Same-Store Sales Decline for Sixth Straight Quarter
Starbucks reported a 2% global same-store sales drop in its fiscal third quarter, marking the sixth consecutive quarterly decline. Despite that, CEO Brian Niccol remains optimistic, stating that the turnaround strategy is ahead of schedule. The company posted net income of $558.3 million, or 49 cents per share, down from $1.05 billion a year earlier. Adjusted earnings per share were 50 cents, though it’s unclear if that matched Wall Street’s 65-cent estimate.
Revenue for the quarter rose 4% to $9.5 billion, surpassing analyst expectations of $9.31 billion. A discrete tax charge and a one-time manager event negatively impacted earnings by 11 cents per share.
U.S. Stores Show Signs of Reconnection
North American same-store sales dropped 2%, a better result than the projected 2.5% decline. Transactions fell 3%, but average ticket size increased by 1%. Starbucks highlighted improved customer satisfaction and partner engagement. CEO Niccol pointed to a resurgence of visits from non-rewards members and improving results at college campus locations as signs of recovery.
To enhance customer experiences, Starbucks is accelerating the rollout of its “Green Apron Service” program, aimed at restoring hospitality and personal interaction. The company is also adding seating back into cafes and slowing down new store openings in favor of upgrading existing locations.
China Returns to Growth, but Challenges Remain
In China, Starbucks’ second-largest market, same-store sales rose 2% for the first time in 18 months. Transactions climbed 6%, while average ticket declined due to price cuts aimed at competing with low-cost rivals like Luckin Coffee. The company is exploring the sale of a stake in its China business, which could be worth up to $10 billion, though Niccol emphasized a desire to retain a meaningful share.
Looking Ahead: Innovation and Investment
Heading into the final quarter, CFO Cathy Smith signaled a conservative outlook due to consumer uncertainty, though she highlighted enthusiasm for product innovation, including the upcoming Pumpkin Spice Latte. Starbucks will invest $500 million in labor initiatives over the next year, focusing on hospitality and store improvements.
For fiscal 2026, Starbucks plans several launches: protein cold foam, coconut water drinks, upgraded food items, a refreshed mobile app, and a redesigned Rewards program. The company has scheduled an investor day for the second quarter of that fiscal year to detail its growth plans.
