AP – It’s been a disappointing start to Pumpkin Spice Latte season for Starbucks.
The Seattle coffee giant on Tuesday reported weaker-than-expected sales in its fiscal fourth quarter, which ended September 29. It also said it would suspend financial guidance for its 2025 fiscal year to give its new Chairman and CEO, Brian Niccol, time to assess the business.
The financial results were preliminary. Starbucks plans to release full results for the July-September period and host a conference call with investors on October 30.
Customer traffic was sluggish in the US, where Starbucks saw a six per cent decline in same-store sales, or sales at stores open at least a year. The company said expanded fall product offerings such as Iced Apple Crisp Nondairy Cream Chai and more frequent in-app promotions didn’t drive more visits.
The Pumpkin Spice Latte, which returned to US stores on August 22 and is usually a reliable booster of traffic, didn’t seem to help.
In China, same-store sales fell 14 per cent as consumers pulled back on spending or visited cheaper rivals, Starbucks said.
In a video message released by the company, Niccol — a former Chipotle CEO who joined Starbucks last month — said Starbucks’ problems are “very fixable and that we have significant strengths to build on.”
Niccol said Starbucks needs to improve staffing, remove bottlenecks and simplify operations for its baristas, especially during the morning rush. Mobile ordering should be refined so it doesn’t overwhelm the café experience, he said. Niccol also said Starbucks needs to simplify its “overly complex menu.”
“We know how to make these improvements, and when we do, we know customers will visit more often,” he said.
Niccol said Starbucks plans to change its marketing to focus less on Starbucks Rewards customers and more on highlighting the brand’s handcrafted drinks and coffee innovation.
The company said its revenue fell three per cent to USD9.1 billion in the July-September period. That was lower than the USD9.4 billion Wall Street was expecting, according to analysts polled by FactSet.
Starbucks said its adjusted earnings fell 24.5 per cent from the same period a year ago to 80 cents per share. That also fell short of analysts’ forecast of USD1.03 per-share earnings.
