:max_bytes(150000):strip_icc()/GettyImages-2237015195-b4290abeb63244abbb0df3568e5177b4.jpg "Starbucks Is Carrying Out a Major Revamp. There Are Signs It’s Working.")
:max_bytes(150000):strip_icc():format(jpeg)/GettyImages-2237015195-b4290abeb63244abbb0df3568e5177b4.jpg)
Key Takeaways
- Starbucks’ same-store sales recently turned positive after six straight quarters of declines, which CEO Brian Niccol says shows the company’s comeback plan is working.
- The company aims to win back customers by serving them quickly and making cafes a calmer, more inviting place to spend time.
Starbucks is back in consumers’ daily grind.
The company’s year-long turnaround campaign is gaining ground, executives said on a conference call Wednesday. Same-store sales started to grow on a year-over-year basis in the fiscal fourth quarter after a year-and-a-half of declines. Business improved among Starbucks Rewards members and less-frequent visitors, showing the Back to Starbucks campaign is on track, CEO Brian Niccol said.
Comparable sales at Starbucks-operated stores in the U.S. “turned positive in September, driven by transactions, and it [has] remained positive through October, reflecting the momentum taking shape in our business,” Niccol said, according to a transcript made available by AlphaSense.
Same-store sales in North America were flat in the quarter ended Sep. 28 compared to the year-earlier period, snapping a six-quarter streak of negative numbers, according to data from Visible Alpha. Globally, same-store sales reversed an equally long period of decline, growing 1% year-over-year.
What This News Means for Investors
Starbucks executives said business is improving, but the path back to consistent earnings growth may not be linear. Sales are picking up. At the same time, Starbucks is investing in staffing, technology and remodeling cafes.
Niccol launched Back to Starbucks shortly after taking the helm as CEO in September 2024. The plan calls for more efficiently managing a crush of orders from phone apps, the counter and drive-thru, and making cafes a more orderly, welcoming place to relax. As part of the initiative, Starbucks is investing in better staffing and renovating cafes, but also shuttering locations and laying off white collar workers.
Starbucks shares (SBUX), which gained ground in the months after Niccol’s appointment, have lost about a quarter of their value since hitting their high for the year in March. The stock was little changed in late trading Thursday.
The cafe giant reported mixed financial results for the fiscal fourth quarter. Its revenue jumped 5% year-over-year to $9.6 billion, above the $9.1 billion analysts were expecting, according to consensus estimates compiled by Visible Alpha. Adjusted earnings per share of 52 cents came in lower than the 55 cents analysts had expected.
It may take time for Starbucks’ sales growth to show up in earnings, said Catherine Park, vice president of investor relations. “We’ve got the right plan in place,” Park said, according to the transcript. “Earnings are going to lag. So we’ve said that you grow top-line first, and then the earnings will follow.”
