3Q16 RESULTS

Starbucks reported 3Q16 EPS of $0.49, in line with the consensus estimate. The company reported a 4% increase in global comps, missing the consensus estimate of 5.7%. Comps in the Americas segment grew by, while comps in the China/Asia-Pacific region grew by 3% and comps in the EMEA region declined bya 1%.  The company also reported disappointing revenues of $5.24 billion for the quarter,versus the consensus estimate of $5.33 billion. The number of active members in the Starbucks rewards program reached 12.3 million in the US during the quarter, up 18% year -over -year. The number of mobile payments and orders increased by 5%, on top of  4% growth in the previous quarter. Management maintained that it was a good quarter for the company, as demonstrated by the 7% comp growth in the China business, healthy growth in the loyalty program base in the US and continued global expansion.

2016 OUTLOOK

Full-year guidance calls for EPS of $1.88–$-1.89, consistent with prior guidance. However comp guidance was lowered to mid-single  digits from somewhat above mid-single digits previously. Starbucks has recently increased the price of its beverages, and, therefore expects theaverage order price to increase by 1%.