SEATTLE — It’s not uncommon for poorly performing publicly-traded companies to issue preliminary financial results to offset the sting for when the results are officially published. Starbucks Corp. did just that on Oct. 22 as new chief executive officer Brian Niccol hits reset on the coffee chain’s strategy.
For the fourth quarter of fiscal 2024 ended Sept. 29, Starbucks said global comparable sales declined 7% and consolidated net sales declined 3% to $9.1 billion. Pressuring the results was a 6% decline in US comparable store sales that was driven by a 10% decline in comparable transactions.
Investments in an expanded range of product offerings combined with more frequent in-app promotions and integrated marketing to improve frequency across Starbucks’ customer base did not improve consumer behaviors, specifically traffic across both Starbucks Rewards (SR) and non-SR customer segments, resulting in lower-than-expected performance, according to the company.
Additionally, China comparable store sales declined 14%, driven by an 8% decline in average ticket compounded by a 6% decline in comparable transactions, weighed down by competition and a soft macro environment that impacted consumer spending, the company said.
For the full fiscal year, the company said global comparable store sales fell 2% and consolidated net revenues increased 1% to $36.2 billion. As a result of the poor performance, the company said it will not be offering guidance for fiscal 2025.
“We are developing a plan to turn around our business, but it will take time,” said Rachel Ruggeri, chief financial officer. “We want to amplify our confidence in the business and provide some certainty as we drive our turnaround.”
In conjunction with the release of the preliminary results, Starbucks also issued a video where Niccol iterated his four-point plan to improve results, which includes a focus on coffee, improving the performance during the morning daypart, reestablishing the community aspect of the business and better communicating the company’s story.
As part of the communication strategy, Niccol said Starbucks must reintroduce itself.
“We’re fundamentally changing our marketing,” he said. “We’ve been focusing on Starbucks Rewards customers rather than talking to all our customers.
“We’re prioritizing our brand, highlighting the handcrafted products customers expect, and showcasing the coffee innovation that sets Starbucks apart. We will simplify our overly complex menu, fix our pricing architecture, and ensure that every customer feels Starbucks is worth it every single time they visit.”
Starbucks will officially release its fourth quarter and fiscal 2024 results Oct. 30.