Starbucks Aims for Redemption with "Back to Starbucks" Plan

Earnings Results Overview

Starbucks (SBUX) reported its fiscal Q1 2025 results, showcasing a mixed performance.

* Revenue remained stable at $9.4 billion, meeting analysts' expectations.
* Earnings per share (EPS) reached $0.69, surpassing Wall Street estimates of $0.66.

Operational Performance

* Global same-store sales declined by 4%, with North America and the US experiencing a 4% decrease.
* Foot traffic decreased by 6% globally, driven by an 8% decline in North America and the US.
* The average ticket size increased by 3%.

Implementation of "Back to Starbucks" Plan

CEO Brian Niccol's "Back to Starbucks" plan focuses on:

* Enhancing core coffee products.
* Improving pricing strategies.
* Accelerating service speed.

Marketing and Cost Management

* Starbucks has doubled marketing spend to offset the decline in promotional discounts.
* The company is reducing its menu offerings by 30% and pausing price increases.
* Operating margin contracted due to investments associated with Niccol's turnaround plan.

International Performance

* China remains a challenge, with same-store sales declining by 6% and foot traffic decreasing by 2%.

Wall Street Expectations and Analyst Outlook

* Analysts anticipate continued negative same-store sales trends.
* BTIG analyst Peter Saleh expects momentum to build in the latter half of 2025 and into fiscal 2026.

Store Expansion and Organizational Changes

* Starbucks opened 377 stores globally in the quarter.
* Belinda Wong, Starbucks China chair, recently retired, with Molly Liu taking over as CEO.
* The company has implemented a Coffeehouse Code of Conduct and announced corporate layoffs to improve efficiency.