Starbucks Plunges 7.33% on Earnings Miss, Margin Contraction

On April 30, 2025, Starbucks' stock price dropped by 7.33% in pre-market trading, reflecting investor concerns over the company's recent financial performance.

Starbucks reported earnings and revenue surprises of -16.33% and 0.31%, respectively, for the quarter ended March 2025. The company's revenue for the quarter was $8.76 billion, representing a year-over-year increase of 2.3%. However, the company's net income dropped 50% to $384 million in its fiscal second quarter, with adjusted earnings falling nearly 40% to 41 cents per share.

During the earnings call, Starbucks highlighted that its global net new store growth was 213 coffeehouses, but global comparable store sales declined by 1%. The global operating margin stood at 8.2%, and the operating income decreased to $748.3 million compared to $1.1 billion in the previous year. The operating margin contracted from 18.0% in the prior year to 11.6% in the current quarter.

Despite these challenges, Starbucks maintained that its turnaround strategy is on track. However, the company's earnings per share (EPS) declined, and it slightly missed revenue forecasts, contributing to the stock price drop. The decline in same-store sales and the contraction in operating margins have raised concerns among investors about the company's ability to execute its turnaround strategy effectively.