Starbucks Corporation released its preliminary financial results for the fourth fiscal quarter of 2024 and the full fiscal year that ended on September 29, 2024.
Starbucks’ results, both under GAAP and Non-GAAP accounting principles, reveal a decline in sales and consolidated revenues, highlighting the challenges the company faces in its key markets, particularly in the United States and China.
Starbucks 2024: Decline in Global and U.S. Sales
During the fourth fiscal quarter of 2024, Starbucks experienced a 7% decline in global comparable store sales, while consolidated net revenues fell by 3%, reaching $9.1 billion. In constant currency terms, the impact was similar, with a 3% decline as well.
This result was primarily driven by a 6% decrease in comparable sales in the United States, Starbucks’ largest market.
The decline was caused by a 10% reduction in comparable transactions, despite a 4% increase in the average ticket size.
The company’s focus on expanding its product offerings and increasing in-app promotions failed to counter the decrease in customer visit frequency, both among Starbucks Rewards members and general consumers.
Meanwhile, China, one of Starbucks’ key markets for international expansion, also showed a significant 14% decline in comparable sales. This drop was due to an 8% decrease in the average ticket size and a 6% reduction in comparable transactions, highlighting the challenging competitive environment in the country.
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Impact on Earnings Per Share
In terms of earnings, the figures were also negative. Earnings per share (EPS) under GAAP were $0.80, representing a 25% decrease compared to the same period the previous year. Adjusted or Non-GAAP earnings per share also stood at $0.80, a 24% decline in constant currency terms.
These decreases reflect the difficulties Starbucks faces in reversing the downward trend in customer traffic and the impact on its net revenues.
In this regard, Rachel Ruggeri, Starbucks’ Chief Financial Officer, commented that despite accelerated investments, the brand was unable to change the trajectory of declining traffic, which created pressures on both the top and bottom lines of its results.
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Full Fiscal Year 2024 Results
For the full fiscal year 2024, Starbucks reported a modest 1% growth in consolidated net revenues, reaching $36.2 billion. However, global comparable sales declined by 2%, reflecting a general slowdown in consumer behavior.
GAAP earnings per share for the year were $3.31, an 8% decrease compared to fiscal year 2023, while Non-GAAP earnings per share also stood at $3.31, representing a 6% decline in constant currency terms.
Given the recent leadership transition, with the arrival of Brian Niccol as CEO, and the current state of the business, Starbucks announced that it has decided to suspend the issuance of financial guidance for fiscal year 2025. This pause will allow the new leadership to conduct a full assessment of the business, consolidate key strategies, and stabilize the company to position it for long-term growth.
“Back to Starbucks”: Brian Niccol’s Strategy
Starbucks’ new CEO, Brian Niccol, was clear about the need for a fundamental change in the company’s strategy to return to growth.
Niccol introduced his “Back to Starbucks” plan, which focuses on returning to what has always made the brand unique: a welcoming coffeehouse where people can gather and enjoy the finest coffee, handcrafted by skilled baristas. “Starbucks is a much-loved brand. We need to focus on what has always set us apart,” Niccol stated.
The CEO also highlighted that the team is already taking swift action to stabilize the business and improve performance, and he looks forward to sharing more details in the upcoming earnings call.
