financetom
Business
financetom
/
Business
/
Starbucks earnings disappoint as CEO Niccol's strategy faces US hurdles
News World Market Environment Technology Personal Finance Politics Retail Business Economy Cryptocurrency Forex Stocks Market Commodities
Starbucks earnings disappoint as CEO Niccol's strategy faces US hurdles
May 25, 2025 10:54 PM

(This April 29 story has been corrected to say that the Siren System store revamp program was launched by Howard Schultz, not Laxman Narasimhan, in paragraph 4)

By Juveria Tabassum

(Reuters) - Starbucks ( SBUX ) faces challenges in reviving its business, CEO Brian Niccol said on Tuesday, after the coffee giant posted disappointing global comparable sales and profit with inflation and economic uncertainty driving up costs and dampening U.S. demand.

Investors have placed their bets on Niccol's turnaround strategy for the brand, whose sales have fallen for four straight quarters, by reducing production and service times and investing in stores to improve customer experience.

"Our financial results don't yet reflect our progress, but we have real momentum with our 'Back to Starbucks' ( SBUX ) plan," Niccol said in a statement.

Starbucks ( SBUX ) paused rolling out its Siren System store revamp program, launched under former CEO Howard Schultz, because it was capital heavy, said Niccol, who had helped revive Chipotle Mexican Grill as CEO of the burrito chain.

The company will focus on investing in improving front-end delivery instead of kitchen equipment, Niccol said on a post-earnings call. "The equipment doesn't solve the customer experience that we need to provide."

Niccol said Starbucks ( SBUX ) was improving service speed with the right staffing and deployment, and that its refreshed marketing was resonating with customers.

Starbucks ( SBUX ) will also review its U.S. store portfolio as it rolls out labor-focused technological changes including a pilot program that allows customers to schedule their mobile orders, he said.

However, consumers are growing more cautious as U.S. President Donald Trump's erratic trade tariffs have created economic uncertainty and threaten to fuel inflation. U.S. restaurant visits and spending weakened in February and March.

Starbucks' ( SBUX ) shares fell 6.5% in extended trading. The stock, which had surged in the months following Niccol's appointment as CEO, is down about 7% so far this year.

North American same-store sales fell 1% for the fiscal second quarter ended March 30, worse than the 0.24% drop estimated by analysts in an LSEG poll. The company said sales in Canada returned to growth in the quarter.

TURNAROUND TIMELINE

It may take time for traffic to reaccelerate because changes in stores and reinstating its coffee house roots could take at least another three to six months, said Bernstein analyst Danilo Gargiulo.

Starbucks ( SBUX ) is paring down promotions and discounts, and relying less on its loyalty program as it invests in broader marketing.

The average ticket, or amount spent by customers per visit, was up 3% in the second quarter.

The company said it will localize and move production as needed to mitigate the impact of U.S. tariffs on imports from China.

The company's international business improved slightly, with sales unchanged in China, its second-largest market, after four straight quarters of decline. Starbucks ( SBUX ) said it was committed to growing business in China long-term.

International comparable sales rose 2%, compared with estimates of a 1.13% drop.

Gross margin fell 590 basis points in the quarter and the company reported adjusted earnings per share of 41 cents, missing estimates of 49 cents.

Total same-store sales declined 1% in the second quarter, compared with analysts' average estimate of a 0.26% fall. Comparable sales had declined 4% in the preceding three-month period.

Comments
Welcome to financetom comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
Related Articles >
Air Lease Delivers One Airbus A321-200neo to Condor
Air Lease Delivers One Airbus A321-200neo to Condor
Jul 18, 2024
05:10 PM EDT, 07/18/2024 (MT Newswires) -- Air Lease ( AL ) said late Thursday it has delivered one new Airbus A321-200neo to German leisure airline Condor. This marks the first of 19 new Airbus aircraft to be delivered to the carrier, Air Lease ( AL ) said. ...
CNB Financial Q2 EPS, Revenue Slip -- Shares Up After Hours
CNB Financial Q2 EPS, Revenue Slip -- Shares Up After Hours
Jul 18, 2024
05:05 PM EDT, 07/18/2024 (MT Newswires) -- CNB Financial ( CCNE ) late Thursday reported Q2 earnings of $0.56 per diluted share, down from $0.61 a year earlier. Two analysts polled by Capital IQ expected $0.51. Revenue, calculated as a sum of net interest income and total noninterest income, for the quarter ended June 30 was $54.58 million, compared with...
Alpine Income Property Trust Q2 Adjusted FFO, Revenue Rise; 2024 AFFO Guidance Boosted
Alpine Income Property Trust Q2 Adjusted FFO, Revenue Rise; 2024 AFFO Guidance Boosted
Jul 18, 2024
05:09 PM EDT, 07/18/2024 (MT Newswires) -- Alpine Income Property Trust ( PINE ) reported Q2 adjusted funds from operations late Thursday of $0.43 per diluted share, up from $0.37 a year earlier. Analysts polled by Capital IQ expected $0.39. Revenue in the quarter ended June 30 rose to $12.5 million from $11.4 million a year earlier. Analysts surveyed by...
Dover Acquires Demaco Holland; Shares Rise After Hours
Dover Acquires Demaco Holland; Shares Rise After Hours
Jul 18, 2024
05:09 PM EDT, 07/18/2024 (MT Newswires) -- Dover (DOV) said late Thursday it has acquired Demaco Holland, a provider of cryogenic infrastructures for industrial gas producers. Demaco has joined OPW's clean energy solutions business within Dover's clean energy and fueling segment. Financial terms of the deal weren't disclosed. Dover shares were up 1.8% in after-hours activity. Price: 189.73, Change: +3.39,...
Copyright 2023-2026 - www.financetom.com All Rights Reserved