Global coffee shop chain Starbucks reported a 4 per cent decline in global comparable store sales for its first-quarter fiscal year 2025 financial results, amid the company’s ongoing ‘Back to Starbucks’ strategy.
According to the report, the decline in global store sales was driven by a 6 per cent decline in comparable transactions, and partially offset by a 3 per cent increase in average ticket.
North America and United States (US) comparable store sales declined 4 per cent, driven by an 8 per cent decline in comparable transactions, and partially offset by a 4 per cent increase in average ticket.
Additionally, international comparable store sales declined 4 per cent, driven by a 2 per cent decline in both average ticket and comparable transactions. Meanwhile, China comparable store sales declined 6 per cent, driven by a 4 per cent decline in average ticket and a 2 per cent decline in comparable transactions
“While we’re only one quarter into our turnaround, we’re moving quickly to act on the ‘Back to Starbucks’ efforts and we’ve seen a positive response,” says Brian Niccol, Starbucks Chairman and CEO.
“We believe this is the fundamental change in strategy needed to solve our underlying issues, restore confidence in our brand and return the business to sustainable, long-term growth.”
The company opened 377 net new stores in the first quarter, ending the period with 40,576 stores which consist of 53 per cent company-operated and 47 per cent licensed
At the end of the first quarter, stores in the US and China comprised 61 per cent of the company’s global portfolio, with 17,049 and 7685 stores in the US and China, respectively.
Consolidated net revenues of US$9.4 billion were flat to prior year, including on a constant currency basis.
Operating margin contracted 390 basis points year-over-year to 11.9 per cent, primarily driven by deleverage and investments in support of ‘Back to Starbucks’, including store partner wages, benefits and hours, and the removal of the extra charge for non-dairy milk customisations. The contraction was partially offset by the annualisation of pricing and supply chain efficiencies. On a constant currency basis, operating margin contracted 380 basis points year-over-year.
Finally, earnings per share of US$0.69 declined 23 per cent over prior year, or declined 22 per cent on a constant currency basis. Starbucks Rewards loyalty program 90-day active members in the US totalled 34.6 million, up 1 per cent year-over-year and up 2 per cent quarter-over-quarter
Rachel Ruggeri, Starbucks CFO, says: “We are encouraged by our Q1 results, which demonstrated the effectiveness of our ‘Back to Starbucks’ strategy, evidenced by our top-line trend.
“Although we are in the beginning chapter, and have much more work ahead of us, we will continue to prioritise shareholder value through dividends, providing a predictable return of capital while we turn around our business.”
