Starbucks Strives for Comeback with Flat Revenue, Earnings Dip

Key Highlights:

* Starbucks (SBUX) releases Q1 FY25 results, exceeding Wall Street expectations.
* Revenue remains flat at $9.4 billion, meeting estimates.
* Earnings per share fall 23% to $0.69, surpassing expectations of $0.66.
* Global same-store sales decline 4%, foot traffic drops 6%.
* Average ticket size increases by 3%.
* North America same-store sales slide 4%, offset by a 4% rise in average ticket.
* Starbucks reduces promotions, leading to a 40% decrease in discounted transactions.

Initiatives and Challenges:

* CEO Brian Niccol emphasizes progress with "Back to Starbucks" plan, focusing on core coffee, pricing, and service.
* Company cites "heightened investments" for Niccol's turnaround plan as a factor in earnings decline.
* Plans to reduce menu offerings by 30% and launch a pilot program for improved staffing.
* Despite rising coffee bean costs, Starbucks faces minimal impact due to its limited coffee cost exposure.
* Same-store sales trends expected to remain negative in the near term.

Growth Areas and Market Dynamics:

* The company opens 377 stores globally in Q1 FY25.
* China remains a key focus for investors, with 6% same-store sales decline.
* Starbucks appoints Molly Liu as Starbucks China CEO following Belinda Wong's retirement.

Changes and Restructuring:

* Starbucks implements a Coffeehouse Code of Conduct, restricting access to non-paying customers.
* Company announces corporate layoffs for operational efficiency enhancements.
* Executive shakeups include departures and team reorganizations.