The starbucks coffee giant disclosed weaker-than-anticipated earnings on Tuesday, along with another decline in same-store sales; however, it stated that its turnaround plan is beginning to show early positive results.
“Our financial outcomes do not yet reflect our advancements, but we are genuinely gaining momentum with our ‘Back to Starbucks’ initiative,” CEO Brian Niccol mentioned in a video shared on the company’s website. “We’re experimenting and learning quickly, and we’re observing changes in our coffeehouses.”
The company’s stock slipped 2% during after-hours trading.
Here’s the information the company provided compared to Wall Street’s expectations.
Starbucks share: according to a survey of analysts by LSEG
Earnings per share: 41 cents adjusted versus the anticipated 49 cents
Revenue: $8.76 billion compared to the expected $8.82 billion
Starbucks reported a net income of $384.2 million for the fiscal second quarter, or 34 cents per share, a decrease from $772.4 million, or 68 cents per share, a year ago.
When excluding restructuring expenses, the company made 41 cents per share.
Net sales increased by 2% to reach $8.76 billion.
For the fifth consecutive quarter, Starbucks experienced a decline in same-store sales. The company has seen a drop in sales as consumers in both the U.S. and China, its largest markets, look for more affordable coffee alternatives.
Since taking over in September, Niccol has been working to revive the U.S. business by focusing on getting “back to Starbucks” and enhancing the coffee and customer experience. In October, the company withdrew its forecast for fiscal 2025 as it revealed the initial phases of its turnaround plan.
The global same-store sales dipped 1% in the second quarter, driven by a 2% decrease in transactions. The decline in traffic was even more pronounced in Starbucks’ primary market.
In the U.S., transactions fell by 4%, which contributed to a 2% drop in same-store sales. In China, same-store sales remained unchanged for the quarter, as a lower average transaction value offset growth in the number of transactions.