Starbucks reported its first same-store sales growth in nearly two years on Wednesday, signaling early success in the company’s sweeping turnaround effort. The coffee giant’s global same-store sales rose 1% in its fiscal fourth quarter, outperforming Wall Street expectations of a decline.
While U.S. same-store sales were flat for the quarter, they turned positive in September and have maintained momentum into October, marking a key milestone for CEO Brian Niccol’s “Back to Starbucks” strategy. The initiative aims to rebuild customer loyalty and improve operations after prolonged struggles in the company’s two largest markets, the United States and China.
Quarterly revenue climbed 5% to $9.57 billion, slightly above analyst forecasts, though earnings per share of 52 cents fell short of projections. Net income dropped sharply to $133 million from $909 million a year ago, reflecting the impact of store closures, layoffs, and higher labor costs tied to operational restructuring.
The company closed 627 locations and eliminated roughly 900 nonretail jobs as part of the effort to streamline operations. At the same time, it invested in labor improvements, including adding assistant managers to many North American cafes to reduce wait times. Starbucks says more than 80% of its stores now process orders in four minutes or less.
International markets provided much of the quarter’s growth, with same-store sales up 3% globally and 2% in China, where traffic rose 9% following price cuts on popular iced drinks. The company continues to explore selling a minority stake in its China business, valued at more than $10 billion, as it competes with low-cost domestic chains.
Starbucks has also shifted marketing toward its core coffee offerings and innovative beverages, such as protein-infused cold foams. Active membership in its rewards program grew 1% both year-over-year and quarter-over-quarter.
Source: CNBC