Starbucks Aims to Brew a Comeback with 'Back to Starbucks' Plan

Key Highlights:

* Q1 FY25 results beat expectations, with revenue flat and earnings per share (EPS) exceeding estimates.
* CEO Brian Niccol's "Back to Starbucks" plan focuses on core coffee offerings, optimized pricing, and enhanced service.
* Global same-store sales and foot traffic declined 4% and 6%, respectively, for the fourth consecutive quarter.
* North America and US same-store sales fell 4%, partially offset by a 3% increase in average ticket size.
* Operating margin contracted by 390 basis points, driven by investments in Niccol's strategy and store operations.
* Wall Street expects continued negative same-store sales trends but anticipates momentum in FY26.
* China remains a focus for Starbucks, with ongoing challenges in sales and competition.
* The company is implementing a Coffeehouse Code of Conduct, corporate layoffs, and management shakeups.

Performance Summary:

Revenue: $9.4 billion (flat year-over-year)
EPS: $0.69 (23% decrease, exceeding estimates)
Global Same-Store Sales: -4%
Global Foot Traffic: -6%
Ticket Growth: 3%
North America and US Same-Store Sales: -4%
North America and US Foot Traffic: -8%
North America and US Ticket Growth: 4%

Analyst Outlook:

"The turnaround story is still in its early innings," said BTIG analyst Peter Saleh. "Momentum should improve in H2 2025 and FY26."

Key Initiatives:

* Emphasis on core coffee products
* Improved pricing strategy
* Enhanced service efficiency

Industry Context:

The coffee industry faces challenges in macroeconomic conditions and competition from local and regional players. Caffeine consumption continues to be a growth driver, with shifts towards premium offerings.