Starbucks: reports preliminary results, suspends guidance

Seattle / WA. (sc) Starbucks Corporation reported preliminary financial results for its 13-week fiscal fourth quarter and 52-week fiscal year ended September 29, 2024. GAAP results in fiscal 2024 and fiscal 2023 include items that are excluded from non-GAAP results.

For the fourth quarter of fiscal year 2024, global comparable store sales declined 7 percent, and consolidated net revenues declined 3 percent to USD 9.1 billion, or a 3 percent decline on a constant currency basis. GAAP earnings per share is USD 0.80, down 25 percent over prior year. Non-GAAP earnings per share is also USD 0.80, declining 24 percent on a constant currency basis.

China comparable store sales declined 14 percent

The company’s results were primarily driven by softness in North America’s revenues in the quarter, specifically a 6 percent decline in U.S. comparable store sales, driven by a 10 percent decline in comparable transactions, partially offset by a 4 percent 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 percent, driven by an 8 percent decline in average ticket compounded by a 6 percent decline in comparable transactions, weighed down by intensified competition and a soft macro environment that impacted consumer spending.

For the full fiscal year 2024, global comparable store sales declined 2 percent, and consolidated net revenues increased 1 percent to USD 36.2 billion, also a 1 percent increase on a constant currency basis. GAAP earnings per share is USD 3.31, down 8 percent over prior year. Non-GAAP earnings per share is also USD 3.31, declining 6 percent on a constant currency basis. The lower-than-expected performance for the full fiscal year was a result of pronounced traffic decline, including a cautious consumer environment, and our targeted and accelerated investments not improving customer behaviors, as well as the macro and competitive environment in China pressuring our results further.

Guidance will be suspended for the full fiscal year 2025

Given the company’s ceo transition coupled with the current state of the business, guidance will be suspended for the full fiscal year 2025. This will allow ample opportunity to complete an assessment of the business and solidify key strategies, while stabilizing and positioning the business for long-term growth.

With a strategic reset underway, the company remains committed to creating shareholder value and is announcing that its Board of Directors approved an increase in the quarterly cash dividend from USD 0.57 to USD 0.61 per share of outstanding common stock. The dividend and related increase demonstrates the company’s confidence in the long-term growth.

«Despite our heightened investments, we were unable to change the trajectory of our traffic decline, resulting in pressures in both our top-line and bottom-line. While our efficiency efforts continued to produce according to plan, they were not enough to outpace the impact of the decline in traffic,» commented Rachel Ruggeri, chief financial officer. «We are developing a plan to turn around our business, but it will take time. We want to amplify our confidence in the business, and provide some certainty as we drive our turnaround. For that reason, we have increased our dividend.»

«Our fourth quarter performance makes it clear that we need to fundamentally change our strategy so we can get back to growth and that’s exactly what we are doing with our ‘Back to Starbucks’ plan,» commented Brian Niccol, chairman and chief executive officer. «I’ve spent my first several weeks in stores engaging with and listening to feedback from our partners and customers. It’s clear that Starbucks is a much-loved brand. We need to focus on what has always set us apart – a welcoming coffeehouse where people gather and where we serve the finest coffee, handcrafted by our skilled baristas. We are energized and the team is moving quickly. I’ll share more details at our earnings call, but invite you to listen to my initial thoughts on our investor relations website.»

Starbucks released a video of prepared remarks by Brian Niccol, chairman and chief executive officer. The video is available at https://investor.starbucks.com and the video will be available on the company’s website until the end of day, Thursday, December 05, 2024. The company uses its website as a tool to disclose important information about the company and comply with its disclosure obligations under Regulation Fair Disclosure. Starbucks plans to release its actual fourth quarter and full fiscal year 2024 financial results after market close on Wednesday, October 30, 2024 (next week).

For additional information please refer to the company’s news release (PDF | 141 KB):

20241022-STARBUCKS-Q42024.