Starbucks Beats $9.4B Revenue, Sales Drop 4%, China Down 6%, Recovery in Focus

U.S. Operations See Decline, but Turnaround Gains Traction Starbucks’ U.S. same-store sales fell 4%, driven by an 8% drop in customer traffic. However, Niccol’s efforts to bring the company “back to Starbucks,” with a renewed focus on coffee, simplified menus, and customer experience improvements, have started to gain traction. The company eliminated extra charges for nondairy milk and introduced operational changes, such as shorter wait times, which have been positively received.

Shares of Starbucks rose nearly 4% in extended trading, as investors viewed the smaller-than-expected sales decline as evidence that the turnaround plan is taking root.

China Challenges Persist Amid Competitive Pricing In China, Starbucks’ second-largest market, same-store sales fell 6%, with a 4% decline in average ticket prices. The company has leaned on discounts to compete with lower-priced rivals like Luckin Coffee. Despite these measures, traffic remains a challenge in the region, contributing to the ongoing decline in sales performance.

Corporate Restructuring and Labor Tensions Niccol has made sweeping changes to Starbucks’ corporate leadership, splitting key roles and bringing in former Taco Bell executives to focus on store operations and development. These changes are aimed at streamlining operations and driving growth. However, labor tensions remain high, with ongoing union contract negotiations and recent strikes at 300 U.S. locations in December, one of Starbucks’ busiest months.

Market Outlook: Cautiously Optimistic