowski, analyst with Nomura-Instinet, wrote in a research note earlier this month.

Ahead of the earnings release, he anticipates that same-store sales will jump 5 percent worldwide this year, with double-digit revenue expansion and EPS growth of 12 percent.