What factors drove SBUX's earnings decline in late 2024?

Starbucks' earnings decline in late 2024 was primarily driven by a combination of factors:

1. **Revenue Miss and Declining Sales**:
- In Q1 2025, Starbucks reported a revenue miss, with consolidated net revenues decreasing by 2% to $8.6 billion in Q1 2024 compared to the prior year.
- Global comparable store sales experienced a 4% decline, driven by a 6% decrease in comparable transactions.
2. **Operating Margin Contraction**:
- The operating margin contracted by 380 basis points to 11.9%, primarily due to investments in labor and the removal of extra charges for non-dairy milk customizations.
- In Q2 2024, the operating margin was 12.8%, contracting 150 basis points from the prior-year quarter’s levels, mainly caused by increased costs due to investments in employee wages and benefits.
3. **Investments Impact**:
- Starbucks made significant investments in technology and staffing to improve efficiency and customer experience, which had an immediate impact on margins.
- These investments put pressure on the operating margin, leading to a decline in earnings per share (EPS) as the company diluted its earnings to fund these initiatives.
4. **Strategic Shifts and Challenges**:
- Despite the challenges, Starbucks emphasized that its long-term strategy remains intact, focusing on reintroducing Starbucks as a premier coffeehouse with a 'Back to Starbucks' strategy.
- The company is planning to double its store count in the US, indicating confidence in market potential and growth opportunities.

In summary, Starbucks' earnings decline in late 2024 was driven by a combination of revenue miss, declining sales, operating margin contraction, investments impact and strategic shifts. These factors collectively contributed to the company's financial performance during that period.