Weak Sales and Staffing Issues Hit Starbucks During Pumpkin Spice Launch

Associated Press
October 23, 2024 | 12:06 pm
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A Starbucks location is seen Tuesday, April 26, 2022, in Havertown, the United States. (AP Photo/Matt Rourke)
A Starbucks location is seen Tuesday, April 26, 2022, in Havertown, the United States. (AP Photo/Matt Rourke)

Seattle. Starbucks is off to a disappointing start this Pumpkin Spice Latte season. The Seattle-based coffee chain announced on Tuesday that it experienced weaker-than-expected sales during its fiscal fourth quarter, which ended on Sept. 29.

The company also decided to suspend financial guidance for its 2025 fiscal year, allowing new Chairman and CEO Brian Niccol to evaluate the business.

The company reported a 3 percent decline in revenue to $9.1 billion for the July-September quarter, falling short of Wall Street’s expectation of $9.4 billion, according to analysts surveyed by FactSet. Additionally, adjusted earnings dropped 24.5 percent compared to the same period last year, reaching 80 cents per share—also below the forecast of $1.03 per share.

These results are preliminary; full financial details for the July-September period and a conference call with investors are scheduled for October 30.

In the US, customer traffic has been sluggish, with same-store sales declining by 6 percent—a measure of sales at locations open for at least a year. Despite introducing expanded fall product offerings, such as the Iced Apple Crisp Nondairy Cream Chai and running more frequent in-app promotions, the company did not see an increase in visits. The Pumpkin Spice Latte, which typically boosts traffic when it returns, has also failed to make a significant impact this year.

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In China, same-store sales dropped 14 percent, attributed to consumers cutting back on spending or opting for less expensive competitors.

In a video message, Niccol, a former Chipotle CEO who joined Starbucks last month, remarked that the company’s challenges are “very fixable” and that it possesses substantial strengths to build upon.

He emphasized the need to enhance staffing, streamline operations for baristas—particularly during peak morning hours—and refine mobile ordering to avoid overwhelming the café experience. Niccol also noted the necessity to simplify what he described as an “overly complex menu.”

Starbucks plans to shift its marketing strategy to focus less on its Rewards program and more on promoting its handcrafted drinks and coffee innovations.

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