Sunday, 19 November, 2017

Starbucks to launch credit card, sell Tazo

Starbucks Misses Q4 Sales Estimates, Sells Tazo To Unilever For $384 Million What To Expect From Starbucks When It Reports After The Close
Juana Turner | 04 November, 2017, 00:32

Starbucks reported quarterly results after the markets closed on Thursday, and the big story was that the coffee giant would be losing Tazo.

The coffee company bought Tazo for $1.8 million in 1999, five years after it was founded.

The brand also sells liquid concentrates focusing on the Chai tea market segment and produces a number of ready-to-drink bottled teas.

Unilever plc (ADR) notes that the acquisition price for the Tazo Tea brand represents 10 times its pro forma EBIT. The Seattle-based company said Unilever will pay $384 million for Tazo in a deal that is expected to be completed in the next year.

"With its strong appeal to millennials, Tazo is a ideal strategic fit for our USA portfolio that includes exciting new brands such as Seventh Generation, Dollar Shave Club and Sir Kensington's", said Kees Kruythoff, president of Unilever North America.

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

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. With JPMorgan Chase & Co., the company is also developing credit and debit cards that have rewards built in. The company fell short of analysts' predictions, reporting revenues of $5.7 billion compared to $5.8 billion projected. On Thursday, the company posted earnings per share of 54 cents for the quarter, in line with analysts' expectations. It is sold in Starbucks outlets and grocery stores in the USA and Canada. The company said USA same-store sales would have risen 3% in the quarter if not for closures and lost business related to Hurricanes Harvey and Irma. It now expects long-term annual earnings per share growth for at least 12 percent, down from 15 percent to 20 percent. But its same-store sales came lower than expected and, in the USA, fell far short of its historic 5% growth rate. It also cut its global long-term same-store sales growth forecast to 3% to 5% from 4% to 6%.

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