Starbucks Wakes Up Investors with Q4 Pre-Announcement, Shares Trading Down
Bean brewer Starbucks Corporation (SBUX) woke investors up with a pre-announcement of their Q4 results that have shares trading off in Wednesday pre-market trade. The company’s new CEO Brian Niccol who was formerly CEO for Chipotle Mexican Grill (CMG) stated, “Our Q4 performance makes it clear that we need to fundamentally change our strategy so we can get back to growth and that’s exactly what we are doing with our ‘Back to Starbucks’ plan.”
The company reported Q4 EPS of $0.80 vs FactSet $1.03, revenue was cited at $9.1B vs FactSet $9.37Bn and increased its quarterly cash dividend from $0.57 to $0.61 per share of outstanding common stock. The company has also decided to suspend its full FY25 guidance due to the CEO transition and current state of the business as management performs a full assessment and develops key strategies to better stabilize and position the company for long-term growth.
The disappointment behind the earnings metrics were primarily driven by softness in Starbucks’ North American revenues that reflected a 6% decline in US comparable store sales that was led by a 10% decline in comparable transactions as fresh in-app promotions and new products failed to work. The company’s same store sales in China dropped even further by 14% as consumers seek out lower-priced chains due to a soft macro environment impacting consumer spending.
“I’ve spent my first several weeks in stores engaging with and listening to feedback from our partners and customers. It’s clear that Starbucks is a much-loved brand. We need to focus on what has always set us apart – a welcoming coffeehouse where people gather and where we serve the finest coffee, handcrafted by our skilled baristas. We are energized and the team is already moving quickly. I’ll share more details at our upcoming earnings call, but invite you to listen to my initial thoughts on our investor relations website,” Niccol concluded.
