MILAN — Starbucks reported financial results for its 13-week fiscal fourth quarter and 52-week fiscal year ended September 29, 2024, on Wednesday after market close. The results had already been partially anticipated last week. For Q4 Fiscal Year 2024, global comparable store sales declined 7%, driven by an 8% decline in comparable transactions, partially offset by a 2% increase in average ticket. Final Q4 results missed key metrics across the board, from same-store sales and revenue to adjusted earnings per share.
North America and U.S. comparable store sales declined 6%, driven by a 10% decline in comparable transactions, partially offset by a 4% increase in average ticket
International comparable store sales declined 9%, driven by a 5% decline in average ticket and a 4% decline in comparable transactions; China comparable store sales declined 14%, driven by an 8% decline in average ticket and a 6% decline in comparable transactions
The company opened 722 net new stores in Q4, ending the period with 40,199 stores: 52% company-operated and 48% licensed
At the end of Q4, stores in the U.S. and China comprised 61% of the company’s global portfolio, with 16,941 and 7,596 stores in the U.S. and China, respectively
Consolidated net revenues declined 3%, including on a constant currency basis, to $9.1 billion
GAAP operating margin contracted 380 basis points year-over-year to 14.4%, primarily driven by deleverage, investments in store partner wages and benefits, and increased promotional activity. This contraction was partially offset by pricing and in-store operational efficiencies.
Non-GAAP operating margin contracted 380 basis points year-over-year to 14.4%, or contracted 370 basis points on a constant currency basis
GAAP earnings per share of $0.80 declined 25% over prior year
Non-GAAP earnings per share of $0.80 declined 25% over prior year, or declined 24% on a constant currency basis
Starbucks Rewards loyalty program 90-day active members in the U.S. totaled 33.8 million, up 4% year-over-year and flat quarter-over-quarter
Starbucks: Full Fiscal Year 2024 Highlights
- Global comparable store sales declined 2%, driven by a 4% decline in comparable transactions, partially offset by a 2% increase in average ticket
- North America and U.S. comparable store sales declined 2%, driven by a 5% decline in comparable transactions, partially offset by a 4% increase in average ticket
- International comparable store sales declined 4%, driven by a 4% decline in average ticket; China comparable store sales declined 8%, driven by an 8% decline in average ticket
- Consolidated net revenues increased 1%, including on a constant currency basis, to $36.2 billion
- GAAP operating margin contracted 130 basis points year-over-year to 15.0%, primarily driven by investments in store partner wages and benefits, deleverage, and increased promotional activity. This contraction was partially offset by pricing and in-store operational efficiencies.
- Non-GAAP operating margin contracted 110 basis points year-over-year, including on a constant currency basis, to 15.0%
- GAAP earnings per share of $3.31 declined 8% over prior year
- Non-GAAP earnings per share of $3.31 declined 6% over prior year, including on a constant currency basis
“It is clear we need to fundamentally change our strategy to win back customers. ‘Back to Starbucks’ is that fundamental change,” commented Brian Niccol, chairman and chief executive officer. “My experience tells me that when we get back to our core identity and consistently deliver a great experience, our customers will come back. We have a clear plan and are moving quickly to return Starbucks to growth,” Niccol added.
CFO Rachel Ruggeri shared the company will “reduce the number” of “new stores and renovations in fiscal year 2025” to focus on “reestablishing Starbucks as the community coffee house.”
Niccol on Wednesday told investors that he plans to overhaul Starbucks U.S. locations, adding more comfortable seating, ceramic mugs and a coffee-condiment bar, with customer wait times of less than four minutes.
He said the team is in the process of simplifying the menu for beverage and food.
Among the first beverages to be removed from the menu are the three olive oil-based coffee drinks from the Oleato line, which will still be sold only in some outlets in Italy, Japan and China.
Starbucks rolled out the Oleato drinks across North America less than a year ago, after initially being sold in Italy.
The products were created by Starbucks founder Howard Schultz, who said he was inspired by a visit to the olive groves of Sicily.
“While this decision was made prior to Brian Niccol taking the role of CEO, the decision to remove the beverages aligns with his strategy to simplify our menu,” a Starbucks spokesperson said.
Beginning on Nov. 7, Starbucks will also eliminate the extra charges for non-dairy milk at North American locations it owns.
Fiscal Year 2025 Financial Targets
As stated in our October 22, 2024 announcement, given the company’s ceo transition coupled with the current state of the business, guidance is suspended for full fiscal year 2025. We believe this will allow ample opportunity to complete an assessment of the business and solidify key strategies, while stabilizing and positioning the business for long-term growth. The company will provide initial information regarding its new strategies during its Q4 and full fiscal year 2024 earnings conference call starting today at 2:00 p.m. Pacific Time. Our October 22, 2024 announcement and accompanying prepared remarks from our chairman and ceo can be accessed on the company’s Investor Relations website. The company uses its website as a tool to disclose important information about the company and comply with its disclosure obligations under Regulation Fair Disclosure.
