Starbucks' Quarterly Results: A Mixed Brew Despite Pumpkin Spice Latte Season

Starbucks Corporation (SBUX) recently reported its preliminary quarterly results, offering a mixed picture of the coffee giant's performance. While the company's iconic Pumpkin Spice Latte (PSL) returned for its 20th season, the early launch of the fall menu did not translate into the desired sales boost. This article explores the factors contributing to Starbucks' weak quarterly results and the potential impact on the company's future prospects.


Starbucks' fourth-quarter consolidated net revenues fell 3% to $9.1 billion, missing analyst expectations of $9.38 billion. Adjusted earnings per share (EPS) of 80 cents also fell short of the projected $1.03. Same-store sales (SSS) declined 7% globally, with North America and China reporting respective decreases of 6% and 14%. Traffic tumbled 10% in North America, despite increased promotions and expanded product offerings.


The early launch of the fall menu, which included the PSL, was intended to capture additional sales and reignite consumer interest in the brand. However, the strategy did not yield the expected results, highlighting the challenges Starbucks faces in maintaining its market position. The company attributed the soft sales to weaker demand in North America and intense competition in China.


The recent CEO transition and strategic changes may also have contributed to the decline in sales. Brian Niccol, the former CEO of Chipotle, took over from Laxman Narasimhan in September 2024. Niccol aims to reverse slowing demand for Starbucks' drinks, particularly in the United States and China. However, the turnaround efforts may take time to materialize, as reflected in the company's suspended fiscal 2025 outlook.

Despite the dismal quarter, Starbucks increased its dividend from 57 cents to 61 cents per share, signaling its confidence in the business. The company plans to share more details about its turnaround strategy on its upcoming earnings call. As Starbucks navigates the challenging market conditions, investors will closely monitor the company's efforts to regain its footing and return to growth.