### Starbucks Reports Decline in Q4 Sales and Outlines Turnaround Strategy

Seattle, October 22, 2024 - Starbucks Corporation (NASDAQ: SBUX) has disclosed preliminary financial outcomes for its 13-week fiscal fourth quarter and the 52-week fiscal year ended September 29, 2024. The coffee giant's performance has highlighted challenges in customer experience, prompting the company to devise a new strategic plan aimed at returning to growth.

For the fourth quarter of fiscal 2024, Starbucks experienced a 7% decline in global comparable store sales and a 3% dip in consolidated net revenues, which amounted to $9.1 billion. On a constant currency basis, this also represents a 3% decline. The company reported GAAP earnings per share of $0.80, down 25% from the previous year, with non-GAAP earnings per share also at $0.80, showing a 24% decline in constant currency.

A significant factor behind these results was a softened revenue performance in North America, particularly in the U.S., where comparable store sales fell by 6%. This decrease was driven by a 10% drop in comparable transactions, partially offset by a 4% increase in average ticket value. Despite investments in new product offerings and enhanced in-app promotions, customer traffic did not meet expectations.

Adding to the challenges, China’s comparable store sales also declined by 14%, reflecting an 8% fall in average ticket and a 6% decline in comparable transactions. The competitive market environment in China played a key role in altering customer behaviors and impacting Starbucks' strategy in the region.

For the entire fiscal year, global comparable store sales saw a 2% decline, although consolidated net revenues increased by 1%, reaching $36.2 billion. GAAP earnings per share for the full fiscal year were reported at $3.31, down 8% over the previous year, with non-GAAP earnings per share also at $3.31, a 6% decline in constant currency. The overall fiscal year performance was marred by a decline in customer traffic and a challenging competitive environment in China.

With a new CEO at the helm, Starbucks has decided to suspend its guidance for the 2025 fiscal year. This suspension will allow the company to reassess its business, further develop key strategies, and stabilize for long-term growth. In a bid to demonstrate confidence in its future, Starbucks' Board of Directors has approved an increase in the quarterly cash dividend from $0.57 to $0.61 per share of outstanding common stock.

Chief Financial Officer Rachel Ruggeri acknowledged the challenges, stating, "Despite our heightened investments, we were unable to change the trajectory of our traffic decline, resulting in pressures in both our top-line and bottom-line." She added that while efficiency efforts performed as planned, they were insufficient to counterbalance the declining traffic.

CEO Brian Niccol emphasized the need for a fundamental strategic change with the company's 'Back to Starbucks' plan. "Our fourth quarter performance makes it clear that we need to fundamentally change our strategy so we can get back to growth," Niccol said. He has been engaging with Starbucks' partners and customers to refocus on what differentiates the brand—a welcoming coffeehouse atmosphere and high-quality coffee crafted by skilled baristas.

Further insights into Starbucks' turnaround strategy will be shared during the upcoming Q4 and full fiscal year 2024 earnings call on October 30, 2024, with a webcast available on the company’s website.