Starbucks Says Its Turnaround Is Starting to Work
Starbucks reports promising signs of recovery as its turnaround strategy begins to yield results. After nearly two years of stagnant same-store sales, the recent announcement of a 1% increase in those sales last quarter was a noteworthy milestone for the coffee giant. However, the excitement was short-lived. Here are the key takeaways from the latest earnings report:
– Earnings Performance:
– Earnings per share (EPS) reached 52 cents, slightly below analyst expectations of 56 cents.
– Revenues surpassed forecasts, totaling $9.57 billion compared to an anticipated $9.35 billion.
– Store Closures and Workforce Changes:
– Starbucks closed 627 locations and laid off approximately 900 non-retail employees last quarter.
– Since CEO Brian Niccol’s tenure began, around 2,000 corporate jobs and thousands of retail positions have been eliminated.
– Historical Context:
– This announcement follows six consecutive quarters of declining same-store sales, marking a significant shift for the company.
– Customer Engagement Initiatives:
– To attract customers back, Starbucks is reintroducing pre-pandemic policies, such as:
– Handwriting customer names on cups.
– Offering free refills on some “for here” orders, extending benefits beyond loyalty-program members.
– Streamlining service by reducing some menu items and reinstating milk and sugar stations, enabling customers to customize their drinks and enhancing overall efficiency.
Despite a dip in stock prices following the earnings report, CEO Brian Niccol confidently stated, “It’s clear that our turnaround is taking hold.” As Starbucks navigates these changes, the industry’s eyes remain fixed on its recovery journey, hopeful for continued growth and revitalization in the coming quarters.