Starbucks Corporation Reports Fourth Quarter Fiscal Year 2024 Financial Results

Starbucks Corporation Reports Fourth Quarter Fiscal Year 2024 Financial Results

Starbucks Corporation (NASDAQ: SBUX) reported its financial results for the fourth quarter (Q4) and 52-week fiscal year ending September 29, 2024. The reported results highlighted challenging customer experiences, with the management actively developing a strategy aimed at revitalizing the Starbucks brand.

Key Financial Metrics

The financial performance demonstrates a decline in both revenue and earnings per share (EPS) compared to Wall Street estimates and the prior year. The overall revenue fell to $9.1 billion, marking a 3% drop year-over-year (YOY), and GAAP EPS decreased 25% from the previous year to $0.80, missing the analyst consensus.

Revenue Performance by Segment

Revenue contraction across major segments reflects the ongoing challenges in maintaining customer engagement with a notable 3% decrease in North America and a 4% decline both internationally and in channel development. These declines were primarily driven by lower comparable store sales and traffic.

Operational Highlights

• Global comparable store sales declined by 7%, influenced by an 8% reduction in transactions, offset minimally by a 2% increase in the average ticket.
• 722 net new stores opened, bringing the total to 40,199 globally, with the U.S. and China comprising 61% of the portfolio.
• Active U.S. Starbucks Rewards membership increased by 4% YOY, totaling 33.8 million.

Executive Comments

Rachel Ruggeri, CFO, stated, 'Our results do not reflect the strength of our brand. I am confident in our ability to turn around our business and expect we will return to long-term growth.' Brian Niccol, CEO, emphasized, 'We need to fundamentally change our strategy to win back customers. 'Back to Starbucks' is that fundamental change.'

Dividends and Share Repurchase Program

The Board declared a cash dividend of $0.61 per share, payable on November 29, 2024. Starbucks emphasized its commitment to consistent shareholder value with its 58th consecutive quarterly dividend payout.

Forward Guidance

Given the transition in leadership and the current business environment, Starbucks has suspended guidance for the full fiscal year 2025. The company intends to reassess its strategies and stabilize its operations, focusing on long-term growth.

Stock Price Reaction

Following the earnings release, Starbucks' stock experienced a slight decline of approximately 0.07%, as investors digested the broader financial performance and management's strategic direction.

In conclusion, Starbucks faces significant challenges in achieving customer engagement and sales growth. However, management's commitment to a strategic overhaul offers a potential pathway to revitalizing the brand and improving financial outcomes in the long term.

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