Starbucks Lowers Long-Term Target, Selling Tazo to Unilever

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Although Starbucks has been shutting down standalone Teavana stores, it still sells the brand's teas in Starbucks.

Starbucks' shares traded down about 6.1% in after-hours trading at $51.50 in a 52-week range of $50.84 to $64.87.

Starbucks is selling the Tazo tea brand for $384 million.

Starbucks, which bought Tazo about 18 years ago for $8.1 million, said it will now focus on its Teavana line. 'With its strong appeal to millennials, TAZO® is a flawless 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, Unilever North America. The brand, which is primarily available in grocery and convenience stores, encompasses packaged teas, K-Cup pods, and bottled beverages.

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

USA same-store sales rose 3% and US average ticket rose 2% while transactions increased by 1%.

The deal is expected to close during the fourth calendar quarter of 2017, with the complete transition taking place by the end of calendar year 2018.

Starbucks sold $1.6 billion in Teavana beverages in the past year. China enjoyed a healthy 8 percent hike buoyed by a 7 percent increase in transactions.

Analysts polled by Thomson Reuters had expected revenue of $5.8 billion and adjusted earnings per share of 55 cents.

Starbucks opened 603 net new stores globally in the quarter, bringing the total count to 27,339 across 75 countries. That's up from 9 percent in the previous quarter, and 6 percent in the year-ago quarter.

Hurricanes Harvey and Irma also cut into sales growth, shaving 1 percentage point off both global and USA growth. "Continued strong growth and performance from CAP demonstrates that Starbucks now has two significant profit engines driving our global returns, our North America business and the broader CAP market".

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