After reporting worse-then-projected quarterly and yearly sales on Thursday, Starbucks, the Seattle company best known for killing Christmas every year, announced plans to unload its Tazo tea brand to Unilever for $384 million.
Starbucks said that, by selling Tazo, it would "sharpen its focus on its up-level tea strategy with Teavana".
Now the iconic tea brand is sold primarily in grocery, mass and convenience channels, offered in formats including packaged teas, K-Cup pods, and bottled ready-to-drink teas.
To view the full article, register now. 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.
Unilever plc (ADR) notes that the acquisition price for the Tazo Tea brand represents 10 times its pro forma EBIT.
"With our growth strategy for premium tea exclusively focused on Teavana, we are pleased to transition our Tazo business to Unilever", said Kevin Johnson, president and CEO, Starbucks.
The chain's fourth quarter in 2016 included an extra week, so comparisons between this year and last week will be a little off, the company said.
Tazo was founded in Portland, Ore.in 1994 by Stash Tea co-founder Steven Smith, who sold the company to Starbucks in 1999 for $8.1 million.
According to the company, Starbucks sold more than $1.6 billion of prepared and RTD Teavana beverages in its stores in the past 12 months. The company expects to launch a Starbucks-branded credit card with Chase this winter. Stripping out the impact of Hurricanes Harvey and Irma, which struck the U.S.in September, comparable sales would have been up 3 percent.
USA same-store sales increased 2 percent, including a 1-percent increase in the number of customers.
Results: EPS of 55 cents, meeting views, but falling short of sales expectations with $5.698 billion in revenue. The tea category in Starbucks stores continues to grow double-digits globally, with Starbucks well on its way to building the Teavana business to over $3B over the next five years.
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While that only represents a 2% increase year-over-year, Apple's other products more than picked up the slack. He said he expects the current quarter to be the company's biggest ever, after a "sensational year" for 2017.
For the 2017 holiday season , the company is ditching their trademark red cups in favor of a do-it-yourself motif . The cup sparked outrage with its lack of Christmas and winter symbols such as snowflakes, trees or presents.
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