Shares of Starbucks are down nearly 6% after hours following a weak report on preliminary Q4 earnings.
- Global comp sales -7%
- US comp sales -6%
- China comparable store sales declined 14%
This could be a sign of a weakening consumer but I think it’s more about Starbucks losing its cool. The company also suspended its guidance for FY 2025.
The slump isn’t exactly a surprise given that the company fired its CEO it September. It looks like the new CEO is doing the ‘kitchen sink’ thing.
This is what the earnings release said:
The company’s
results were primarily driven by softness in North America’s revenues
in the quarter, specifically a 6% decline in U.S. comparable store
sales, driven by a 10% decline in comparable transactions, partially
offset by a 4% increase in average ticket. The accelerated investments
in an expanded range of product offerings coupled with more frequent
in-app promotions and integrated marketing to entice frequency across
the customer base did not improve customer behaviors, specifically
traffic across both Starbucks Rewards and non-SR customer segments,
resulting in lower-than-expected performance. 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 intensified competition and a soft macro environment that
impacted consumer spending.
This article was written by Adam Button at www.forexlive.com.
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