New York, October 22, 2024 — Starbucks Corp (SBUX.O) has suspended its financial forecast for the upcoming fiscal year as its newly appointed CEO, Brian Niccol, seeks to overhaul the coffee giant’s strategy amid declining demand for its premium beverages. The company also reported preliminary results for its fourth quarter, revealing declines in same-store sales, net revenue, and profit, driven by weaker demand in key markets like the U.S. and China.
Shares of Starbucks dropped by about 4% in after-hours trading following the announcement. Despite this, the company’s stock has risen nearly 28% since Niccol took over as CEO in early August 2024, a move that surprised many industry insiders.
In a statement, Niccol acknowledged the challenges facing Starbucks, particularly in its core markets, and outlined plans to simplify its menu and adjust its pricing strategy as part of the “Back to Starbucks” initiative. “It’s clear we need to fundamentally change our strategy so we can get back to growth,” Niccol said.
For the fourth quarter ending September 29, Starbucks anticipates a 6% drop in comparable U.S. sales and a 14% decline in China. In light of these challenges, the company suspended its annual outlook for the fiscal year ending in September 2025.
Chief Financial Officer Rachel Ruggeri echoed Niccol’s concerns, noting that despite increased investments, Starbucks has been unable to reverse declining customer traffic. As part of its turnaround efforts, the company plans to broaden its marketing focus beyond its rewards program members to target a wider customer base.
Niccol, previously CEO of Chipotle Mexican Grill, is known for revitalizing that brand’s sales and hopes to apply similar strategies to Starbucks as it faces stiff competition and shrinking demand in its top markets. To bolster investor confidence, the company raised its quarterly dividend to 61 cents from 57 cents per share.
