STARBUCKS posted a second consecutive quarter of declining sales as pullback from coffee treats hurt results.
Comparable sales, a measure tracking company-operated locations open for at least 13 months, fell 3 per cent from a year ago in the company’s third fiscal quarter, a slightly steeper slide than the average of analyst estimates. The number of transactions fell both in North America and abroad, the company said. Revenue was also just shy of market expectations.
The shares rose 1.2 per cent at 4.18 pm in extended New York trading – a sign that some investors may have been bracing for a deeper decline.
Starbucks’ business has taken a hit as consumers pressured by inflation and dwindling savings tighten their spending. In the US, its largest market by number of stores, the company has sought to lure customers in with half-off deals and discounted bundles. It’s also looking to speed up service, while facing renewed pressure from an activist investor.
Chief financial officer Rachel Ruggeri said the chain’s efficiency efforts are “are tracking ahead of expectations” and partially offset investments the company made to cope with the cautious consumer environment.
Still, an increase in the size of the average ticket in North America helped stem a steeper sales decline. The chain has been enticing diners to its app with exclusive deals, saying on Tuesday (Jul 30) that the number of US loyalty members active over 90 days had risen 7 per cent from a year ago. Mobile ordering suffered an outage for several hours on Tuesday connected to issues with Microsoft’s Azure cloud service.
Same-store sales in China, which has been a weak spot, declined more than expected due to a slump in transactions and average ticket sizes. Other parts of the international business have suffered from consumer boycotts over the company’s perceived stance in the Israel-Hamas war. The chain has said it does not take political positions.
Earnings per share, excluding some items, were 93 US cents, slightly above the average estimate. Operating margin declined from the prior year, mostly due to an increase in promotions and improved wages and benefits for store workers, among other factors. BLOOMBERG
