Starbucks Shares Fall as Preliminary Q4 Results Show Drop in US, China Sales

Starbucks (SBUX) posted preliminary fourth-quarter results that shocked the Street on Tuesday afternoon.

The company reported quarterly revenue that fell 3% year over year to $9.1 billion, while earnings per share fell 24% to $0.80.

Starbucks also suspended its full-year 2025 fiscal guidance, citing its transition to new CEO Brian Niccol and to allow time to restructure strategies. Shares quickly fell 3% in after-market trading.

U.S. same-store sales declined 6% year over year in the fourth quarter, with a 10% drop in foot traffic and a 4% increase in average ticket.

Its highly publicized promotions and deals on the app haven’t changed the direction. The company’s pairing menu, which offered North American customers a small coffee and croissant or breakfast sandwich for $5 or $6, “did not improve customer behavior,” according to its statement.

Starbucks China’s same-store sales fell 14%, with a 6% drop in foot traffic and an 8% drop in average ticket size. The company attributed the performance to “intensified competition and a weak macro environment that impacted consumer spending.”

Prior to the report, Starbucks shares were up 3% year to date, but have risen 10% in the past six months after investors were upbeat about the arrival of former Chipotle (CMG) CEO Niccol at the helm. The company still plans to release its official fourth-quarter and fiscal 2024 financial results after the market closes on October 30.

The number shows the long road ahead for Niccol as he tries to get Starbucks back on track. He initiated a shake-up in the management ranks, including hiring longtime friend Tressie Lieberman as global brand director. Liberman will start on November 4, following his most recent role as Yahoo’s CMO.

In a video posted on the Starbucks website, Niccol reemphasized some of the key issues he outlined in a letter during his first week, including the need to simplify his menu, fix his prices and perception of value, and build repeat customers.

“We’re fundamentally changing our marketing. We’re focusing on Starbucks Rewards customers rather than talking to all of our customers. We’re changing quickly, as you’ve probably noticed,” said Niccol, known throughout his career for his marketing expertise.

“I believe that our problems can be solved and that we have significant strengths to build on. I’ve spent my career understanding, managing and building brands, and it’s clear that the Starbucks brand is strong and enduring,” he added.

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Brooke DiPalma is a senior reporter at Yahoo Finance. Follow her on Twitter at @Brooke DiPalma or send an email to [email protected].

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