Starbucks Aiming for Growth, Focuses on Improved Customer Experience
Analyst: Bernstein
Starbucks (SBUX) shares surged 5% following better-than-expected earnings. CEO Brian Niccol emphasizes a commitment to growth but refrains from providing specific projections.
Niccol highlights improvements in sequential sales trends in the US, including quicker mobile orders and the elimination of upcharges for dairy substitutes. He believes the company is in the midst of a turnaround.
Despite positive trends, Starbucks' recent quarter saw a 4% decline in global same-store sales, including a 4% drop in North America and US. International sales also faced challenges, with same-store sales declining 4% overseas.
Operating profit margins in North America and international segments have decreased by a combined 510 basis points year-over-year.
The company continues to withhold guidance for the current fiscal year, indicating ongoing challenges.
Niccol plans to enhance the in-store experience, reintroducing ceramic mugs and streamlining the mobile order and pay process. However, he remains cautious about predicting a return to growth in Starbucks US this fiscal year.
Analysts have moderated their earnings expectations for Starbucks, citing factors such as rising coffee prices. Citi analyst Jon Tower maintains a Neutral rating.
Outlook
Starbucks remains focused on implementing strategies to improve its customer experience, but the path to growth is not yet clear. Analysts continue to assess the company's prospects as it navigates industry challenges and executes its turnaround plan.