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Starbucks reports notable 7 percent decrease in global sales
(MENAFN) Starbucks, the American coffee powerhouse, has reported a notable 7 percent decrease in global sales for the third quarter of 2024, spanning July to September. This decline marks the third consecutive quarterly drop in sales for the company during the initial nine months of the year. The preliminary financial results were shared on Tuesday, ahead of a more detailed balance sheet expected next week.
The sales downturn has been linked, in part, to persistent boycott movements aimed at international brands viewed as supporters of Israel during the current conflict in the Gaza Strip. As these movements gain momentum, a growing number of consumers are opting to avoid companies associated with these issues.
In its announcement, Starbucks also indicated a 25 percent fall in earnings per share compared to the same period last year, with the latest figure reported at 80 cents. Rachel Ruggieri, the company’s Chief Financial Officer, acknowledged the significant hurdles Starbucks is encountering. Despite a rise in investments aimed at enhancing operations, the persistent decline in customer foot traffic has yet to be reversed.
Ruggieri explained that, although the company is making continuous efforts to improve efficiency, these initiatives have not been adequate to mitigate the effects of the dwindling number of customers. She also noted that Starbucks is working on a comprehensive recovery plan, but warned that the execution of this strategy will require time.
The influence of the ongoing protests and boycotts has been particularly pronounced throughout the first nine months of the year, significantly impacting sales in the Middle East. In light of these challenges, Starbucks has adjusted its annual sales forecast downward, reflecting the detrimental effects of these geopolitical issues on its performance in the region.
From January to March, the company saw a revenue decline of 2 percent, followed by a further drop of 3 percent from April to June. As Starbucks navigates these difficult circumstances, investors and industry observers will be closely watching how the company responds and attempts to recover in the months ahead.
The sales downturn has been linked, in part, to persistent boycott movements aimed at international brands viewed as supporters of Israel during the current conflict in the Gaza Strip. As these movements gain momentum, a growing number of consumers are opting to avoid companies associated with these issues.
In its announcement, Starbucks also indicated a 25 percent fall in earnings per share compared to the same period last year, with the latest figure reported at 80 cents. Rachel Ruggieri, the company’s Chief Financial Officer, acknowledged the significant hurdles Starbucks is encountering. Despite a rise in investments aimed at enhancing operations, the persistent decline in customer foot traffic has yet to be reversed.
Ruggieri explained that, although the company is making continuous efforts to improve efficiency, these initiatives have not been adequate to mitigate the effects of the dwindling number of customers. She also noted that Starbucks is working on a comprehensive recovery plan, but warned that the execution of this strategy will require time.
The influence of the ongoing protests and boycotts has been particularly pronounced throughout the first nine months of the year, significantly impacting sales in the Middle East. In light of these challenges, Starbucks has adjusted its annual sales forecast downward, reflecting the detrimental effects of these geopolitical issues on its performance in the region.
From January to March, the company saw a revenue decline of 2 percent, followed by a further drop of 3 percent from April to June. As Starbucks navigates these difficult circumstances, investors and industry observers will be closely watching how the company responds and attempts to recover in the months ahead.
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