Starbucks on Tuesday reported its sixth straight quarter of same-store sales declines as the company implements a turnaround strategy.
CEO Brian Niccol said in a statement that the company’s comeback is ahead of schedule, based on his past experience, which includes turning around Chipotle Mexican Grill after a series of food-safety scandals.
“While our financial results don’t yet reflect all the progress we’ve made, the signs are clear — we’re gaining momentum,” Niccol said in a pre-recorded video published with the earnings report.
Shares of the company rose 4% in extended trading.
Here’s what the company reported for the quarter ended June 29 compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per share: 50 cents adjusted, it was not immediately clear if it was comparable to the 65 cents expected
- Revenue: $9.5 billion vs. $9.31 billion expected
Starbucks reported fiscal third-quarter net income attributable to the company of $558.3 million, or 49 cents per share, down from $1.05 billion, or 93 cents per share, a year earlier.
Excluding restructuring costs and other items, the company earned 50 cents per share. A discrete tax item and a one-time investment hosting the company’s three-day event for U.S. store managers weighed on the company’s earnings per share by 11 cents.
Net sales rose 4% to $9.5 billion.
But global same-store sales declined 2%, a steeper drop than estimates of a 1.3% decrease, according to StreetAccount estimates.
However, Starbucks’ North American cafes performed better than expected. The chain’s North American same-store sales fell 2%, a smaller decline than the 2.5% projected Wall Street, according to StreetAccount. Transactions fell 3%, but average ticket rose 1% in the quarter.
“In the U.S., partner engagement is rising, customer connection scores are up, shift completion is at a record high, non-Starbucks Reward customer transactions returned to growth, and more coffeehouses are delivering positive transaction comps,” Niccol said in the video.
On the company’s conference call, he told analysts that the company’s licensed stores on college campuses saw same-store sales increase, showing that younger consumers are reconnecting with the brand.
To bring back customers, Starbucks is doubling down on hospitality. The chain is rolling out its “Green Apron Service” program, which emphasizes customer interactions. Executives have said that the program tested successfully, leading the company to accelerate its rollout.
The chain is also building fewer new U.S. locations, instead focusing on improving its current cafes. In recent years, Starbucks had removed seats from many of its cafes, citing the shift to mobile ordering and drive-thru transactions. But Niccol wants to replace thousands of removed seats as part of a broader effort to make its cafes comfortable again.
In China, the company’s second-largest market, Starbucks reported same-store sales growth of 2% for the quarter. Transactions climbed 6%, but average ticket fell. Starbucks has cut prices for its drinks in China to compete better with lower-priced rivals, like Luckin Coffee.
This quarter marked the first time in a year and a half that the company’s China business saw its same-store sales increase. Under pressure from increased competition, a weaker economy and the distraction of the struggling U.S. business, Starbucks has been weighing selling a stake in its China business, which overall could be valued at up to $10 billion, CNBC has previously reported.
“We’ve received significant interest from more than 20 interested parties, and we’re evaluating options,” Niccol told analysts. “We remain committed to our China business and want to retain a meaningful stake.”
Heading into the final quarter of the company’s fiscal year, CFO Cathy Smith said that the company is “conservative” on how Starbucks’ results will look in the fiscal fourth quarter compared with the year-ago period. She cited an uncertain consumer environment, although she also noted the company’s excitement about its coming innovation and the return of the Pumpkin Spice Latte.
Over the next year, Starbucks plans to invest $500 million in labor, including the rollout of the “Green Apron Service” program, according to Smith.
Starbucks yanked its full-year forecast in October, shortly after Niccol took the reins of the company and months before Smith joined.
Looking ahead to fiscal 2026, Starbucks has big plans. Niccol said that the chain will launch protein cold foam, improved artisanal food options, coconut-water based drinks, a new Starbucks app and a “refreshed” Rewards program.
The company plans to host an investor day in the fiscal second quarter of 2026.
