Starbucks Beats Earnings Expectations Amid CEO’s Turnaround Plan
Key Takeaways
- Starbucks (SBUX) exceeded analysts' expectations in fiscal Q1, despite year-over-year declines in sales and profit.
- New CEO Brian Niccol’s "Back to Starbucks" turnaround plan is showing early positive signs.
- CFO Rachel Ruggeri warned of increased earnings pressure in Q2, with improvement expected in the latter half of 2025.
Earnings Beat Despite Sales Decline
Starbucks reported fiscal first-quarter revenue of $9.4 billion, down 0.3% year-over-year but above analyst estimates. Earnings per share (EPS) of $0.69 fell from $0.90 a year ago, yet still topped Wall Street expectations. Global same-store sales declined 4%, a smaller drop than the 5% analysts predicted.Turnaround Strategy Gains Traction
CEO Brian Niccol, who took over in September, said the company is making strides with its "Back to Starbucks"initiative. The plan includes:- Reinstating a purchase requirement for café seating and restrooms.
- Reducing menu items by 30% to speed up service.
- Introducing mobile order scheduling and dedicated shelving for pickups.
- Expanding store locations, with 377 net new stores added in Q1. Niccol hinted at potentially doubling the U.S. store count in the coming years.
Outlook & Market Reaction
Starbucks withheld 2025 guidance, citing ongoing business assessments. However, CFO Rachel Ruggeri warned of intensified earnings pressure in Q2, with recovery expected in the latter half of the year.Starbucks shares remained little changed in extended trading Tuesday but are up 10% year-to-date.