- Starbucks reported that same-store sales fell for a sixth straight quarter as CEO Brian Niccol tries to implement a turnaround strategy.
- The company beat Wall Street’s quarterly revenue estimates, and comparable sales in China rose.
Starbucks announced on Tuesday that same-store sales had decreased for the sixth consecutive quarter as the firm pursues a turnaround plan.
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In a statement, CEO Brian Niccol claimed that the company’s recovery is ahead of schedule because of his prior expertise, which included reviving Chipotle Mexican Grill following a string of food safety incidents.
Niccol stated in a taped video that was released along with the earnings announcement, “Even though our financial results don’t yet reflect all the progress we’ve made, the signs are clear – we’re gaining momentum.”
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During extended trading, the company’s shares increased by 4%.
According to an LSEG survey of analysts, the following is a comparison between the company’s results for the quarter that concluded on June 29 and what Wall Street anticipated:
-
Earnings per share:
50 cents adjusted. It was not immediately clear if it was comparable to the 65 cents expected. -
Revenue:
$9.5 billion vs. $9.31 billion expected
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Compared to $1.05 billion, or 93 cents per share, a year earlier, Starbucks reported fiscal third-quarter net income attributable to the business of $558.3 million, or 49 cents per share.
The company’s earnings per share were 50 cents, excluding restructuring costs and other expenses. The company’s profits per share were negatively impacted by 11 cents due to a discrete tax item and a one-time cost in hosting the three-day event for store managers in the United States.
Net sales reached $9.5 billion, up 4%.
However, according to StreetAccount estimates, same-store sales fell 2% globally, which was a more severe reduction than the 1.3% predicted.
But Starbucks’ cafes in North America did better than anticipated. According to StreetAccount, the chain’s same-store sales in North America dropped 2%, which was less than the 2.5% Wall Street had predicted. The average ticket increased 1% throughout the quarter, while transactions decreased 3%.
“In the U.S., partner engagement is rising, customer connection scores are up, shift completion is at a record high, non-Starbucks Reward customer transactions returned to growth, and more coffeehouses are delivering positive transaction comps,” Niccol stated in the clip.
He informed analysts on the company’s conference call that same-store sales at its licensed outlets on college campuses increased, indicating that younger customers are reestablishing their connection with the brand.
Starbucks is stepping up its hospitality in an effort to win back patrons. The chain is introducing its “Green Apron Service” initiative, which prioritizes connections with customers. According to executives, the program proved well, so the corporation decided to speed up its implementation.
Additionally, the firm is concentrating on enhancing its existing cafes rather than opening more new ones in the United States. Starbucks has eliminated seating at a number of its cafés in recent years, blaming the switch to drive-thru and mobile ordering. However, as part of a larger initiative to restore comfort to its cafes, Niccol plans to reinstall thousands of seats that have been removed.
For the quarter, Starbucks reported a 2% increase in same-store sales in China, the company’s second-largest market. The average ticket decreased, but transactions increased by 6%. Starbucks has lowered the cost of its beverages in China in an effort to better compete with less expensive competitors like Luckin Coffee.
The company’s China business showed an uptick in same-store sales this quarter for the first time in a year and a half. Starbucks has been considering selling a portion of its China company, which might be worth up to $10 billion altogether, as a result of pressure from heightened competition, a faltering economy, and the distraction of its faltering U.S. business, according to a recent CNBC story.
“We’ve received significant interest from more than 20 interested parties, and we’re evaluating options,” Niccol informed analysts. “We remain committed to our China business and want to retain a meaningful stake.”
Chief Financial Officer Cathy Smith stated that the firm is “conservative” about Starbucks’ fiscal fourth quarter results in comparison to the same period last year as the company enters the last quarter of its fiscal year. Although she also mentioned the company’s excitement about its upcoming innovation and the reintroduction of the Pumpkin Spice Latte, she cited an uncertain consumer environment.
According to Smith, Starbucks intends to spend $500 million on labor over the course of the upcoming year, which will include implementing the “Green Apron Service” initiative.
In October, months before Smith joined and just after Niccol took over as CEO, Starbucks canceled their full-year projection.
In fiscal 2026, Starbucks has ambitious intentions. According to Niccol, the business would introduce a new Starbucks app, a “refreshed” Rewards program, more artisanal food options, protein cold foam, and drinks made with coconut water.
In the fiscal second quarter of 2026, the firm intends to hold an investor day.
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