Starbucks Corporation (NASDAQ:SBUX) stock was down 6.18% in early afternoon trading on January 26. Shares have now fallen 2.7% year over year. The company released its first quarter results on January 25.
Starbucks reported consolidated net revenues of $6.1 billion – a 6% jump year over year. Analysts soured on holiday sales that showed sales growth of 2% in the Americas, 1% in China and Pacific, and a 1% dip in Europe, the Middle East, and Africa. Sales growth in China alone was a bright spot, rising 6% year over year. It also posted a 6% increase in transactions.
The company recently rolled out a mobile ordering platform that failed to generate greater traffic in usual afternoon and evening downtimes. Membership in Starbucks Rewards in the U.S. rose 11% with Mobile Order and Pay making up 11% of U.S. transactions.
Starbucks recently announced that it would give employees pay raises, expanded benefits, and stock worth more than $250 million in response to the boost from U.S. tax reform. Its global tax rate has been projected to fall into the mid-20s compared to around 33%, which should generate almost half a billion a year in tax savings.
Starbucks also announced a dividend of $0.30 per share representing a 2.1% dividend yield. Despite disappointing holiday sales, Starbucks boasts consistently high consumer traffic and a solid dividend. Its promising growth trend in China and the savings it will yield from tax reform is reason enough to hold going forward.
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