On Tuesday, Starbucks revealed its latest financial results, which fell short of analysts' expectations. Despite reporting another quarter of declining same-store sales, the coffee giant emphasized that its turnaround strategy is beginning to show early signs of success. CEO Brian Niccol stated in a video posted on the company's website, "Our financial results don't yet reflect our progress, but we have real momentum with our 'Back to Starbucks' plan." Niccol added that the company is "testing and learning at speed," indicating that positive changes are being implemented across its coffeehouses.
In after-hours trading, shares of Starbucks fell by 2%. Below is a comparison of the company's reported figures against Wall Street's expectations, based on a survey of analysts conducted by LSEG:
Earnings per share: 41 cents adjusted vs. 49 cents expected Revenue: $8.76 billion vs. $8.82 billion expectedFor the fiscal second quarter, Starbucks reported a net income attributable to the company of $384.2 million, translating to 34 cents per share. This figure has significantly decreased from $772.4 million, or 68 cents per share, reported in the same quarter last year. When excluding restructuring costs, the adjusted earnings stood at 41 cents per share. Overall, net sales saw a modest increase of 2%, reaching $8.76 billion.
Despite the slight increase in revenue, Starbucks has now experienced a decline in same-store sales for five consecutive quarters. The downturn in sales has been attributed to shifting consumer preferences in both the U.S. and China, the company's two largest markets, as customers seek more affordable coffee options.
Under the leadership of CEO Brian Niccol, who assumed his role in September, Starbucks has been focused on revitalizing its U.S. operations. This initiative includes a renewed emphasis on coffee quality and enhancing the overall customer experience. In October, the company made the decision to suspend its forecast for fiscal 2025 while unveiling the initial phases of its turnaround strategy.
In the recent financial report, Starbucks noted that its global same-store sales declined by 1% in the second quarter, primarily driven by a 2% drop in transactions. The situation was even more pronounced in the U.S. market, where transaction numbers decreased by 4%, contributing to a 2% decline in same-store sales. Meanwhile, China's same-store sales remained flat for the quarter, indicating that although transaction growth was achieved, it was offset by lower average ticket values.
As Starbucks continues to navigate these challenges, the company is optimistic about the future. The focus on its 'Back to Starbucks' plan is aimed at regaining customer loyalty and enhancing the overall coffee experience, which could potentially reverse the downward sales trend in the upcoming quarters.
