Why did Starbucks' net profit decline in Q2 2024?

Starbucks' net profit declined in Q2 2024 due to a combination of factors:

1. Revenue Shortfall: Starbucks fell short of revenue expectations, with consolidated net revenues dropping 2% year-over-year to $8.6 billion. This missed the estimated $9.13 billion, indicating a decline in sales and profitability.
2. Decrease in Average Ticket Sales and Transaction Volumes: Global comparable store sales declined by 4%, primarily driven by a 6% drop in comparable transactions. This reduction in transactions, coupled with a 2% increase in average ticket prices, resulted in lower revenue and profitability.
3. Increased Costs and Investments: The company experienced a 240 basis point contraction in GAAP operating margin to 12.8%. This was due to increased costs and investments in wages and benefits, reflecting the challenges of managing expenses amidst declining sales.
4. Challenging Macro Environment: Starbucks faced a "highly challenged environment," with CEO Laxman Narasimhan attributing the downturn to macroeconomic pressures, particularly around consumer spending. This suggests that the company was affected by broader economic headwinds that impacted customer purchasing power and frequency of visits.
5. Decline in China Market Performance: Starbucks faced a significant challenge in its largest market outside the U.S., China, where comparable store sales dropped by 11%. This decline was due to factors such as decreased visits from occasional customers, shifts in holiday patterns, and heightened promotional activity.

In summary, Starbucks' net profit decline in Q2 2024 was a result of a combination of revenue shortfall, decrease in average ticket sales and transaction volumes, increased costs and investments, challenging macro environment and decline in China market performance.