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The
Seattle coffee giant on Tuesday reported weaker-than-expected
sales in its fiscal fourth quarter, which ended Sept. 29. It
also said it would suspend financial guidance for its 2025
fiscal year to give its new Chairman and CEO, Brian Niccol, time
to assess the business.
The financial results were preliminary. Starbucks plans to
release full results for the July-September period and host a
conference call with investors on Oct. 30.
Customer traffic was sluggish in the U.S., where Starbucks saw a
6% decline in same-store sales, or sales at stores open at least
a year. The company said expanded fall product offerings such as
Iced Apple Crisp Nondairy Cream Chai and more frequent in-app
promotions didn’t drive more visits.
The Pumpkin Spice Latte, which returned to U.S. stores on Aug.
22 and is usually a reliable booster of traffic, didn’t seem to
help.
In China, same-store sales fell 14% as consumers pulled back on
spending or visited cheaper rivals, Starbucks said.
In a video message released by the company, Niccol — a former
Chipotle CEO who joined Starbucks last month — said Starbucks’
problems are “very fixable and that we have significant
strengths to build on.”
Niccol said Starbucks needs to improve staffing, remove
bottlenecks and simplify operations for its baristas, especially
during the morning rush. Mobile ordering should be refined so it
doesn’t overwhelm the café experience, he said. Niccol also said
Starbucks needs to simplify its “overly complex menu.”
“We know how to make these improvements, and when we do, we know
customers will visit more often,” he said.
Niccol said Starbucks plans to change its marketing to focus
less on Starbucks Rewards customers and more on highlighting the
brand's handcrafted drinks and coffee innovation.
The company said its revenue fell 3% to $9.1 billion in the
July-September period. That was lower than the $9.4 billion Wall
Street was expecting, according to analysts polled by FactSet.
Starbucks said its adjusted earnings fell 24.5% from the same
period a year ago to 80 cents per share. That also fell short of
analysts’ forecast of $1.03 per-share earnings.
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