Starbucks shares hit two-year low as China, US demand clouds outlook

The company reported a fall in same-store sales for the first time in nearly three years.

"The inability to stop the traffic leakage from the early signs of pull-back in November to date and the worsening macro and competitive dynamics in China may suggest prolonged challenges and no evidence of light at the end of the tunnel," Danilo Gargiulo, senior analyst at Bernstein, wrote in a note.

Deutsche downgraded its rating on Starbucks to "hold" from "buy", while at least 12 brokerages cut target price on the stock.

Starbucks expects full-year comparable sales - both globally and in the U.S. - to be in the range of a low single-digit decline to flat, compared with its previous range of 4% to 6% growth.

It also cut per-share profit growth forecast to between flat and low-single digits, versus its earlier range of 15% to 20% growth.

"Many customers are being more exacting about where and how they choose to spend their money, particularly with stimulus savings mostly spent," CEO Laxman Narasimhan said on a post-earnings call.

"We saw this materialize over the quarter as customers made the trade-offs between food away from home and food at home," he added.

Jefferies' analysts said they were skeptical about the planned slate of new products this year and a re-focus on core menu, value, and loyalty would be more prudent for Starbucks.

Starbucks' forward price-to-earnings multiple, a common for valuing stocks, is 20.88, compared with 21.54 and 20.83 for industry peers McDonald's and Restaurant Brands, respectively.