Seattle, Washington – Starbucks, a global coffee chain, faced challenges in its second quarter earnings report, falling short of expectations in revenue, earnings, and same-store sales growth. The CEO, Laxman Narasimhan, described the current environment as “highly challenged” during the earnings call, citing macro headwinds and consumer pressures affecting occasional customers.
This quarter marks Starbucks’ first sales decline since 2020, reflecting a 2% drop in revenue to $8.6 billion. Adjusted earnings per share also decreased by 8% to $0.68. Global same-store sales fell by 4% from a year ago, driven by a 6% decrease in transactions partially offset by a 2% increase in average ticket size.
Despite efforts to attract customers through promotions like Lavender Lattes, new offerings, and afternoon specials, Starbucks struggled to increase its market share significantly. Same-store sales in North America and the US dipped by 3%, with foot traffic decreasing by 7% and ticket size rising by 4%.
In response to the decline, Starbucks plans to introduce new promotions on its app and improve speed of service to enhance customer experience. Additionally, the company aims to expand its menu with innovative products like boba tea pearls, low-calorie energy drinks, and sugar-free syrups.
On an international scale, same-store sales dropped by 6%, most notably in China where sales decreased by 11%, showcasing a significant impact on Starbucks’ global performance. Narasimhan expressed concerns about misinformation and current events negatively affecting the company’s reputation.
Revised 2024 outlooks anticipate low-single-digit revenue growth and a decline in same-store sales, signaling a more conservative forecast than previous expectations. Despite the challenges, Starbucks continues to focus on adapting its strategies to meet changing consumer behaviors and market trends.