Starbucks sees 7 percent drop in global sales for July-September period
Date
10/23/2024 8:45:28 AM
(MENAFN) Starbucks announced on Wednesday that it experienced a 7 percent decline in global sales for the July to September period, marking the third consecutive quarter of sales drops for the coffee giant. This downturn in performance is particularly concerning as the company also reported a 2 percent decrease in comparable store sales for the entire fiscal year, which encompasses the 52-week period ending September 29.
In terms of financial metrics, Starbucks saw its earnings per share plummet by 25 percent compared to the same quarter last year, resulting in earnings of 80 cents. The company’s consolidated net revenues also fell by 3 percent, amounting to USD9.1 billion for the quarter. These disappointing results prompted the coffee chain to suspend its annual forecast for the upcoming fiscal year. New CEO Brian Niccol emphasized the necessity for a “fundamental change” within the organization to address the ongoing challenges.
The press release from Starbucks highlighted that the company’s underperformance was primarily attributed to a significant decline in customer traffic, driven by a cautious consumer environment and competitive pressures, particularly in the Chinese market. Starbucks CFO Rachel Ruggeri pointed out that despite the company’s increased investments aimed at revitalizing the brand, there has been no substantial improvement in traffic patterns. However, she mentioned that plans are in place for long-term strategies to rejuvenate the business.
Additionally, Starbucks has faced backlash in the form of protests and boycott campaigns globally due to its perceived support for Israel, which may have impacted sales over the past three quarters. The company had previously lowered its sales forecast for the October to December period last year, citing negative repercussions from the situation in the Middle East. This trend continued with revenue declines of 2 percent from January to March and a 4 percent decrease in global sales—a notable drop that marked the first such decline since the end of 2020. Furthermore, the company reported a 3 percent reduction in global sales for the April to June quarter, underscoring the ongoing challenges it faces in the marketplace.
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