April 3, 2025/
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Starbucks reported a decline in sales for the third consecutive quarter, causing its shares to fall by more than 3% in extended trading. The coffee giant announced preliminary quarterly results, highlighting its need for a strategic shift to return to growth. CEO Brian Niccol outlined a plan aimed at turning around the company’s fortunes, beginning with changes in the U.S. market.
In a statement, CEO Brian Niccol acknowledged the company’s underperformance, stating, “Our fourth-quarter performance makes it clear that we need to fundamentally change our strategy so we can get back to growth.” The company’s preliminary net sales fell 3% to $9.1 billion, while adjusted earnings per share stood at 80 cents, falling short of analysts’ expectations of $1.03 per share and revenue of $9.38 billion.
Starbucks experienced its steepest drop in same-store sales since the Covid-19 pandemic, with a 7% decline in this quarter. Same-store sales in North America decreased by 6%, with traffic down 10%, despite increased promotional efforts and product range expansion. In China, the company faced a significant challenge, with same-store sales plummeting by 14% due to rising competition and shifts in consumer behavior.
To address these challenges, Niccol emphasized a need for a comprehensive strategy, which he plans to share in detail during the company’s earnings call on October 30. The new CEO aims to simplify the menu, fix pricing issues, and enhance customer experience by ensuring drinks are handed directly to customers. Niccol believes that the company’s challenges are fixable and that they can leverage existing strengths for recovery.
Due to the recent transition in leadership and the current state of the business, Starbucks suspended its fiscal 2025 outlook. Chief Financial Officer Rachel Ruggeri stated, “We want to amplify our confidence in the business and provide some certainty as we drive our turnaround.” Despite the disappointing results, Starbucks increased its dividend from 57 cents to 61 cents per share as a show of confidence in its recovery plan.
With Niccol at the helm, Starbucks is reshuffling its executive team to better position itself for growth. The company plans to focus on improving the barista experience, enhancing morning service, and refining its branding. As it navigates these changes, the coffee chain is determined to turn around its declining sales and regain its footing in a competitive market.
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