Starbucks sales decline but revenue beats expectations
The world's largest coffee chain, which was founded as a single store in 1971 in Seattle's historical Pike Place Market, said that group net revenues in the three months to June 29 rose by 4 per cent to $9.5 billion against forecasts of $9.31 billion.
The shares rose $4.30, or 4.6 per cent, to $97.25 in after-hours trading in New York after the earnings report, up almost 24 per cent in the past year but just 1.9 per cent since the start of the year.
Starbucks also reported that overall same-store sales declined by 2 per cent for the quarter against expectations of a 1.2 per cent dip. Net income fell 47 per cent to $558 million in the period. However, in China, the company's second-largest market, same-store sales grew by 2 per cent for the three months.
Brian Niccol, chief executive, has pushed for a simplified menu, freshly baked food items, cups with handwritten messages and quicker service as he tries to drive a brand reset since taking charge last August.
• New Starbucks boss: We are inconsistent and customers wait too long
He has also pledged to increase investments in staffing in all 10,000-plus Starbucks-owned US stores by the end of the summer. The company has a stock market value of $106 billion with 32,000 stores in 80 countries.
'We've fixed a lot and done the hard work on the hard things to build a strong operating foundation, and based on my experience of turnarounds, we are ahead of schedule,' Niccol said. 'We are making tangible progress in our 'Back to Starbucks' strategy.'
Customer visits to the coffee chain operator were down by an average 0.1 per cent between April to June, according to Placer.ai, the research firm. That was better than a 0.9 per cent drop in the previous three months, suggesting that Niccol's 'Back to Starbucks' initiative was starting to have an effect.
Starbucks said it was confident that new products coming next year, including a cold foam protein drink, coconut water-based beverages and improved baked goods, would help turn around lagging US sales.
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3 days ago
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