Starbucks has reported its sixth consecutive quarter of declining same-store sales, even as the company pushes forward with a major turnaround strategy under CEO Brian Niccol. Despite the ongoing challenges, Niccol expressed optimism, stating that the company’s recovery is progressing faster than expected. Shares rose 4% in extended trading following the earnings release.
For the quarter ending June 29, Starbucks reported revenue of $9.5 billion, slightly ahead of analyst expectations of $9.31 billion. However, global same-store sales dropped by 2%, steeper than the projected 1.3% decline. Earnings per share stood at 50 cents on an adjusted basis, but it remains unclear how this compares directly to the expected 65 cents. The company attributed an 11-cent hit to a one-time investment in a three-day event for U.S. store managers and a tax adjustment.
In North America, same-store sales declined 2%, a smaller dip than the anticipated 2.5%. Transactions fell by 3%, while the average ticket rose by 1%. Niccol noted improvements in employee engagement, customer satisfaction, and transaction growth from non-rewards members. He emphasized that customer connection and shift completion metrics are trending positively, and licensed stores on college campuses saw an uptick in same-store sales, signaling renewed interest among younger consumers.
To enhance customer experience, Starbucks is prioritizing hospitality through the expansion of its “Green Apron Service” initiative. The program, focused on personalized customer interaction, has tested well and is now being rolled out more widely. The company is also shifting focus from expanding its U.S. store count to upgrading existing locations, including reintroducing seating that was previously removed in favor of mobile and drive-thru services.
In China, Starbucks posted a 2% increase in same-store sales—the first such growth in 18 months. While transactions grew by 6%, average spending per customer dropped due to price cuts aimed at competing with more affordable rivals like Luckin Coffee. Niccol confirmed ongoing discussions about possibly selling a stake in the China business, valued at up to $10 billion, though Starbucks intends to retain a significant portion.
CFO Cathy Smith expressed cautious optimism for the fiscal fourth quarter, citing consumer uncertainty but highlighting upcoming product innovations like protein cold foam, coconut-water drinks, a refreshed app, and an updated Rewards program. Starbucks also plans to invest $500 million in labor and will host its next investor day in fiscal Q2 of 2026.
READ MORE: