For Starbucks Corporation, the Seattle-based coffee giant, it was a brutal first fiscal quarter. The company faced increasing pressure from persistently negative same-store sales in the United States. For the three months from April through June, the company already announced a 2% drop in same-store sales in the domestic market. This decline represents the sixth straight quarter of declining sales numbers. At the same time, for the owner of the Big Mac, some respite was available within its second-largest market, China—where same-store sales continued to grow.
Starbucks welcomed delegates to an impressive two-day gathering at the MGM Grand in Las Vegas. Close to 14,000 store managers and regional leaders participated in the event. This convening was an important reflection of the company’s desire to tackle its performance issues head on and plan for future growth endeavors. It was an important meeting. Starbucks plans to roll out new categories of strategies and products, placing particular focus on protein beverages.
Unfortunately, even with these initiatives, Starbucks’ Q2 financial results missed the mark compared to analysts’ predictions. The shipper’s most recent quarter came in above analyst estimates, with the company reporting adjusted earnings of 50 cents per share. That’s a stunning 46% drop from last year. Analysts had expected earnings of 65 cents per share. Additionally, Starbucks’ net income dropped 47% to $558 million during this quarter, further highlighting the impact of ongoing economic challenges.
Still, Starbucks did post a $9.3 billion revenue number for the quarter that beat Wall Street’s estimates. Yet even with this new revenue, it is still a sign of the ongoing battle in the U.S. market, where weak and slow demand is still dragging down results. The carmaker is pouring billions of dollars into reorienting the company to reverse its conversion rates and boost sales numbers.
U.S. Same-store sales are sinking. This decline is largely due to shifts in consumer tastes and increasing competition in the coffee sector. Starbucks has shifted its attention toward breakthrough products and more imaginative, deep-rooted marketing to win back momentum with its core base of customers.
