Starbucks Revenue Misses, Selling Tazo Tea

"With our growth strategy for premium tea exclusively focused on Teavana, we are pleased to transition our Tazo business to Unilever", President and CEO, Starbucks, Kevin Johnson said in a statement. Unilever is paying $384m for the Tazo brand, which is sold primarily in grocery and convenience stores.

The acquisition by Unilever is the latest in a string of deals by the Anglo-Dutch consumer giant to add smaller and healthier brands to its portfolio, particularly those in the fast-growing speciality tea market.

Starbucks also reported earnings for its fiscal fourth quarter of 2017 on Thursday, which left investors underwhelmed as it delivered worse-than-expected sales figures. Starbucks acquired the brand in 1999 for $8.1 million, five years after Tazo was founded.

Unilever North America president Kees Kruythoff, meanwhile, praised TAZO's strong appeal with millennials.

The chain's fourth quarter in 2016 included an extra week, so comparisons between this year and last week will be a little off, the company said. In the past year, Tazo had sales of $112.5 million.

Starbucks has removed its e-commerce platform as part of the streamlining, instead, will set its attention to mobile order improvements, innovation in food and beverage, investments in its own roasteries, and gaining share of at-home coffee.

Starbucks total net income slipped 1.6% to $789 million, or 54 cents a share, on total net revenue of $5.7 billion for the three months ended October 1.

On the company's quarterly call, Starbucks said it would launch a co-branded Chase Visa credit card this winter. Globally, Starbucks posted 2% growth in same-store sales, missing expectations. Net revenue was $5.7bn, short of the estimate of $5.8bn. Its earnings were 55 cents per share, on the nose with analyst projections. Starbucks said same-store sales would have increased 3 percent without the impact of hurricanes Harvey and Irma.

Starbucks also adjusted its long-term annual global same-store sales growth target to 3% to 5%, compared with its previous target of mid-single digit growth.



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