Slow Sales Makes Starbucks Cut Its Revenue Forecast

Starbucks reduces its revenue forecast for the year after missing third quarter sales targets.  The Seattle based popular coffee brand Starbucks has decided to go slow on its sales forecast after its revenue in the third quarter saw a small slump with regards to its sales estimates. The sales in the global stores as well as its US flagship stores in the third quarter have seen a growth of 4 percent in all popular locations. It is expected that this figure would increase to about 5 to 6 percent for the year. This is a good sign for this popular coffee store.

The Chairman and the CEO of Starbucks, Howard Shultz, in a meeting with the analysts, said that the marketplace has been a bit challenging this time round due to civil problems in terms of race and the ambiguity surrounding the US presidential election. All this has led to the company showing lesser sales than what was targeted to achieve for the third quarter.  Howard said that there is nothing to worry about as the kind of community that Starbucks has created over the years will help the company to realize its targets soon.

These results of the third quarter could be the after effects of the revision of the Starbucks rewards program that was carried out in April. There were many speculations, then that the revised program could drive away customers from entering the stores. Schultz admitted that the roll out of the new reward program for regular customers at the same time as the Frappuccino Happy Hour annual promotion has negatively impacted the company as they were not able to build the necessary awareness in the market.

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The Chief Operating Officer of Starbucks Kevin Johnson said that the new rewards program will take something to sink in. The customers will start to realize its benefits and start to use it more. It is now based on the spending made by the customers rather than the transactions they make. Many customers are looking to split their purchases in order to get more points. There are many who are of the opinion that the new rewards program favored those who spend money on buying expensive drinks.  To know more about the US markets and its uncertainty, please Check Out This Link “US Equities In An Unfavorable Position”.

The analysts had estimated that the Starbucks sales would touch $5.34 billion this quarter, but it fell short of the mark and was able to reach just $5.24 billion. The slowdown in sales of Starbucks has made the analysts think and come out with the revised sales expectation on the mid single digits than the previously announced above mid-single digits. The outlets that have shown a slump is the sales through the US Starbucks outlets. The sales across the new outlets opened last year have seen an increase of 4% from the previous year’s same quarter reading. Even though the sales have shown improvements, there has not been any change in the number of transactions made.

Despite the launch of the new rewards program and the criticisms it faces from some customers, the loyalty membership of Starbucks grew by 18% when compared to last year. There are over 12.3 million active users of the Starbucks reward program.


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