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Starbucks on Thursday reported first-quarter earnings that showed profits in line with expectations but a miss on sales at stores open for at least one year.
Comparable-store sales rose 3%, below analysts’ forecast for 3.6%, according to Bloomberg. Revenues also came in light, at $5.29 billion versus $5.41 billion expected.
Sales growth slowed amid competition from lower-end brands like Dunkin’ Donuts and McDonald’s that serve cheaper coffee. And earlier this year, mobile orders overwhelmed baristas in some stores during peak hours.
The coffee retailer reported adjusted earnings per share of $0.45.
Starbucks shares fell by as much as 3% in extended trading after the results.
In the Americas, Starbucks’ operating margins – how much of each dollar of revenues is retained after the costs of sales and operating expenses are accounted for – shrunk by 130 basis points. This was partly due to higher labor costs, Starbucks said.
“With our US business accelerating throughout the quarter and strong performance in China, we are poised to deliver strong revenue growth in the second half and into the future,” said Kevin Johnson, Starbucks’ new CEO, in the earnings statement.
Starbucks said it would no longer provide forward-looking targets in its earnings releases but will continue to give a business outlook during earnings calls.