Starbucks posts disappointing sales figure, will sell Tazo

04 November, 2017, 00:28 | Author: Regina Lloyd
  • Starbucks manager Tim Webb watches as one-year-employee Loni Stubblefield works a new espresso machine at the the Starbucks company-owned store in White Center

"With our growth strategy for a 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. The brand pulled in $112.5 million in revenue over the previous year and UL believes that there is room for more growth.

In addition to Tazo, Unilever owns beverage brands Lipton and Brisk, both of which make tea products.

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.

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

"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.




For the three months ending October 1, net revenue of USA $5.7 bn was flat compared with the same period a year earlier. The company expects to launch a Starbucks-branded credit card with Chase this winter. Overall, the company reported net income of $788.5 million, or 54 cents per share, in the three months ending October 1.

Excluding some items, profit came in at 55 cents a share, which was in line with analysts' forecast. 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.

Starbucks global same store sales were up 2% following a gain of 2% in the amount each customer was spending and an increase of 1% in transactions.

The chain trimmed its long-term earnings target to growth of 12% or greater per share compared with its previous estimate of 15% to 20%. Revenue slipped slightly to $5.7 billion, falling short of the $5.8 billion analysts expected.

Over the long-term, the café chain is targeting global comparable sales annual growth of between 3% and 5% and annual growth in consolidated net revenue of the high-single digits.

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