Starbucks reported fiscal first-quarter results that topped analysts’ expectations, despite sales and profit declines year-over-year.
The better-than-expected results came as new CEO Brian Niccol said the company made progress toward its “Back to Starbucks” strategy.
Starbucks did not provide an outlook for 2025, but CFO Rachel Ruggeri warned earnings pressure could “intensify” in the second quarter, before improving in the back half of 2025.
Starbucks (SBUX) reported fiscal first-quarter results that topped analysts’ expectations, despite sales and profit declines.
The coffee giant saw net sales fall 0.3% year-over-year to $9.4 billion, above the analyst consensus compiled by Visible Alpha. Earnings of $780.8 million, or 69 cents per share, declined from $1.02 billion, or 90 cents per share, a year earlier but topped Wall Street projections. Global same-store sales fell 4%, a narrower decline than the 5% drop expected by analysts.
Better-Than-Expected Results Come Under New CEO’s Turnaround Plan
“While we’re only one quarter into our turnaround, we’re moving quickly to act on the ‘Back to Starbucks’ efforts and we’ve seen a positive response,” new CEO Brian Niccol said in a release.
Niccol, who took the reins in September, has implemented a turnaround strategy known as “Back to Starbucks,” which has included the reinstatement of a policy requiring customers to make a purchase if they want to spend time in the company’s cafes or use its bathrooms.
The plan also includes a roughly 30% reduction in menu items to help cut down on order times, Niccol said on the company’s earnings call. Niccol said Starbucks plans to develop a time slot model that will allow customers to schedule mobile orders, as well as adding shelving to separate mobile orders from in-store ones.
Starbucks aims to expand its presence with more stores too, after adding 377 net new stores in the first quarter. Niccol said Starbucks could even double its store count in the U.S. in the next couple years, which stood at 17,049 as of Dec. 29.
CFO Warns of Earnings Could Be Pressured in Q2
Starbucks did not provide an outlook for 2025, after saying last fall that it wanted to “complete an assessment of the business” under Niccol, before issuing guidance.
However, CFO Rachel Ruggeri said on the company’s earnings call Starbucks expects year-over-year earnings pressure could “intensify” in the second quarter, before improving in the back half of 2025.
Shares of Starbucks were little changed and slightly higher in extended trading Tuesday following the company’s earnings call. They were up 10% for the year so far through Tuesday’s close.
