Starbucks on Tuesday reported weaker-than-expected earnings and another quarter of same-store sales declines, but the coffee giant said its turnaround strategy is showing early signs of success.
“Our financial results don’t yet reflect our progress, but we have real momentum with our ‘Back to Starbucks’ plan,” CEO Brian Niccol said in a video posted on the company’s website. “We’re testing and learning at speed and we’re seeing changes in our coffeehouses.”
Shares of the company fell 2% in extended trading.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per share: 41 cents adjusted vs. 49 cents expected
- Revenue: $8.76 billion vs. $8.82 billion expected
Starbucks reported fiscal second-quarter net income attributable to the company of $384.2 million, or 34 cents per share, halved from $772.4 million, or 68 cents per share, a year earlier.
Excluding restructuring costs, the company earned 41 cents per share.
Net sales rose 2% to $8.76 billion.
Starbucks’ same-store sales fell for its fifth straight quarter. The company’s sales have slumped as consumers in the U.S. and China, its two largest markets, seek cheaper coffee options.
Under Niccol, who took the reins in September, the company has been trying to turn around its U.S. business by getting “back to Starbucks” and returning its focus to coffee and the customer experience. In October, the company suspended its forecast for fiscal 2025 as it unveiled the early stages of its turnaround strategy.
The company’s global same-store sales fell 1% in its second quarter, fueled by a 2% decline in transactions. In Starbucks’ home market, the traffic decline was even steeper.
U.S. locations saw transactions fall 4%, dragging its same-store sales down by 2%.China’s same-store sales were flat for the quarter, as lower average ticket offset transaction growth.
