Starbucks Corporation (NASDAQ:SBUX) reported disappointing fourth-quarter results that fell short of analyst expectations, sending shares down 1.5% in after-hours trading. The coffee giant's earnings and revenue declined as it faced challenges in customer experience and traffic.
Starbucks reported adjusted earnings per share of $0.80 for the fourth quarter, missing the analyst estimate of $1.03. Revenue came in at $9.07 billion, below the consensus forecast of $9.38 billion and down 3% YoY.
Global comparable store sales declined 7% in Q4, driven by an 8% drop in comparable transactions, partially offset by a 2% increase in average ticket. North America and U.S. comparable store sales fell 6%, with transactions down 10% but average ticket up 4%.
"Our results do not reflect the strength of our brand," said Rachel Ruggeri, chief financial officer. "I have confidence in our ability to turn around our business and expect we will return to long-term growth."
The company's operating margin contracted 380 basis points YoY to 14.4%, primarily due to deleverage, investments in store partner wages and benefits, and increased promotional activity.
Starbucks opened 722 net new stores in Q4, ending the period with 40,199 locations globally. The Starbucks Rewards loyalty program reached 33.8 million 90-day active members in the U.S., up 4% YoY but flat quarter-over-quarter.
CEO Brian Niccol acknowledged the need for change, stating, "It is clear we need to fundamentally change our strategy to win back customers. 'Back to Starbucks' is that fundamental change."
For the full fiscal year 2024, Starbucks reported a 2% decline in global comparable store sales and a 1% increase in consolidated net revenues to $36.2 billion.