Starbucks Corporation (NASDAQ: SBUX) stock plunged 16% in intraday trading Wednesday after the coffee chain reported worse-than-expected quarterly results. The company also lowered its fiscal 2024 outlook amidst a drop in same-store sales.
Starbucks (SBUX) reported fiscal second-quarter adjusted earnings of 68 cents per share late Tuesday, falling short of analysts’ expectations of 79 cents per share. Net sales for the period also disappointed, declining 2% year-over-year to $8.56 billion, below the Street estimate of $9.13 billion.
The coffee giant witnessed a 4% decrease in same-store sales during the quarter, driven by a 6% decline in cafe footfall. Analysts had anticipated a 1% growth in same-store sales. Regionally, same-store sales dipped 3% in the U.S. and 6% internationally. Notably, in China, Starbucks’ second largest market, same-store sales contracted by 11%, primarily due to an 8% reduction in the average ticket size.
Starbucks CEO Laxman Narasimhan addressed the challenges on the company’s conference call, stating,
“In this environment, many customers have been more exacting about where and how they choose to spend their money.”
Narasimhan also cited a deteriorating economic outlook in several markets, contributing to a reduction in customer traffic.
Looking ahead, Starbucks revised its 2024 revenue growth guidance to the low single digits, down from its previous forecast of 7% to 10%. The company expects global and U.S. same-store sales growth to range from low single digits to flat, below its prior projection of 4% to 6%.
In China, Starbucks expects same-store sales to decline by single digits, down from its previous outlook of a single-digit increase. On the earnings front, the company adjusted its full-year bottom-line growth forecast to flat to low single digits, down from its initial earnings growth forecast of 15% to 20%.
Starbucks (NASDAQ: SBUX) Stock Price Action
SBUX stock plummeted 15.88% to close at $74.44 on Wednesday. Its value has dropped by 16.12% this week. Trading activity has witnessed 66,332,378 (66.33 million) shares changing hands, well above the average daily volume of 8.40 million.
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