Starbucks shares fall after warning inflation-battered customers are cutting back
Starbucks shares dropped Wednesday after the company warned its inflation-battered customers are cutting back on its pricey coffee — even as its new CEO Brian Niccol begins a turnaround bid.The Seattle-based java giant released preliminary results for the latest quarter, revealing its same-store sales dropped 7% in the fourth quarter — its steepest decline since the pandemic. Preliminary sales fell 3% to $9.1 billion in revenue, below expectations of $9.4 billion.The struggling chain reported adjusted earnings per share of 80 cents, missing estimates of $1.03 — and suspended its financial forecast for the full fiscal year ending in 2025.“The lower-than-expected performance for the full fiscal year was a result of pronounced traffic decline, including a cautious consumer environment,” the java chain said in a statement.Niccol — a former Chipotle executive hired last month inject new life into the company — said Starbucks needs to simplify its complicated, jargon-filled menu, fix pricing and make sure all drinks are handed directly to customers.“Our fourth quarter performance makes it clear that we need to fundamentally change our strategy so we can get back to growth,” Niccol said in a statement.“We need to focus on what has always set us apart – a welcoming coffeehouse where people gather and where we serve the finest coffee, handcrafted by our skilled baristas,” Niccol said in a statement.NIccol said Starbucks will share more details during its earnings call on Oct.
30.Starbucks shares were recently off 0.9% at $95.94.Starbucks blamed its poor results on soft demand in North America.Same-store sales dropped 6% in the North America division.
Traffic plunged 10%, despite additional promotions via the company’s mobile app and new menu offerings.Same-store sales tumbled 14% in China, Starbucks’ second-largest market, which the company attributed to steep competition.“Despite our heightened investments, we were unable to change the traje...