Starbucks Revenue Falls Short Despite Meeting Earnings Expectations

Starbucks' quarterly earnings for the fiscal third quarter met expectations, with earnings per share at 93 cents adjusted, as forecasted. However, the company reported a drop in revenue, coming in at $9.11 billion, missing Wall Street's estimate of $9.24 billion. The coffee giant's net sales fell by 1% compared to the previous year, with a 3% decrease in same-store sales driven primarily by weakened demand in both U.S. and international cafes.

The report indicated a decline in the company's net income to $1.05 billion, or 93 cents per share, down from $1.14 billion, or 99 cents per share, a year earlier. Despite efforts to revive the U.S. business by offering discounts and introducing new drinks, traffic to U.S. stores continued to drop, with a 6% decrease in transactions. Additionally, same-store sales in China, the second-largest market for Starbucks, plummeted by 14%, influenced by both a reduction in average ticket and transactions as local coffee shops in China pose increased competition for the global coffee chain.

Although Starbucks opened 526 new stores in the fiscal quarter, the company remains cautious as it faces ongoing revenue challenges. Looking ahead, Starbucks plans to address its financial outlook for fiscal 2024 during an upcoming conference call. Last quarter, Starbucks projected minimal revenue growth and earnings per share growth for the foreseeable future, highlighting the persisting struggles the company is navigating amidst changes in consumer behavior and the competitive market dynamics.