Struggling Starbucks: Coffee titan experiences sixth consecutive drop in same-store sales

Starbucks Reports Sixth Consecutive Quarterly Contraction, Yet Signs of Recovery Emerge

Starbucks Corporation, the global coffee giant, has reported a 2% decline in overall same-store sales for the quarter ended June 29, 2023. This marks the sixth consecutive quarterly contraction for the company. However, there are signs of a potential turnaround, according to the company's CFO, Cathy Smith.

In the third quarter, a discrete tax item negatively impacted earnings per share by 11 cents, as per Smith. Analysts, on average, had estimated a 1.19% dip in Starbucks' third-quarter sales. Yet, the improvement in same-store sales from last year might indicate a slight recovery in Starbucks' performance.

The 'Back to Starbucks' initiative, led by CEO Brian Niccol, and recent menu innovations are believed to be driving this turnaround. According to Placer.ai, customer visits to Starbucks averaged a 0.1% decrease from April to June. While this represents a decline, it is better than the 0.9% drop in the prior three months, suggesting a potential turnaround.

Niccol has been trying to drive a brand reset at Starbucks since August 2022. As part of this effort, he has been pushing for a simplified menu and has introduced freshly baked food items at Starbucks. He has also pledged to increase investments in staffing for all Starbucks-owned US stores by the end of the summer.

Starbucks has introduced cups with handwritten messages as part of their service, aiming to enhance the customer experience. In its North America market, Starbucks experienced a 2% decline in same-store sales, a slight improvement from the 2% drop last year.

Starbucks made a significant non-recurring investment in Leadership Experience 2025 in the third quarter. Despite these efforts, Starbucks' shares were down 1% at $92 in volatile extended trading.

Despite the challenges, the 'Back to Starbucks' strategy is showing tangible progress, according to Smith. The company will continue to focus on improving its performance and delivering value to its shareholders.

Struggling Starbucks: Coffee titan experiences sixth consecutive drop in same-store sales