Are you sipping your Starbucks coffee as you read this article? Well, you might want to hold onto your cup because Starbucks just reported weaker-than-expected quarterly earnings and revenue. The coffee giant saw a surprise decline in same-store sales, leading to a 10% drop in shares in extended trading.
Starbucks’ CEO, Laxman Narasimhan, expressed disappointment in the results, citing a “highly challenged environment.” The company reported earnings per share of 68 cents adjusted vs. the expected 79 cents and revenue of $8.56 billion vs. the expected $9.13 billion. Net sales dropped nearly 2% with same-store sales falling 4% as traffic declined 6% in the quarter.
Not only did Starbucks struggle in the U.S., but its international segment also saw same-store sales declines, especially in China where sales plunged 11%. This poor performance aligns with what other companies like McDonald’s and PepsiCo have reported – a trend of low-income consumers pulling back on spending.
Despite the disappointing results, Starbucks remains optimistic and is set to discuss its full-year financial outlook during the company’s conference call. Last quarter, it anticipated revenue growth, global same-store sales growth, and earnings per share growth, all ranging from 7% to 20%.
So, what’s next for Starbucks? Stay tuned for updates as this story develops. And remember, your cup of coffee might taste a bit different next time you visit a Starbucks store.
