Starbucks CEO Brian Niccol is promising more caffeinated growth but isn’t yet ready to put hard projections around when.
And for now, that continues to be enough for Wall Street.
Shares of the coffee giant advanced 5% on Wednesday following better-than-expected earnings late Tuesday. On its earnings call, the company highlighted improved sequential sales trends in the US as it worked to speed up mobile orders and end upcharging for dairy substitutes, among other changes.
«I think we’re definitely in the middle of a turnaround,» Niccol said on Yahoo Finance (video above).
The former Chipotle CEO — who officially took over at Starbucks on Sept. 9, 2024 — has a tall order this year in delivering growth to an anxious investor base expecting great things from the restaurant wizard.
Starbucks’ most recent quarter showed a 4% drop in global same-store sales as the company pulled back on discounts and consumers shunned the long lines at the chain. North America and US same-store store sales dropped 4%.
International sales weren’t any better amid pressure in key markets such as China.
Same-store sales overseas declined 4%, with China dropping 6% year over year.
The company’s operating profit margins in its North America and international segments fell a combined 510 basis points from a year ago.
«Still highly controversial [stock] … but at least things don’t seem to be getting worse,» the Bernstein research team quipped in a client note.
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As a sign of its challenging road ahead, Starbucks continued to decline to share guidance for sales and earnings for its current fiscal year. Niccol pulled the guidance back in October to free up space to invest in marketing, staff, and in-store experience.
He’s turning his attention toward making stores feel like the Starbucks stores of yesteryear — more welcoming and with more inviting service. Recently, the company introduced serving coffee in ceramic mugs.
Niccol is also focused on making the mobile order and pay process easier to prevent annoyingly long lines and frustrated baristas.
Still, he declined to say whether he thinks these actions will bring growth back to Starbucks US this fiscal year.
«We’re not where we want to be yet. But I’m confident we stay after these strategies. We continue to test and learn. We listen to the feedback. We take action. We will return to growth,» Niccol said.
Wall Street has subsequently begun to mark down their earnings expectations on Starbucks for this year, according to Yahoo Finance data.
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