(Reuters) -Starbucks Corp has suspended its full-year forecasts as new CEO Brian Niccol looks to turn around the coffee giant’s struggle to rein in sagging customer demand, sending its shares down about 4% in after-hours trading on Tuesday.
The coffee chain also expects a decline in turnover and profit in the fourth quarter.
Niccol, who led a successful revival at Chipotle Mexican Grill, took over from Laxman Narasimhan on September 9, at a time when the coffee chain was struggling to address weakness in two of its top markets, the US and China .
Starbucks needs to “fundamentally change” its recent strategy, Niccol said in a video released alongside Starbucks’ preliminary results.
“We will simplify our overly complex menu, improve our pricing architecture and ensure every customer feels like Starbucks is worth it every time they visit.”
The company expects comparable sales to decline 6% in the fourth quarter as in-app promotions did not help attract customers to its stores. Sales in China are expected to decline by 14%.
“Despite our increased investments, we were unable to change the trajectory of the visitor traffic decline, resulting in pressure on both our revenue and bottom line,” said Chief Financial Officer Rachel Ruggeri.
“We are developing a plan to turn our business around, but that will take time.”
Niccol has outlined its plan for the first 100 days, focused on improving the customer experience in its US stores
He faces several challenges at the coffee giant, which is under pressure from activist investors to improve its operations and has suffered from increased competition and weakening demand in the United States and China.
Starbucks said it was suspending its annual guidance for the year ending September 2025 due to the CEO transition combined with the “current state of affairs.”
(Reporting by Aishwarya Venugopal in Bengaluru; Editing by Tasim Zahid and Sriraj Kalluvila)
