Starbucks (SBUX) recorded fiscal first-quarter outcomes surpassing analysts' forecasts, in spite of a dip in sales and profits. The coffee behemoth's net sales declined slightly by 0.3% year-over-year to $9.4 billion, exceeding the analyst consensus compiled by Visible Alpha. Profits stood at $780.8 million, translating to 69 cents per share, marking a drop from $1.02 billion or 90 cents per share the previous year, but surpassing Wall Street estimates. The worldwide sales in the same stores fell by 4%, a narrower decline than the 5% plummet projected by analysts.
"We're progressing rapidly in our 'Back to Starbucks' turnaround strategy and have received positive feedback," announced their new CEO, Brian Niccol. Since September, Niccol has been leading Starbucks and has implemented the 'Back to Starbucks' strategy. This includes reintroducing a rule that obligates customers to purchase if they intend to spend time at Starbucks cafes or use their bathrooms.
Included in the strategy is a roughly 30% reduction in menu items to improve order times, shared Niccol. He further stated that Starbucks is contemplating a time slot model for customers to schedule mobile orders, along with incorporating shelves to distinguish mobile orders from in-store ones.
Starbucks is devising plans to open more stores following the addition of 377 net new stores in the first quarter. The CEO insinuated that Starbucks might potentially double its existing stores, which are currently approximately 17,049, within the next few years in America.
While Starbucks didn't provide a 2025 future perspective, following its declaration last fall that it intends to "complete an assessment of the business" under Niccol before issuing guidance, CFO, Rachel Ruggeri, informed on the earnings call that Starbucks predicts year-over-year earnings pressure could "intensify" in Q2, with a prospect of improving later in 2025.
Post the company's earnings call, Starbucks stocks exhibited marginal change and were somewhat high during extended trading on Tuesday. By Tuesday's close, they had risen by 10% since the beginning of the year.