Starbucks (SBUX) stock jumped more than 4% on Tuesday after the company reported U.S. same-store sales fell 2%—matching the previous quarter and coming in better than the 2.5% drop analysts had forecast. The result was helped by a smaller-than-expected 4% decline in comparable transactions, versus Wall Street’s expectation of a 4.5% drop.
Despite logging a sixth consecutive quarterly decline in U.S. same-store sales, investors welcomed signs that CEO Brian Niccol’s turnaround plan may be gaining traction.
Global same-store sales fell 2%, steeper than the 1.5% decline expected, and an acceleration from last quarter’s 1% drop. In China, however, same-store sales rose 2%, beating the 1.4% estimate and marking the second straight quarter of growth in the key international market.
Niccol, who took the helm last fall, said: “We’ve fixed a lot and done the hard work on the hard things to build a strong operating foundation, and based on my experience of turnarounds, we are ahead of schedule.”
Adjusted earnings per share came in at $0.50, missing the $0.65 forecast, while revenue climbed 5% year over year to $9.5 billion, topping expectations for $9.3 billion.
Since taking over, Niccol has implemented cost-cutting measures—including staff reductions—and introduced new policies, such as requiring corporate employees to work in-office four days a week. Executives have also been offered performance-based stock incentives tied to expense management.
“While the magnitude of the savings offset remains in question, management was clear that the corporate cost structure of the business would continue to be closely examined to accommodate the necessary in-store and marketing investments that drive transaction growth,” noted Stifel analyst Chris O’Cull in a client note.
To address ongoing challenges, Starbucks is rolling out its “Back to Starbucks” plan—an ambitious strategy outlined by CEO Brian Niccol with optimism during the latest earnings presentation. The plan is built around four core priorities:
- Putting customers and “green apron partners” (employees) first, with a goal of becoming the best employer in retail.
- Elevating the in-store experience during peak hours with premium coffee, innovative beverages, and enhanced digital platforms.
- Reinforcing Starbucks’ identity as a community hub by opening locations that meet customer needs for accessibility and experience.
- Reintroducing the Starbucks brand globally to boost visibility, relevance, and perceived value.
On the earnings call, Niccol stressed the company’s renewed focus on “putting the customer back at the center of all we do,” marking a clear pivot toward refining the core Starbucks experience. The company also announced it will hold off on additional price increases for the rest of the fiscal year, instead concentrating on improving operational efficiency.
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