11:37 AM EDT, 10/23/2024 (MT Newswires) -- Starbucks' ( SBUX ) new Chief Executive Brian Niccol is planning a turnaround as the company faces rising competition, a boycott and flagging sales.

Investments that Starbucks ( SBUX ) made in a bid to drive US sales including more promotions in its app didn't bring in customers as planned, the company said late Tuesday in its preliminary fiscal Q4 report. Comparable sales for the quarter ended Sept. 29 dropped 6% in the US and 14% in China compared with a year earlier as competition increased and a "soft macro environment" weighed on consumers.

Total comparable sales in Q4 fell 7% year-over-year, missing consensus compiled by Capital IQ for a 6.5% drop.

"Our fourth quarter 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' ( SBUX ) plan," said Niccol, who joined the company in early September after leaving the same role at Chipotle Mexican Grill ( CMG ) .

The Back to Starbucks ( SBUX ) plan was outlined by Niccol last month in a bid to bolster US sales with a sharper focus on customer service and technology investing. Niccol said he would give more details on the company's earnings call next Wednesday.

UBS analysts including Dennis Geiger said in a note to clients that they expect Niccol to come up with a "comprehensive plan" to address the challenges the company faces. Sales in the US should improve in Q1 amid better comps and as protests in the US slow.

Some consumers have boycotted Starbucks ( SBUX ) over perceived support for Israel in its war with Hamas in Gaza, though the company said in December that it "has never contributed to any government or military operation in any way."

Starbucks ( SBUX ) has also faced criticism for how it has dealt with attempts by workers to unionize. In February, the company and labor group Workers United said they would begin talks on a "foundational framework."

Earnings in the fiscal fourth quarter dropped 24% year-on-year to $0.80 a share on a non-GAAP basis, Starbucks ( SBUX ) said Tuesday in its preliminary results. The consensus on Capital IQ is for $0.88. Revenue fell 3% to $9.1 billion, while the Street currently expects $9.07 billion.

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