Starbucks sales miss as virus spike keeps customers at home

Starbucks Corp on Tuesday reported a larger-than-expected fall in quarterly sales as the renewed surge in coronavirus cases in the United States kept customers at home.

The world’s largest coffee chain’s global same-store sales fell 5 percent in its first quarter, which ended Dec. 27, more than analysts’ estimates of a 3.4 percent decline, according to Refinitiv IBES data.

Shares fell slightly in extended trading.

The second wave of COVID-19 infections and accompanying restrictions dented traffic at the coffee chain’s stores, hampering its efforts to boost demand through product launches and new drive-thrus.

Comparable sales declined 6 percent for the Americas region, compared with a 5.2 percent fall expected by analysts.

But in China, Starbucks’ biggest growth market, comparable sales rose 5 percent as the company benefited from the popularity of its rewards program and the return of pre-coronavirus consumer habits.

Customers also spent more money per order, helping to offset fewer transactions.

Starbucks also said Chief Operating Officer Roz Brewer would be leaving the company next month to take a chief executive officer role at another company.

Walgreens Boots Alliance Inc later announced that Brewer would take the helm at the company effective March 15.

For the second quarter, Starbucks said it expects U.S. comparable sales to rise between 5 percent and 10 percent, while in China they were forecast to grow nearly two-fold a year after the pandemic hit the region.

The company did not change its guidance of an expected rebound overall this year, with global comparable sales expected to rise 18 percent to 23 percent in 2021.

Net revenue fell 5 percent to $6.7 billion, missing expectations of $6.93 billion.

The Seattle-based company has been closing some stores, adding drive-thrus to others, remaking some with smaller cafes and building a few with no seating at all as it focuses on expanding to-go options.

Overall, the company opened 278 net new stores in the quarter, for 4 percent year over year growth. It now has 32,938 stores around the world, 51 percent of which are company-operated.

Starbucks also saw coffee lovers return to its Rewards loyalty program, with its count of 90-day active U.S. members increase 15 percent year over year to 21.8 million.

-reuters-

China's SenseTime expects $750-M revenue despite US ban -sources

BEIJING - Chinese artificial intelligence (AI) start-up SenseTime, which Washington put on a trade blacklist in October, expects its 2019 revenue to increase by more than 200 percent year-on-year to around $750 million, 2 sources familiar with the matter said.

This suggests strong demand for SenseTime's technology, which has been used by smartphone makers Xiaomi and Oppo as well as China Mobile and Alibaba Group , despite the ban since October on it buying certain components from US firms without government approval.

However, SenseTime's 2019 sales growth forecast is sharply lower than its annual revenue growth between 2015 and 2017, which it said last year was 400 percent in each of those years.

SenseTime made the 2019 prediction to investors in briefings, said the sources, who declined to be named as the information was not public.

The company was among 8 Chinese tech firms placed on the US entity list in October amid ongoing trade tensions. The United States alleges the companies have played a role in human rights abuses against Muslim minority groups in China.

SenseTime said at the time that it strongly opposed the US ban and would work with relevant authorities to resolve the situation.

A SenseTime spokeswoman did not immediately respond to a request to comment.

AI CHIPS

Hong Kong-headquartered SenseTime, which provides technology-based applications including, facial recognition and video analyzing and autonomous driving, says it is valued at more than $7.5 billion.

SenseTime has not disclosed how the US ban might impact its supply chain, but its contingency plans include developing AI chips on its own, a separate source told Reuters.

The 5-year-old start-up counts Qualcomm Ventures, a unit of US semiconductor giant Qualcomm, as one of its strategic investors. Other existing investors include SoftBank Vision Fund, HOPU Investment Management Company, Silver Lake Partners and Alibaba.

Plans by SenseTime's Chinese rival Megvii, which was also blacklisted by the US, to list in Hong Kong have been delayed until next year, IFR reported on Tuesday.

Beijing-based Megvii, also known as Face++, said in October it opposed the blacklisting and would prepare contingency plans. It booked a loss of 3.35 billion yuan on revenue of 1.43 billion yuan in 2018, its IPO prospectus showed.

source: news.abs-cbn.com

Facebook profit climbs along with user base

SAN FRANCISCO - Facebook on Wednesday reported that its quarterly profit grew along with its user base as it grapples with concerns ranging from political ads to cryptocurrency.

The leading social network said its profit topped $6 billion on revenue that climbed 28 percent to $17.4 billion in the quarter that ended on September 30.

Meanwhile, the number of active monthly users increased eight percent from a year ago to 2.45 billion.

