Starbucks has suspended its forecast for the next fiscal year as new CEO Brian Niccol looks to turn around the struggling coffee giant Falling demand for its expensive beverages,
The coffee chain also reported preliminary fourth-quarter results, saying same-store sales, net revenue and profit declined due to weak demand in the US.
Its shares fell nearly 4% in after-hours trading. The stock has risen about 28% since the company appointed Niccol as CEO in early August.
Nicole, who was nominated for top post “It’s clear we need to fundamentally change our strategy so we can get back to growth, and that’s exactly what we’re doing with our ‘Back to Starbucks’ plan,” it said in a surprise move in August.
He said Starbucks would simplify its “overly complex menu, fine-tune our pricing structure.”
The company now expects comparable sales to decline 6% in the US and 14% in China in the fourth quarter ending Sept. 29. It has suspended the annual outlook for the fiscal year that will end in September 2025.
Chief Financial Officer Rachel Ruggeri said, “Despite our increased investment, we were unable to reverse the trajectory of our traffic decline.” “We are developing plans to turn our business around, but it will take time.”
Ruggeri said the company raised its quarterly dividend from 57 cents a share to 61 cents to boost investor confidence in the turnaround plan.
Starbucks’ rewards program did not help improve customer traffic. As part of the turnaround plan, Nicholl said the company aims to change its marketing efforts, and focus on all customers, not just “Starbucks Rewards” members.
Before taking the helm at Starbucks, Niccol was CEO of Chipotle Mexican Grill, where he solved the burrito maker’s problems, agreed with critics and revived sales.
At Starbucks, Nicholl took over from Laxman Narasimhan, inheriting a number of challenges at the coffee giant, which was under pressure from an activist investor to improve its business.
The coffee chain is also suffering from increased competition and weak demand in its two top markets, the US and China.
Nicole has presented her plan for first 100 days Focused on improving the customer experience at its stores in the US.
The company still plans to hold its scheduled fourth-quarter earnings conference call on October 30.
