Starbucks suspends annual forecast as new CEO prepares turnaround plan
Starbucks reports decline in Q4 same-store sales, and profit
CEO Niccol to focus on simplifying menu, fix pricing
Turnaround will take time - CFO
Shares fall 4% after hours
Adds analyst comment in paragraphs 10-11, context on Nike's forecast withdrawal in paragraph 16
By Aishwarya Venugopal
Oct 22 (Reuters) -Starbucks Corp SBUX.O suspended its forecast through the next fiscal year as new CEO Brian Niccol looks to turn around the coffee giant struggling with falling demand for its pricey drinks.
The coffee chain also reported preliminary fourth-quarter results, saying same-store sales, net revenue, and profit declined, weighed down by weak demand in the U.S.
Its shares fell about 4% in after-hours trading. The stock has gained nearly 28% since the company named Niccol as CEO in early August.
Niccol, who was named to the top job in a surprise move, said, "It's clear we need to fundamentally change our strategy so we can get back to growth and that's exactly what we are doing with our 'Back to Starbucks' plan."
He said Starbucks would simplify its "overly complex menu, fix our pricing architecture."
The company now expects comparable sales to decline 6% in the U.S. and 14% in China for the fourth quarter ended Sept. 29. It suspended annual outlook for the fiscal year that will end in September 2025.
"Despite our heightened investments, we were unable to change the trajectory of our traffic decline," said Chief Financial Officer Rachel Ruggeri. "We are developing a plan to turn around our business, but it will take time."
Still, Starbucks increased its quarterly dividend to 61 cents from 57 cents per share, to boost investor confidence in the turnaround plan, Ruggeri said.
The company's rewards program did not help improve customer traffic. As part of the turnaround plan, Niccol said the company aimed to change its marketing efforts, and shift focus to all customers and not just "Starbucks Rewards" members.
"While we remain optimistic that Starbucks can return to positive comparable sale as fiscal 2025 progresses under Niccol's leadership, we suspect a reality check is needed on the timeline to reinvigorate profitability," William Blair analyst Sharon Zackfia said.
"We suspect multiple avenues of attack (by Niccol) are likely, including increasing labor hours at stores and reducing the frequency of limited-time promotions."
Before taking the helm at Starbucks, Niccol was CEO of Chipotle Mexican Grill CMG.N, where he owned the burrito maker's problems, agreed with critics, and revitalized sales.
At Starbucks, Niccol took over from Laxman Narasimhan, inheriting several challenges at the coffee giant that has been under pressure from an activist investor to improve its business.
The coffee chain is also suffering from increased competition and weak demand in two of its top markets, the U.S. and China.
Niccol, in his first address as CEO, said last month he would look to "reestablish the brand as the community coffeehouse" in the U.S. as he laid out his plan for the next 100 days.
Niccol's strategy to start with a clean slate echoes that of new Nike NKE.N CEO Elliott Hill, a company veteran. The sportswear giant had also been grappling with declining sales under former boss John Donahoe.
Starbucks still plans to hold its scheduled fourth-quarter earnings conference call on Oct. 30.
Veteran fast-food exec known for tackling crises head-on takes over at Starbucks https://www.reuters.com/business/retail-consumer/veteran-fast-food-exec-known-tackling-crises-head-on-takes-over-starbucks-2024-08-14/
More US firms lean on retired, veteran leaders to steady ship in choppy economy https://www.reuters.com/markets/us/more-us-firms-lean-retired-veteran-leaders-steady-ship-choppy-economy-2024-10-22/
Starbucks new CEO taps fellow Chipotle alum for top marketing role nL1N3LU0VW
Reporting by Aishwarya Venugopal, Neil J Kanatt in Bengaluru and Waylon Cunningham in ; Editing by Sriraj Kalluvila and Sayantani Ghosh
Asset collegati
Ultime news
Disclaimer: le entità di XM Group forniscono servizi di sola esecuzione e accesso al nostro servizio di trading online, che permette all'individuo di visualizzare e/o utilizzare i contenuti disponibili sul sito o attraverso di esso; non ha il proposito di modificare o espandere le proprie funzioni, né le modifica o espande. L'accesso e l'utilizzo sono sempre soggetti a: (i) Termini e condizioni; (ii) Avvertenza sui rischi e (iii) Disclaimer completo. Tali contenuti sono perciò forniti a scopo puramente informativo. Nello specifico, ti preghiamo di considerare che i contenuti del nostro servizio di trading online non rappresentano un sollecito né un'offerta ad operare sui mercati finanziari. Il trading su qualsiasi mercato finanziario comporta un notevole livello di rischio per il tuo capitale.
Tutto il materiale pubblicato sul nostro servizio di trading online è unicamente a scopo educativo e informativo, e non contiene (e non dovrebbe essere considerato come contenente) consigli e raccomandazioni di carattere finanziario, di trading o fiscale, né informazioni riguardanti i nostri prezzi di trading, offerte o solleciti riguardanti transazioni che possano coinvolgere strumenti finanziari, oppure promozioni finanziarie da te non richieste.
Tutti i contenuti di terze parti, oltre ai contenuti offerti da XM, siano essi opinioni, news, ricerca, analisi, prezzi, altre informazioni o link a siti di terzi presenti su questo sito, sono forniti "così com'è", e vanno considerati come commenti generali sui mercati; per questo motivo, non possono essere visti come consigli di investimento. Dato che tutti i contenuti sono intesi come ricerche di investimento, devi considerare e accettare che non sono stati preparati né creati seguendo i requisiti normativi pensati per promuovere l'indipendenza delle ricerche di investimento; per questo motivo, questi contenuti devono essere considerati come comunicazioni di marketing in base alle leggi e normative vigenti. Assicurati di avere letto e compreso pienamente la nostra Notifica sulla ricerca di investimento non indipendente e la nostra Informativa sul rischio riguardante le informazioni sopra citate; tali documenti sono consultabili qui.
