Starbucks Q4 disappoints; to launch credit card

Starbucks Misses Q4 Sales Estimates Sells Tazo To Unilever For $384 Million
Starbucks posts disappointing sales figure, will sell Tazo
Author

04 November, 2017

The sale of the Tazo Tea brand to Unilever plc (ADR) will include all of its recipes, inventory and intellectual property that now belongs to Starbucks Corporation.

Tazo, which had sales of $112.5 million over the past year, sells specialty black, green and herbal teas, as well as liquid concentrates to make chai lattes.

Now the iconic tea brand is sold primarily in grocery, mass and convenience channels, offered in formats including packaged teas, K-Cup pods, and bottled ready-to-drink teas.

Unilever plc (ADR) notes that the acquisition price for the Tazo Tea brand represents 10 times its pro forma EBIT.

Under the asset purchase agreement, Unilever will acquire the Tazo brand and all related intellectual property, signature recipes and inventory for $384 million.

"With our growth strategy for premium tea exclusively focused on Teavana, we are pleased to transition our Tazo business to Unilever", said Kevin Johnson, president and CEO, Starbucks.

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The two companies are expecting the deal to close in the fourth quarter of the year.

For the three months ending October 1, net revenue fell slightly short: $5.7 billion against the Street's estimation of $5.8 billion. With JPMorgan Chase & Co., the company is also developing credit and debit cards that have rewards built in. Analysts had expected a rise of 3.3 percent, according to FactSet. The company attributed the performance in part to Hurricanes Irma and Harvey. The company also reported narrower operating margins and earnings per share of 54 cents. Separately, the coffee-shop giant missed revenue and same-store sales forecasts for the quarter, sending shares lower after hours.

Starbucks had net sales for the quarter of $5.7 billion, flat with the same quarter the year prior.

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.

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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