"We had a good quarter and our community and business continue to grow," said Facebook chief and co-founder Mark Zuckerberg.

"We are focused on making progress on major social issues and building new experiences that improve people's lives around the world."

Facebook shares rose more than four percent in after-market trades that followed release of the earnings figures, which beat Wall Street expectations.

"Advertisers continue to support Facebook, despite the many controversies swirling around the company, and the user base also continues to expand around the world," said eMarketer principal analyst Debra Aho Williamson.

"Yes, Facebook has a lot of challenges it must deal with, but increasing its revenue and user count isn't one of them."

The California-based company said that costs rose 32 percent in the quarter, which ended with a headcount of 43,030 employees, an increase of 28 percent from the same quarter last year.

Facebook has been beefing up teams devoted to privacy and security to protect people's data and thwart the kind of voter manipulation campaigns seen during the US election three years ago.

The earnings release came just hours after Facebook announced it took down accounts linked to a Russian ally of President Vladimir Putin seeking to spread disinformation in eight African countries.

The influence operations hiding behind fake identities were traced back to Yevgeny Prigozhin, who has been indicted in the United States in connection with a campaign targeting the 2016 US elections.

"Each of these operations created networks of accounts to mislead others about who they were and what they were doing," Facebook cybersecurity chief Nathaniel Gleicher said in a statement.

"We're constantly working to detect and stop this type of activity because we don't want our services to be used to manipulate people."

- Hands-off approach -

Facebook came under fresh criticism this week for its hands-off approach to political speech, as a group of employees and US lawmakers called on the social network to fact-check politicians spreading misinformation.

A letter from employees urged the company to crack down on "civic misinformation," saying the spread of debunked claims is a "threat to what FB stands for."

At the same time, US lawmakers critical of Facebook stepped up their calls for it to revisit its policy, which exempts comments and paid ads on the platform from fact-checking -- an issue that has become heated with President Donald Trump's online ads using what some called "provably false" claims.

"Being a politician shouldn't be a license to lie -- especially to spread hatred. If Facebook employees get it so should Zuckerberg," tweeted Senator Richard Blumenthal.

On an earnings call with analysts, Zuckerberg held firm that it was imperative for Facebook to let political figures speak freely and count on voters to judge truthfulness.

Facebook makes data public regarding who is behind political ads and how much money is being spent.

Zuckerberg dismissed the notion that Facebook defended political advertising for the money, saying it was likely to account for just a fraction of a percent of revenue in the hot election year ahead.

Meanwhile, Twitter on Wednesday announced it would stop running political ads all together.

Zuckerberg recently faced a torrent of criticism on Capitol Hill over the Libra cryptocurrency Facebook is seeking to roll out next year.

"We clearly have not locked down exactly how this is going to work yet," Zuckerberg told members of the House Financial Service Committee.

He acknowledged that Libra could be limited to digital payment systems using individual currencies -- a less ambitious plan than creating a new coin linked to a basket of major currencies.

Libra is backed by an alliance of companies in a nonprofit, Swiss-based association, but some lawmakers are skeptical about the project, and want Facebook instead to focus on data privacy.

Lawmakers did not hold back in their harsh criticism of Facebook's data practices and doubts about Libra in particular.

While discussing controversies and criticisms heaped on Facebook, Zuckerberg said he expected "this is going to be a very tough year."

source: news.abs-cbn.com

Macy's shares sink as discounts to clear inventory hurt, tourism drops

Macy's Inc cut its full-year earnings forecast on Wednesday after missing estimates for quarterly profit for the first time in at least 2 years, as it discounted merchandise heavily to clear spring inventory, sending its shares down as much as 18 percent.

The largest US department store operator, whose flagship building in Manhattan is a major tourist attraction, blamed a bigger-than-expected decline in tourist spending for the shortfall along with weak demand for its own-brand women's sportswear and for warm weather apparel.

"We had a slow start to the quarter and finished below our expectations," Chief Executive Jeff Gennette said in a statement.

Tourist arrivals to the United States have taken a hit in the past year, hurt by a stronger dollar and escalating trade tensions between Washington and Beijing, denting the number of Chinese visitors to the country.

The number of Chinese citizens arriving in the United States dipped 2.8 percent in the first 6 months of the year, according to the National Travel and Tourism Office.

Like its peers, the Cincinnati, Ohio-based retailer, which has closed more than 100 stores since 2015 and cut thousands of jobs as mall traffic plummeted, faltered in the past few years as it struggled to adjust to a fiercely competitive retail landscape where shoppers buy more goods online at places like Amazon.com Inc.

