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Starbucks Reports Drop in Same-Store Sales, Beats Earnings Expectations
Starbucks on Tuesday reported that its same-store sales slid for the fourth consecutive quarter, but the company’s quarterly earnings and revenue beat Wall Street’s expectations.
The coffee giant, which kicked off a turnaround plan last quarter to revitalize its U.S. business, saw a “positive response” to early steps taken, including removing extra charges for non-dairy milk options and slashing 30% of its food and beverage menu items by the end of fiscal 2025.
Starbucks reported fiscal first-quarter net income attributable to the company of $780.8 million, or 69 cents per share, down from $1.02 billion, or 90 cents per share, a year earlier.
The company’s net sales of $9.4 billion were unchanged from a year earlier, but its same-store sales fell 4%, fueled by a 6% decline in traffic to its stores. Wall Street was expecting a steeper drop of 5.5%, according to estimates.
CEO Brian Niccol attributed the decline in sales to the company’s efforts to cut back on discounts, which fell 40% during the quarter. He credited the pullback in discounts for the chain’s sales improvement throughout the quarter.
Outside of its home market, same-store sales also declined 4%. In China, same-store sales fell 6%, driven by a 4% decline in average ticket.
The company is exploring strategic partnerships to grow its business in China and has seen strong demand for more cafes in the long term. Starbucks plans to double its store count in the U.S. through a strong store renovation program, new store builds, and store closures.
The company is also working to improve its speed of service by scheduling more workers, removing bottlenecks behind its coffee counters, and making baristas’ jobs easier. It is piloting a new algorithm to manage the order that baristas should make both mobile and in-store drinks.
