Starbucks is reeling as customers go elsewhere, sales decline

Starbucks on Tuesday reported quarterly revenue that missed analysts’ expectations as both its U.S. and international cafes faced weaker demand.

Shares of the company rose more than 1% in extended trading.

Here is what the company reported compared to what Wall Street was expecting, based on a survey of analysts by LSEG:

The coffee giant reported fiscal third-quarter net income attributable to the company of $1.05 billion, or 93 cents per share, down from $1.14 billion, or 99 cents per share, a year earlier.

Excluding items, Starbucks earned 93 cents per share.

Net salesdropped1% to $9.11 billion. The company’s same-store sales fell 3% in the quarter, fueled by a 5% decline in transactions.

Traffic to its U.S. stores fell again this quarter, dropping 6%. Domestic same-store sales fell 2%, boosted by an increase in average ticket. Last quarter, executives discussed plans to revive the lagging U.S. business that included leaning on discounts and new drinks to bring back customers who had abandoned the chain.

Outside of North America, same-store sales slid 7%. In China, Starbucks’ second-largest market, same-store sales tumbled 14% as both average ticket and transactions shrank. Starbucks has faced stiffer competition in China from local coffee shops that undercut the coffee giant on price.

Starbucks opened 526 net new stores in the fiscal quarter.

The company will discuss its outlook for fiscal 2024 on its upcoming conference call. Last quarter, Starbucks slashed its forecast, projecting revenue growth of a low single-digit percentage and earnings per share growth in a range of flat to a low single-digit percentage.