Starbucks Faces Suit Over “Sugar Free” Claims

Starbucks (NASDAQ: SBUX | SBUX Price Prediction) faces a lawsuit over how it describes some of its food. According to Reuters, the suit cites a federal regulation. “Federal law prohibits Starbucks from using “sugar-free” to describe beverages containing more than…

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Starbucks (NASDAQ: SBUX | SBUX Price Prediction) faces a lawsuit over how it describes some of its food. According to Reuters, the suit cites a federal regulation. “Federal law prohibits Starbucks from using “sugar-free” to describe beverages containing more than ​0.5 grams of sugar per 12-ounce serving, the complaint said.” Customers say “sugar-free” is incorrect because of lactose.

Starbucks says the claim is “without merit” and that its menu labels are correct

Aside from which side is correct, Starbucks faces more bad publicity. Add this to claims by unionized workers that Starbucks does not pay a fair wage

After some enthusiasm about its most recent earnings, the stock has sold off. It is now slightly underperforming the S&P 500 this year. Over the last five years, the stock is down 15% while the S&P 500 is up 75%. There had been hopes that a turnaround plan would lift the shares

In the June quarter, revenue was slightly below flat at $9.3 billion. EPS rose 85% to $.91. The really good news was that same-store sales were higher by 7.9% year over year

When earnings were announced, CEO Brian Niccol said, “Our Back to Starbucks plan was built on the belief that an extraordinary cup of coffee, human connection, and customer experience win the day, every day. Our third quarter results are proof they do,” he commented

Apparently, investors do not believe him.

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