Starbucks Reports a Slide in Sales and Traffic

In recent years, the arrival of fall is a reason for many customers to scurry to their local Starbucks to get their pumpkin spice latte fix.But not this year.On Tuesday, after the market closed, the coffee giant reported preliminary quarterly earnings showing a steep decline in same-store sales.Starbucks said global same-store sales fell 7 percent for the fourth-quarter that ended in September, with a decline of 6 percent in North America and a 14 percent drop in China.Overall, for the full fiscal year, the company reported “a pronounced traffic decline.”The dismal news came a week before the company’s scheduled earnings announcement.

Starbucks’ stock was down more than 4 percent in aftermarket trading.The results further reveal the challenges facing the company and its new leader, Brian Niccol, who was wooed away from Chipotle to become Starbucks’ chairman and chief executive with a jaw-dropping compensation package that could top $100 million.In a video message, Mr.Niccol, who officially took over in early September, said the results showed that it was “clear we need to fundamentally change our strategy so we can get back to growth.”Throughout the Covid pandemic, Starbucks was a consistent big winner, expanding its loyalty programs and drive-through capabilities while Gen Zers ordered ever-complicated iced beverages.But whether because of increased competition from other rapidly expanding coffee shops, consumers cutting back on nonessential spending or the various boycotts against the company, Starbucks is struggling.Starbucks has been under pressure for awhile.

Following two quarters of consecutive declines in sales and a stock price that dropped nearly 30 percent in six months, the board of directors decided this summer to abruptly replace its then-chief executive, Laxman Narasimhan.In the most recent quarter, Starbucks said its efforts in North America to entice consumers to visit and spend more through expanded product offerings and frequent pr...