Starbucks Sales Slumped in Quarter
Starbucks Sales Slumped in Quarter
Coffee Network (Bogota)- Starbucks said consolidated net revenues declined 2%, to $8.6 billion, or a 1% decline on a constant currency basis as customers cut on spending in the 13-week fiscal second quarter ending March 31, 2024 .
The company attributed the drop to a complex operating environment.
The coffee giant reported fiscal second-quarter net income attributable to the company of $772.4 million, or 68 cents per share, down from $908.3 million, or 79 cents per share, a year earlier.
“In a highly challenged environment, this quarter's results do not reflect the power of our brand, our capabilities or the opportunities ahead,” commented Laxman Narasimhan, chief executive officer. “It did not meet our expectations, but we understand the specific challenges and opportunities immediately in front of us. We have a clear plan to execute and the entire organization is mobilized around it,” Narasimhan added.
Global comparable store sales declined 4%, driven by a 6% decline in comparable transactions, partially offset by a 2% increase in average ticket.
In North America and the US sales declined 3%, driven by a 7% decline in comparable transactions, partially offset by a 4% increase in average ticket.
In the international markets, store sales declined 6%, driven by a 3% decline in both comparable transactions and average ticket. While in China comparable store sales declined 11%, driven by an 8% decline in average ticket and a 4% decline in comparable transactions.
Net revenues for the North America segment totalled $6.4 billion in the second quarter flat to the same quarter last year, primarily driven by a 3% decline in comparable store sales. This decline was offset by net new company-operated store growth of 5% over the past 12 months, as well as growth in our licensed store business, the company said.
Net revenues for the international segment declined 5% over second quarter in 2023 to $1.8 billion, primarily driven by an approximate 5% unfavorable impact from foreign currency translation and a 6% decline in comparable store sales, driven by a 3% decline in both comparable transactions and average ticket. Also contributing were lower product and equipment sales to, and royalty revenues from, our licensees. This decline was partially offset by net new company-operated store growth of 12% over the past 12 months.
Operating income decreased to $233.8 million in Q2 FY24 compared to $314.7 million in Q2 FY23. Operating margin of 13.3% contracted from 17.0% in the prior year, primarily driven by promotional activities, incremental investments in store partner wages and benefits, as well as sales mix shift, partially offset by pricing in certain markets.
The company opened 364 net new stores in second quarter, ending the period with 38,951 stores of which 52% are company-operated coffee shops and 48% are licensed stores.
At the end of the second quarter, stores in the U.S. and China comprised 61% of the company’s global portfolio, with 16,600 and 7,093 stores in the U.S. and China, respectively, the company said.
“While it was a difficult quarter, we learned from our own underperformance and sharpened our focus with a comprehensive roadmap of well thought out actions making the path forward clear,” commented Rachel Ruggeri, chief financial officer. “On this path, we remain committed to our disciplined approach to capital allocation as we navigate this complex and dynamic environment,” Ruggeri added.
Last quarter, it said it anticipates revenue growth of 7% to 10%, global same-store sales growth in a range of 4% to 6% and earnings per share growth of 15% to 20%.
By Diana Delgado
