Starbucks (SBUX) posted preliminary fourth-quarter results that shocked the Street Tuesday afternoon.
The company reported quarterly revenue down 3% year over year to $9.1 billion, while earnings per share fell 24% to $0.80.
Starbucks also suspended its full-year 2025 guidance, citing the transition to new CEO Brian Niccol and to allow time for a new strategy. Shares quickly fell 3% in aftermarket trading.
U.S. same-store sales fell 6% year-over-year in the fourth quarter, with a 10% decline in visitors and a 4% increase in average ticket.
The much talked about in-app promotions and offers haven’t changed anything. The company’s pairing menu, which offered U.S. customers a small coffee with a croissant or a breakfast sandwich for $5 or $6, “did not improve customer behavior,” the release said.
Starbucks China same-store sales fell 14%, with a 6% decline in footfall and an 8% decline in average ticket size. The company attributed the performance to “heavier competition and a soft macro environment that impacted consumer spending.”
Ahead of the report, Starbucks shares were up 3% so far this year, but up 10% over the past six months, as investors grew optimistic about former Chipotle ( CMG ) CEO Niccol taking over. The company still plans to release its official fourth quarter and full fiscal 2024 financial results after the market closes on October 30.
The number shows the long road ahead for Niccol as he tries to get Starbucks back on track. He has engineered a management shake-up, including appointing longtime girlfriend Tressie Lieberman as Global Chief Brand Officer. Liberman will start on November 4 after her most recent role as Yahoo CMO.
In a video posted to Starbucks’ site, Niccol re-emphasized some of the key issues he had outlined in a letter during his first week, including the need to simplify the menu, adjust prices and value perception and reduce recurring build customers.
“We’re fundamentally changing our marketing. We’ve focused on Starbucks Rewards customers, instead of talking to all of our customers. We’re changing quickly, as you’ve probably seen,” said Niccol, known in his career for his marketing expertise.
“I believe our problems are highly solvable and that we have significant strengths to build on. “I have spent my career understanding, managing and building brands, and it is clear that the Starbucks brand is strong and enduring,” he added.
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Brooke DiPalma is a senior reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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