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Starbucks Corporation

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Starbucks’ third-quarter fiscal 2016 earnings of $0.49 per share came in line with the Zacks Consensus Estimate. However, sales fell short of expectations. On a year-over-year basis, earnings rose 17%, while sales rose 7%. Higher sales in China and the Channel Development segment offset a slowdown in sales growth in the U.S. and Europe. Global comps grew 4%, less than 6% the previous quarter, due to slowdown in traffic trends in the flagship U.S. market. The disruption brought on from the changes in the rewards program and its negative impact on one of the most popular yearly promotion - Frappuccino Happy Hour - hurt sales/comps in the U.S. Following lower-than-expected sales in the third quarter, Starbucks cut its full year issued sales and comps outlook. Though the company expects U.S. comps to improve in the next quarter, we await better visibility.

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