Starbucks Reports Shockingly Disappointing Preliminary Financial Results, Sales Topple 7%
CoffeeNetwork (New York) - Starbucks Corporation (NASDAQ: SBUX) today reported preliminary financial results for its 13-week fiscal fourth quarter and 52-week fiscal year ended September 29, 2024. GAAP results in fiscal 2024 and fiscal 2023 include items that are excluded from non-GAAP results.
For the fourth quarter of fiscal year 2024, global comparable store sales declined 7%, and consolidated net revenues declined 3% to $9.1 billion, or a 3% decline on a constant currency basis. GAAP earnings per share is $0.80, down 25% over prior year. Non-GAAP earnings per share is also $0.80, declining 24% on a constant currency basis.
The company’s results were primarily driven by softness in North America’s revenues in the quarter, specifically a 6% decline in U.S. comparable store sales, driven by a 10% decline in comparable transactions, partially offset by a 4% increase in average ticket. The accelerated investments in an expanded range of product offerings coupled with more frequent in-app promotions and integrated marketing to entice frequency across the customer base did not improve customer behaviors, specifically traffic across both Starbucks Rewards and non-SR customer segments, resulting in lower-than-expected performance. Additionally, China comparable store sales declined 14%, driven by an 8% decline in average ticket compounded by a 6% decline in comparable transactions, weighed down by intensified competition and a soft macro environment that impacted consumer spending.
For the full fiscal year 2024, global comparable store sales declined 2%, and consolidated net revenues increased 1% to $36.2 billion, also a 1% increase on a constant currency basis. GAAP earnings per share is $3.31, down 8% over prior year. Non-GAAP earnings per share is also $3.31, declining 6% on a constant currency basis. The lower-than-expected performance for the full fiscal year was a result of pronounced traffic decline, including a cautious consumer environment, and our targeted and accelerated investments not improving customer behaviors, as well as the macro and competitive environment in China pressuring our results further.
Given the company’s ceo transition coupled with the current state of the business, guidance will be suspended for the full fiscal year 2025. This will allow ample opportunity to complete an assessment of the business and solidify key strategies, while stabilizing and positioning the business for long-term growth.
“Our fourth quarter performance makes it clear that we need to fundamentally change our strategy so we can get back to growth and that's exactly what we are doing with our ‘Back to Starbucks’ plan,” commented Brian Niccol, chairman and chief executive officer. Niccol commented that the goal is to “reintroduce Starbucks to the world.”
He said, “We’re fundamentally changing our marketing. We’ve been focusing on Starbucks Rewards customers rather than talking to all our customers. And we’re changing that quickly, as you likely have already seen. We’re prioritizing our brand, highlighting the handcrafted products customers expect, and showcasing the coffee innovation that sets Starbucks apart. We will simplify our overly complex menu, fix our pricing architecture, and ensure that every customer feels Starbucks is worth it every single time they visit.”
Additionally, it was noted that the near-term focus is the U.S. “It’s our biggest business and we need to return it to growth,” he said, “But we also have significant opportunities around the world. Our team is focused on how we return Starbucks China to growth and getting all our international businesses performing again.”
Starbucks plans to release its actual fourth quarter and full fiscal year 2024 financial results after market close on Wednesday, October 30, 2024, with a conference call to follow at 2:00 p.m. Pacific Time.
Alexis Rubinstein
