COFFEE chain Starbucks saw its profit forecast for 2014 fall short of Wall Street’s expectations, despite fourth quarter profits that jumped 34 per cent as more customers flocked to its branches.
Starbucks share price fell three per cent in after hours trading to $78.20 as investors reacted to the news that the company expects 2014 earnings in the range of $2.55 to $2.65 per share, short of analysts’ average estimate of $2.67 per share.
Expectations run exceedingly high for high-flying companies like Starbucks, and any perceived stumble is often punished in the form of a share selloff.
Despite investor’s fears, finance chief Troy Alstead described Starbucks’ outlook as robust on the back of its strong quarterly results.
“Outstanding global sales growth combined with record earnings and operating margin demonstrate the fundamental health of our business model and our continued ability to successfully execute on new initiatives while maintaining financial discipline.”
Fourth quarter revenues to 30 September for the chain rose 13 per cent to $3.8bn with profits growing 29 per cent to $668.9m.
Global sales at Starbucks cafes open for at least 13 months jumped seven per cent, versus analysts’ average estimate for a 6.7 per cent rise, according to Consensus Metrix.
A figure that included a stronger-than-expected eight per cent rise for the US-dominated Americas region that contributes the lion’s share of Starbucks revenue.
“The fourth quarter of fiscal 2013 capped off by far the best year in Starbucks 42-year-history,” said Starbucks chairman and chief executive Howard Schultz.
“One month into a fiscal year, you're typically not going to have revisions to guidance,” said William Blair analyst Sharon Zackfia.