Topline
Shares of Starbucks fell to a 21-month low in extended trading on Tuesday on the heels of a dismal quarterly earnings report missing analysts’ expectations amid faltering sales in the first few months of 2024.
Shares of Starbucks hit their lowest point since July 2022.
Key Facts
Starbucks’ stock plummeted minutes after 4 p.m. Tuesday afternoon, dropping more than 10% to nearly $80 per share—its lowest point since July 2022.
That single-day drop also represents the coffee chain’s worst day on Wall Street since May 2023.
Starbucks reported a 15% drop in net income (to $772 million) compared to this time last year in its quarterly earnings report, with a 2% drop in revenue over the same period, to $8.56 billion—well off the $9.13 billion analysts had predicted.
That slump also came as a surprise to analysts, who had estimated Starbucks would post a 1% increase in comparable store sales during the first three months of the year, only to see a 4% decline, thanks to a 3% drop in the U.S. market and a 6% drop internationally.
Starbucks CEO Laxman Narasimhan attributed the dip to a “highly challenged environment,” arguing in a financial filing with the Securities and Exchange Commission that the “quarter’s results do not reflect the power of our brand, our capabilities or the opportunities ahead.”
Contra
While Narasimhan acknowledged the shortcomings in Tuesday’s report, he also vowed to turn sales around, citing the chain’s so-called Triple Shot Reinvention strategy. According to the company, that strategy includes a goal of doubling its 75 million worldwide Starbucks rewards members over the next five years and bringing its total stores to 55,000 as part of a larger goal of generating $3 billion in savings over three years. Starbucks operates just under 39,000 stores worldwide, according to its quarterly report, with over three-fifths of those in the U.S. and China.
Tangent
Starbucks officials were dealt another blow earlier this month as part of an ongoing unionization effort by employees. Last week, the Ninth Circuit Court upheld a federal decision validating a union election by the company’s flagship Seattle Roastery, where employees had voted to unionize two years earlier. That roastery—one of Starbucks’ premier locations—is one of 400 unionized U.S. Starbucks locations.
