Starbucks (SBUX) Q4 2024 Earnings

Starbucks reported quarterly earnings and sales on Wednesday that fell short of analysts' expectations as sales disappointed in the U.S. and China, its two largest markets.

The company had previously released a preliminary report on its quarterly results on October 22 and announced that it would suspend its outlook for fiscal 2025.

This report is the first under CEO Brian Niccol, who joined the company on September 9 to revitalize the flagging business.

“It’s clear that we need to fundamentally change our strategy to win back customers,” CEO Brian Niccol said in a statement. “We have a clear plan and are moving quickly to get Starbucks back on track for growth.”

Niccol outlined a multi-part plan to immediately improve the company's U.S. business. Many of the moves address a new goal for Starbucks: personally delivering a drink to a customer in less than four minutes. According to Niccol, about half of current transactions fall within this threshold.

Cafes will bring back the spice bars that disappeared behind counters during the pandemic, eliminate additional fees for milk alternatives and trim menus. Niccol also told investors that he wants to transition “ordering to mobile order and pay” and improve restaurant staffing.

“I am very optimistic despite the short-term challenges,” said Niccol. “I believe we have significant strengths, a strong, enduring brand. We have a clear plan. We will act quickly.”

The strategy is currently focused on North America. Niccol said he had to spend time in China beforehand to better understand the company's operations and the market decide how to revive sales there.

In fiscal year 2025, Starbucks also plans to scale back on new cafes and renovations. CFO Rachel Ruggeri said the move was to “allow for a redesign” of all locations and free up capital to be used for the broader turnaround.

The company's shares were flat in extended trading on Wednesday.

Here's what the company reported compared to Wall Street's expectations, based on an analyst survey by LSEG:

• Earnings per share: 80 cents versus $1.03 expected
• Revenue: $9.07 billion versus expected $9.36 billion

Starbucks reported fiscal fourth-quarter net income attributable to $909.3 million, or 80 cents per share, down from $1.22 billion, or $1.06 per share, a year earlier.

Net sales fell 3% to $9.07 billion.

The company's global same-store sales fell 7% due to weak demand in the U.S. and China. Traffic to its stores worldwide fell 8% in the quarter.

The company's U.S. restaurants reported same-store sales declines of 6%, driven by a 10% drop in traffic.

In China, the company's same-store sales fell 14% as both traffic and average ticket counts fell. Starbucks faces increased competition from local rivals such as Luckin Coffee, which can undercut the company's prices.