Starbucks’ Financial Results Miss Wall Street Targets

Retail coffee chain Starbucks (SBUX) has reported first-quarter financial results that missed Wall Street targets across the board. The Seattle-based company announced earnings per share (EPS) of $0.41 U.S., which was below the $0.49 U.S. consensus expectation of analysts. Revenue in the January through March period totaled $8.76 billion U.S., which fell short of the $8.82 billion U.S. that had been forecast on Wall Street. The poor results sent Starbucks’ stock down 10% in after hours trading. Management acknowledged that its same-store sales continued to decline in this year’s first quarter but said its turnaround strategy is starting to work. Still, the company’s operating margin fell to 6.9% from 12.8% a year earlier as Starbucks spent more money on its revitalization efforts. Labor costs also rose as it hired more baristas.Starbucks’ same-store sales fell for a fifth consecutive quarter. The company’s sales continue to decline as consumers in the U.S. and China, its two biggest markets, seek out cheaper coffee options.The company’s global same-store sales fell 1%, driven by a 2% decline in transactions. In Starbucks’ home market of America, the traffic decline was even steeper.U.S. locations saw transactions fall 4%, dragging its same-store sales down 2%. China’s same-store sales were flat for the quarter, as a lower average ticket offset transaction growth.Last October, Starbucks suspended its forecast for 2025 as it launched its turnaround strategy. The plan has included layoffs for its white-collar workers. In late February, Starbucks announced it would cut 1,100 corporate jobs.Prior to today (April 30), Starbucks’ stock had declined 8% this year to trade at $84.85 U.S. per share.