Starbucks‘ preliminary fourth-quarter results have shown a decline in global comparable store sales and consolidated revenues.
On 22 October, the company released its preliminary financial results for its 13-week fiscal fourth quarter and 52-week fiscal year ending 29 September 2024.
For the fourth quarter of fiscal year 2024, global comparable store sales declined 7 per cent, and consolidated net revenues declined 3 per cent to US$9.1 billion.
GAAP earnings per share was US$0.80, down 25 per cent from the previous year. Non-GAAP earnings per share is also US$0.80, declining 24 per cent on a constant currency basis.
According to a statement, the company’s results were primarily driven by softness in North America’s revenues in the quarter, specifically a 6 per cent decline in United States (US) comparable store sales, driven by a 10 per cent decline in comparable transactions.
Starbucks said 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 behaviours, specifically traffic across both Starbucks Rewards (SR) and non-SR customer segments, resulting in lower-than-expected performance.
Additionally, China comparable store sales declined 14 per cent, driven by an 8 per cent decline in average ticket and compounded by a 6 per cent decline in comparable transactions.
For the full fiscal year 2024, global comparable store sales declined 2 per cent, and consolidated net revenues increased 1 per cent to US$36.2 billion.
GAAP earnings per share was US$3.31, which was down 8 per cent from the previous year.
The lower-than-expected performance for the full fiscal year was said to be a result of traffic decline, including a cautious consumer environment, and targeted and accelerated investments not improving customer behaviours, as well as the macro and competitive environment in China pressuring the company’s results.
Due to the transitioning of the CEO coupled with the current state of the business, Starbucks will suspend guidance for the full fiscal year 2025.
The company says this will allow ample opportunity to complete an assessment of the business and solidify key strategies, while stabilising and positioning the business for long-term growth.
With a strategic reset underway, the company says it remains committed to creating shareholder value and is announcing that its Board of Directors approved an increase in the quarterly cash dividend from US$0.57 to US$0.61 per share of outstanding common stock.
“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,” says 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.”
CEO Brian Niccol adds: “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.”
Starbucks plans to release its actual fourth quarter and full fiscal year 2024 financial results after market close on 30 October 2024, with a conference call to follow at 2pm Pacific Time. The conference call will be webcast, including closed captioning, and can be accessed on the company’s website. A replay of the webcast will be available on the company’s website until the end of day 13 December 2024.
