Starbucks Corp. beat expectations for earnings and revenue in the quarter ended Oct. 2 but missed U.S. sales targets for the fourth consecutive period, as the coffee giant said a tumultuous presidential election is weighing on consumer spending.
Starbucks has yet to meet a promise made last quarter to return to its historic rate of at least 5% U.S. same-store sales growth. Chief Executive Howard Schultz on Thursday noted a "high degree of uncertainty" around next week's election.
"Everyone is hoping post-election there will be a return to a natural state of affairs in terms of consumer behavior," Mr. Schultz told investors.
U.S. same-store sales in the quarter rose 4%, compared with analysts' projections for a 4.8% increase. Mr. Schultz urged analysts to look at Starbucks's long-term strategy rather than quarterly sales fluctuations.
More customers in the U.S. are using the chain's mobile app to order and pay for their drinks and are joining the company's rewards program. Membership is up 18% versus the year-ago period. Mobile payments represent 25% of U.S. transactions, up from 20% a year ago.
Chief Operating Officer Kevin Johnson said Starbucks needs to make a splash heading into its sustaining holiday season, when the company sells a great deal of gift cards and merchandise.
The presidential election is "generating a lot of noise," Mr. Johnson said in an interview. "All retailers, us included, will have to work harder to break through that noise."
The chain already caused a stir with green "unity" cups, a marketing gambit Starbucks said is meant to to bring Americans together amid a fractured political environment. But many customers mistook the new cups for holiday cups, which are traditionally red. They chastised Starbucks on social media this week when they thought Starbucks had abandoned what they see as a holiday tradition.
China was a bright spot in the quarter, generating 6% same-store sales growth. Starbucks plans to more than double its store count in the world's second-biggest economy to 5,000 by 2021. "We are doubling down on China," Mr. Schultz said.
The company plans to open its first international Roastery, a higher-end shop than its traditional outlets, next year in Shanghai. Starbucks already has 500 cafes in the Chinese financial capital, more than any other city. Starbucks is increasingly aiming to capture the premium coffee customer by opening large Roastery stores, as well as smaller shops that serve special reserve-only coffees.
Starbucks's fourth-quarter profit rose 23% to $ 801 million, or 54 cents a share. Excluding certain items, profit rose to 56 cents a share from 43 cents a share a year earlier, above the company's guidance. Revenue rose 16% to $ 5.71 billion, above the $ 5.68 billion projected by analysts surveyed by Thomson Reuters. The quarter included an extra week.
Corrections & Amplifications:
Analysts surveyed by FactSet expect Starbucks Corp.'s 2016 earnings to be $ 2.16 a share and the company said its China and Asia Pacific region comparable sales rose 1% in the most recent period. An earlier version of this article misstated the analysts' expectations as $ 1.89 a share and the China and Asia Pacific region comparable-sales increase as 3%. (Nov. 3, 2016)
Write to Julie Jargon at julie.jargon@wsj.com and Maria Armental at maria.armental@wsj.com
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