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
Mga Kaugnay na Asset
Pinakabagong Balita
Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.
Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.
Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.