"While they are controlling what they can control, the headwinds from both macro and micro factors continue to grow, creating a challenging backdrop for CEO Jeff Gennette to manage through," said Gordon Haskett analyst Chuck Grom. "The good news is that they have a plan."

The 160-year-old company is pumping money into projects such as remodeling its stores and building up its off-price and online businesses. Macy's also announced a partnership with fashion resale marketplace thredUP, aimed at helping the chain "reach a new customer and keep them coming back to shop...," the company said.

Retailers like Macy's have been burdened by a long-drawn trade war between the United States and China, which US President Donald Trump escalated earlier this month by threatening to impose 10 percent tariffs on $300 billion worth of Chinese goods from Sept. 1. On Tuesday, the Trump administration delayed the 10 percent tariffs on some Chinese goods until Dec. 15.

Macy's executives reassured investors on a post-earnings call Wednesday that the company is in "active discussions" with vendors and suppliers to mitigate tariffs and minimize customer impact in 2019 as much as possible.

Analysts said the temporary tariff reprieve would likely not benefit retailers greatly.

"Only a small percentage of soft-good tariffs are actually getting delayed until December 15th and none have been removed yet," UBS analyst Jay Sole wrote in a note, adding that, of the approximately 789 apparel and footwear categories on the original latest list of tariffs, only 17 percent have had tariffs delayed.

Gennette said he believed 10 percent tariffs to be manageable but that it would be harder to maintain pricing if 25 percent tariffs are imposed on all remaining imports from China, adding "there's no customer appetite for price increases."

Macy's now expects 2019 adjusted profit to be between $2.85 per share to $3.05 per share, down from a previous forecast of $3.05 to $3.25.

The company's margins in the quarter fell to 38.8 percent from 40.4 percent a year earlier, hit hard by steep markdowns.

For the second quarter ended Aug. 3, net income attributable to Macy's shareholders slumped 48 percent to $86 million, or 28 cents per share.

Analysts on average had expected the company to earn 45 cents per share, according to IBES data from Refinitiv.

Net sales fell marginally to $5.55 billion, largely in line with estimates, while sales at its established stores rose 0.3 percent.

Still, Macy's, whose digital business posted its fortieth consecutive quarter of double-digit growth, maintained its 2019 sales expectations, and said it entered the fall season with the "right inventory."

Macy's shares, which have declined about 35 percent this year, opened at a near 10-year low. Shares were down about 15 percent at $16.50 in afternoon trading Wednesday.

The company, which is the first of the department stores to report results, also dragged down peers' shares. Kohl's, Nordstrom and J.C. Penney were down between 8 percent and 11 percent.

(Reporting by Aishwarya Venugopal in Bengaluru and Melissa Fares in New York; Editing by Nick Zieminski and Diane Craft) 

source: news.abs-cbn.com

Australia telecom giant Telstra flags tough times as profit slides

SYDNEY - Australia's dominant telecommunications company Telstra Thursday warned of "enormous challenges" ahead as it posted an 8.9 percent slump in annual profit.

Its net result in the year to June 30 fell to Aus$3.52 billion (US$2.54 billion), while revenue was flat at Aus$26 billion.

Chief executive Andy Penn said intense competition for mobile customers and increased customer expectations were having an impact on business.

"Companies are defined by how they respond in challenging times and there is no doubt Telstra, and the telecommunications industry globally, is operating in times of enormous challenge and change," he said. 

"On one hand demand for our core products and services continues to grow. Telecommunications networks have become some of the most important pieces of infrastructure in the world today. 

"On the other hand, competition has never been more intense, our market dynamics are shifting rapidly, and customer expectations are changing."

He pointed to the accelerated rollout of a national broadband network, in particular, as weighing on the company.

"This is having an enormous impact on our business -- wholesale prices have risen, meaning we and other industry participants are facing a fixed-line market where reseller margins are rapidly reducing," he said. 

"At the same time, competition in the mobile market is increasing with the expected entrance of a fourth mobile network operator. These factors have influenced our performance this year."

In a bid to transform the business to deal with the new realities, Telstra, one of Australia's largest employers, has put in place a new strategy to be achieved by 2022.

This includes a plan announced in June to axe 8,000 jobs -- a quarter of its workforce -- in a bid to achieve an extra Aus$1 billion in cost-cutting, on top of Aus$1.5 billion previously announced.

It will also split its mobile and infrastructure divisions into separate businesses.

"We are determined to meet the challenges we face, and to continue to lead in the market, just as we have always done," said Penn.

Telstra said it will pay a six-monthly dividend of 11 cents for a full-year payout of 22 cents.

source: news.abs-cbn.com