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Starbucks to launch credit card, sell Tazo; sales disappoint

In this Tuesday, March 21, 2017, photo, a woman walks past a Starbucks coffee shop in Sewickley, Pa. Starbucks Corp. reports earnings Thursday, Nov. 2, 2017. (AP Photo/Gene J. Puskar)

Starbucks announced deals Thursday to sell its Tazo tea brand to Unilever and launch a credit card with Chase. But the coffee chain also reported disappointing fourth-quarter sales growth at stores around the world, and its shares fell more than 3 percent in after-hours trading.

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. Unilever, which owns the Lipton and PG Tips tea brands, called the acquisition a "perfect strategic fit." Starbucks, which bought Tazo about 18 years ago for $8.1 million, said it wants to focus on its Teavana tea brand. Although Starbucks has been shutting down stand-alone Teavana stores, it still sells its teas in stores.

The company expects to launch a Starbucks-branded credit card with Chase this winter. A prepaid card will come later. The company said both cards will allow customers to earn Starbucks rewards when they spend. Co-branded cards, which feature the brand of a bank and another company, have been popular for decades since they help strengthen customer loyalty. Ride-hailing company Uber, for example, announced a card with British bank Barclays last week.

Starbucks' financial results, meanwhile, showed slowing growth.

The chain said fourth-quarter sales rose 2 percent at its established locations worldwide, below the 3.3 percent Wall Street analysts expected, according to FactSet. During the same period a year ago, those sales grew 4 percent.

Overall, the company reported net income of $788.5 million, or 54 cents per share, in the three months ending Oct. 1. Adjusted earnings came to 55 cents per share, matching what analysts expected. In the same period a year ago, Starbucks reported net income of $801 million, or 54 cents per share.

Revenue slipped slightly to $5.7 billion, falling short of the $5.8 billion analysts expected.

Shares of Starbucks fell $1.82 to $53.05 after the stock market closed Thursday.

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