The stock of Starbucks (SBUX) is down 13% after the retail coffee chain reported disappointing quarterly financial results and lowered its forward guidance.
The Seattle-based company announced earnings per share (EPS) of $0.68 U.S. compared to $0.79 U.S. that was expected among analysts who cover the company.
Revenue in the year’s first quarter totaled $8.56 billion U.S., which missed Wall Street forecasts of $9.13 billion U.S. Sales were down 2% from a year ago.
Same-store sales fell 4% as traffic at Starbucks cafes declined 6% in the quarter. Analysts were anticipating same-store sales growth of 1%.
Across all regions and markets, Starbucks reported declining same-store sales and customer traffic.
In the U.S., same-store sales decreased 3% as customer foot traffic fell 7%. Starbucks’ international segment reported a same-store sales decline of 6%.
In China, Starbucks’ second-largest market, same-store sales plunged 11% year over year.
The poor results were blamed on consumers pulling back on discretionary spending as prices rise to counter inflation, as well as on slowing economies such as China.
Looking ahead, Starbucks lowered its forecast for both 2024 earnings and revenue, saying that its outlets are likely to continue underperforming for several quarters.
For 2024, Starbucks now expects revenue growth in the low single digits, down from its prior forecast of 7% to 10% growth.
Earnings per share growth is now forecast to be flat to low single digits. The company previously forecast its earnings would rise 15% to 20% this year.
Management said they expect sales to start improving in this year’s fourth quarter.
Prior to today (May 1), Starbucks’ stock had declined 23% over the last 12 months and was trading at $88.49 U.S. per share.
