Starbucks sells Tazo tea brand
NEW YORK—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 per cent in after-hours trading.
The Seattle-based company said Unilever will pay $384 million (U.S.) 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 per cent at its established locations worldwide, below the 3.3 per cent Wall Street analysts expected, according to FactSet. During the same period a year ago, those sales grew 4 per cent.
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.