Starbucks reports stagnant store traffic, shares slip

By Lisa Baertlein

LOS ANGELES (Reuters) - Starbucks Corp on Thursday reported stagnant store traffic at established cafes for the second fiscal quarter, stirring concerns about intense competition from upscale coffee houses as well as fast-food chains and convenience stores.

Shares in the world's biggest coffee chain, which repeatedly has said that it is not losing business to rivals, fell 2 percent in extended hours as investors worry that growth in the company's most important, the United States, and around the world market is cooling.

Global sales at established stores rose 2 percent, but the rise was fuelled exclusively by higher sales per transaction.

Store traffic was flat in the Americas and China-dominated China/Asia Pacific region. It fell 4 percent in the Europe, Middle East and Africa region. The value per transaction, or how much each customer spends, rose 3 percent in all regions and globally.

The United States is Starbucks' largest market with more than 14,000 stores.

Same-store sales in China, the fast-growing market where Starbucks expects to one day have more cafes than in the United States, were up 4 percent for the quarter. Starbucks has 3,200 cafes in mainland China.

Total revenue rose almost 14 percent to $6.0 billion.

Starbucks' quarterly net income was $660.1 million, or 47 cents per share, compared with $652.8 million, or 45 cents per share, a year ago. Excluding items, profit of 53 cents a share matched expectations.

The company said its board authorized buying back 100 million shares, which is worth more than $5 billion at current prices.

The results come as Starbucks is working to limit or avoid reputational damage from the arrests of two black men in a Philadelphia cafe two weeks ago. A bystander video of the incident went viral, fuelling protests and calls to boycott the chain.

Starbucks apologised for the incident, which was set in motion when a manager called police to report the two men who were waiting for a friend and had not made purchases. It plans to close 8,000 company-owned cafes on the afternoon of May 29 for racial tolerance training.

(Reporting by Lisa Baertlein in Los Angeles; Editing by Nick Zieminski)