Starbucks posts disappointing sales figure, will sell Tazo

Nov 04, 2017, 00:30
Starbucks posts disappointing sales figure, will sell Tazo

Despite announcing in July the decision to close all 379 Teavana brick-and-mortar outlets, Starbucks extended the brand with the February launch of Teavana Craft Iced Teas.

According to the company, shoppers purchased more than $1.6 billion worth of Teavana beverages in stores in the past year. Unilever is paying $384m for the Tazo brand, which is sold primarily in grocery and convenience stores. Unilever, which owns the Lipton and PG Tips tea brands, called the acquisition a "perfect strategic fit".

For Starbuck's, which acquired Tazo in 1999 for $8.1 million, the deal is a lucrative one which offers a more than 47-times return on its investment.

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"With its strong appeal to millennials, Tazo is a flawless strategic fit for our USA portfolio", Kees Kruythoff, President, Unilever North America said.

"With its strong appeal to millennials, Tazo is a ideal strategic fit for our U.S. portfolio that includes exciting new brands such as Seventh Generation, Dollar Shave Club and Sir Kensington's", Unilever North America president Kees Kruythoff said.

The transaction is expected to be close in the fourth quarter of this year, subject to regulatory approval. In the same period a year ago, the company reported EPS of $0.56 on revenues of $5.71 billion. He added that the company reset its long-term guidance to "represent performance we can meet or beat in the years ahead". The company said US same-store sales would have risen 3% in the quarter if not for closures and lost business related to Hurricanes Harvey and Irma. Overall, the company reported net income of $788.5 million, or 54 cents per share, in the three months ending October 1.

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US same-store sales increased 2 percent, including a 1-percent increase in the number of customers.

In the long-term, the company is targeting annual global comparable-store sales growth of 3 percent to 5 percent and annual consolidated net revenue growth in the high-single digits.

The Seattle-based coffee giant made the announcement moments before it released its fourth-quarter earnings Thursday.

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Results: EPS of 55 cents, meeting views, but falling short of sales expectations with $5.698 billion in revenue.

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