Starbucks Q1 2025: Striving for a Comeback

Financial Performance

* Revenue: $9.4 billion, flat year-over-year * Earnings per share: $0.69, a 23% decline

Same-Store Sales and Foot Traffic

* Global same-store sales: -4% * US same-store sales: -4% * Global foot traffic: -6% * US foot traffic: -8%

Key Developments

* CEO Brian Niccol's first full quarter brought positive traction with the "Back to Starbucks" plan. * Company invested heavily in turnaround efforts, resulting in margin contraction. * Starbucks paused price increases and eliminated extra charges on non-dairy milks. * The menu will undergo a 30% reduction in beverage and food offerings. * Starbucks plans to improve staffing levels with a pilot program in 700 stores. * Despite rising coffee bean costs, their impact on Starbucks has been minimal.

Wall Street Expectations

Same-store sales trends underperformed Wall Street expectations: * Global same-store sales: -4% (actual) vs. -5.30% (expected) * US same-store sales: -4% (actual) vs. -5.04% (expected) * China same-store sales: -6% (actual) vs. -9.34% (expected) Foot traffic also fell below estimates: * Global foot traffic: -6% (actual) vs. -7.28% (expected) * US foot traffic: -8% (actual) vs. -7.33% (expected) * China foot traffic: -2% (actual) vs. -5.67% (expected)

Analyst Outlook

* BTIG analyst Peter Saleh anticipates improved same-store sales growth, margins, and earnings in the latter half of 2025 and into 2026.

Operational Changes

* Starbucks opened 113 stores in North America and 264 internationally in the quarter. * Belinda Wong retired as Starbucks China chair; Molly Liu took over as CEO. * Starbucks implemented a Code of Conduct, limiting in-store access to paying customers. * Corporate layoffs announced to improve efficiency.