Starbucks on Tuesday reported that its same-store sales slid for the fourth consecutive quarter, but the company’s quarterly earnings and revenue beat Wall Street’s expectations.
The coffee giant kicked off a turnaround plan last quarter in the hopes of reviving its U.S. business, which has slumped over the last year.
“While we have room for improvement, we’re making progress as planned, and have confidence we’re on the right track,” CEO Brian Niccol said in a video released on the company’s website on Tuesday afternoon.
He added that the company has seen a “positive response” to the early steps that it has taken. Those tweaks have included removing extra charges for non-dairy milk options, focused its marketing on its coffee and beginning a menu overhaul.
Shares of the company rose 3% in extended trading.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per share: 69 cents vs. 67 cents expected
- Revenue: $9.4 billion vs. $9.31 billion expected
Starbucks reported fiscal first-quarter net income attributable to the company of $780.8 million, or 69 cents per share, down from $1.02 billion, or 90 cents per share, a year earlier.
The company’s net sales of $9.4 billion were unchanged from a year earlier.
Starbucks’ same-store sales fell 4%, fueled by a 6% decline in traffic to its stores. Wall Street was expecting a steeper drop of 5.5%, according to StreetAccount estimates. Both its U.S. and international locations outperformed expectations.
U.S. same-store sales slid 4% as traffic to its cafes fell 8%. Under Niccol, who took the reins in September, the company has been trying to turn around its U.S. business by getting “back to Starbucks” and returning its focus to coffee and the customer experience.
Outside of its home market, same-store sales also declined 4%.
Starbucks’ same-store sales in China, its second-largest market, fell 6%, fueled by a 4% in average ticket. The coffee giant has been leaning into discounts in China to compete with rivals that have much lower prices, like Luckin Coffee.
In October, the company suspended its forecast for fiscal 2025, citing the turnaround efforts. Starbucks is also planning fewer new locations and renovations in fiscal 2025 to free up capital to fuel its comeback.
Niccol also has plans for Starbucks’ corporate workforce. He’s been reorganizing the company’s structure, including splitting the role of North American president into two jobs. Earlier on Tuesday, the company announced it has hired two alumni from Taco Bell, Niccol’s employer prior to Chipotle.
In early March, the company is planning to lay off workers, although Starbucks hasn’t shared yet how many jobs will be affected.