(Reuters) - Starbucks Corp (SBUX.O) shares slid more than 11 percent Friday, in their biggest one-day drop in 12 years, after it missed quarterly profit expectations and cut its outlook as visits to its U.S. coffee shops dwindled.
The world’s largest coffee chain said on Thursday that store traffic was “noticeably down” in many areas across the United States in a sluggish pattern that began in June and continued in July.
The company missed Wall Street’s quarterly profit estimate by 2 cents a share, a rarity for one of the food industry’s top performers that, along with disappointing results from Chipotle Mexican Grill Inc (CMG.N) and McDonald’s Corp (MCD.N), has stoked fears about a revision of growth expectations for the sector.
“I’d be cautious right now,” Investment Technology Group Inc research analyst Steve West said. “They’re all high-valuation stocks. It’s live by the sword, die by the sword.”
Starbucks shares were down $5.78, or 11 percent, at $46.63 on Nasdaq. The stock had appreciated nearly 14 percent in the year to date, before its results were announced Thursday.
It was rated “Buy” by 16 analysts, “Outperform” by seven, “Hold” by six and “Underperform” by one. There are no “Sell” ratings on the stock.
Despite the disappointing results, most analysts stuck to their ratings, citing Starbucks’ ongoing efforts to diversify its revenue beyond coffee drinks bought at stores.
The company recently launched a line of Refreshers fruit drinks, and is working on its own single-serve coffee brewers. It also has single-serve “K-Cups” for Green Mountain Coffee Roasters Inc’s GMCR.O Keurig brewers and a line of instant coffee.
“They’re proactive in the things they’re doing,” said Williams Capital Group analyst Marc Riddick, who has a “Buy” rating on the shares.
Reporting by Martinne Geller in New York. Additional reporting by Lisa Baertlein in Los Angeles; Editing by Bernadette Baum