On the morning of May 1st Beijing time, Starbucks (SBUX. US) announced its second quarter results. In addition, Starbucks will launch a beverage similar to pearl milk tea in the summer of 2024. In terms of stock price, Starbucks' US stock market fell nearly 12% after trading.
Starbucks' Q2 2024 financial report showed that due to a decrease in customer frequency and order size, the company's revenue, profitability, and same store sales growth did not meet market expectations. CEO Laxman Narasimhan referred to the current environment as "a challenging one" during a earnings conference call, pointing out macroeconomic resistance and consumer pressure as the main challenges.
The financial report shows that revenue in the second quarter decreased by 2% year-on-year to $8.6 billion, and adjusted earnings per share decreased by 8% to $0.68. Global same store sales decreased by 4% year-on-year and transaction volume decreased by 6%. Despite a 2% increase in average consumption, the impact of the aforementioned decline has not been fully offset. Therefore, the stock price of the coffee chain fell by more than 12% in post market trading.
In order to boost sales, Starbucks has tried a series of new strategies, including afternoon promotions and launching new products such as lavender lattes, but the results showed that these measures did not significantly improve performance. In addition, the company's same store sales in North America have decreased by 3%, and customer traffic and ticket prices have also shown varying degrees of decline.
In terms of international business, Starbucks also faces challenges, especially in the Chinese market, where same store sales have significantly decreased by 11%. Narasimhan explained this trend during a conference call, pointing out that it is mainly influenced by occasional customer reductions, changes in holiday patterns, and the normalization of customer behavior after the market reopened last year.
Given the aforementioned challenges, Starbucks has revised its growth forecast for 2024 for the third time. The company now expects global revenue growth to be in low single digits, far below the previous forecast range of 7% to 10%. Meanwhile, global and US same store sales are expected to experience a low single digit decline or remain stable, while the same store sales in the Chinese market are expected to experience a single digit decline.
Compared to previous Wall Street estimates, Starbucks' adjusted earnings per share, revenue, and same store sales growth, among other key indicators, did not meet expectations.
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