Shares of Starbucks are down nearly 6% after hours following a weak report on preliminary Q4 earnings.
SBUX after hours
- Global comp sales -7%
- US comp sales -6%
- China comparable store sales declined 14%
This could be a sign of a weakening consumer but I think it’s more about Starbucks losing its cool. The company also suspended its guidance for FY 2025.
The slump isn’t exactly a surprise given that the company fired its CEO it September. It looks like the new CEO is doing the ‘kitchen sink’ thing.
This is what the earnings release said:
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.