Starbucks (SBUX) posted preliminary Q4 results that shocked the Street on Tuesday afternoon.
The company reported quarterly revenue that fell 3% year over year to $9.1 billion, while earnings per share fell 24% to $0.80.
Starbucks also suspended its full-year fiscal 2025 guidance, citing its transition to new CEO Brian Niccol and to allow time to re-strategize. Shares quickly dropped 3% in after-market trading.
US same-store sales decreased 6% year over year in Q4, with a 10% decline in foot traffic and a 4% increase in the average ticket.
Its much publicized in-app promotions and deals haven’t moved the needle. The company’s pairing menu, which offered US customers a small coffee with a croissant or breakfast sandwich for $5 or $6, “did not improve customer behaviors,” per its release.
Starbucks China’s same-store sales fell 14%, with a 6% drop in foot traffic and an 8% decline in the average ticket size. The company attributed the performance to “intensified competition and a soft macro environment that impacted consumer spending.”
Prior to the report, Starbucks shares were up 3% year to date, but up 10% in the past six months after investors grew optimistic about former Chipotle (CMG) CEO Niccol taking the helm. The company still plans to release its official fourth quarter and full fiscal year 2024 financial results after market close on Oct. 30.
The number shows the long road ahead for Niccol as he tries to get Starbucks back on track. He has started a shake-up in the management ranks, including bringing in longtime friend Tressie Lieberman as global chief brand officer. Liberman will start on Nov. 4 after her most recent role as Yahoo CMO.
In a video posted on Starbucks’ site, Niccol re-emphasized some of the key issues he outlined in a letter during his first week, including the need to simplify its menu, fix its pricing and value perception, and build return customers.
“We’re fundamentally changing our marketing. We’ve been focusing on Starbucks Rewards customers, rather than talking to all our customers. We’re changing quickly, as you likely have already seen,” said Niccol, known in his career for his marketing expertise.
“I believe that our problems are very fixable and that we have significant strengths to build on. I’ve spent my career understanding, stewarding, and building brands, and it’s clear the Starbucks brand is strong and enduring,” he added.
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
