April 26, 2018 / 8:55 PM / 5 months ago

UPDATE 1-Starbucks reports flat U.S. traffic, shares slip

(Adds details on results, context, share reaction)

LOS ANGELES, April 26 (Reuters) - Starbucks Corp on Thursday reported flat traffic at established U.S. cafes for the second quarter in a row amid intense competition from upscale coffee houses as well as fast-food chains and convenience stores.

Shares in the world's biggest coffee chain, which repeatedly has said that it is not losing business to rivals, fell 2 percent to $58.17 in extended hours as investors worry that growth in the company's most important market is cooling.

Same-store sales for the U.S.-dominated Americas region rose 2 percent for the quarter, more than the 1.8 percent gain analysts expected, according to Consensus Metrix. Increased spending per visit drove the same-store sales increase, however, since customer visits, or traffic, were flat for the quarter.

The United States is Starbucks' largest market with more than 14,000 stores.

Starbucks' quarterly net income was $660.1 million, or 47 cents per share, compared with $652.8 million, or 45 cents per share, a year ago. Excluding items, profit of 53 cents a share matched expectations.

The results come as Starbucks is working to limit or avoid reputational damage from the arrests of two black men in a Philadelphia cafe two weeks ago. A bystander video of the incident went viral, fueling protests and calls to boycott the chain.

Starbucks apologized for the incident, which was set in motion when a manager called police to report the two men who were waiting for a friend and had not made purchases. It plans to close 8,000 company-owned cafes on the afternoon of May 29 for racial tolerance training.

Reporting by Lisa Baertlein in Los Angeles Editing by Nick Zieminski

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