Starbucks faces global sales dip in July-September quarter

By Al Mayadeen English
Source: News websites
25 Oct 2024 08:29

Starbucks has recently reported a 7% drop in global sales for the July-September period, continuing its downward trend for the third consecutive quarter.

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Starbucks sign hangs outside a casino along Main Street, Wednesday, September 20, 2023, in Deadwood, S.D. (AP)

Starbucks reported a seven percent decline in global sales for the July-September period on Wednesday, marking its third consecutive quarter of shrinking sales, as per Anadolu.

For the full fiscal year ending on 29 September, the company’s global comparable store sales dropped by 2 percent.

Earnings per share decreased by 25 percent year-over-year, falling to 80 cents, while consolidated net revenues dipped 3 percent to $9.1 billion.

Newly appointed CEO Brian Niccol acknowledged the need for a "fundamental change" within the company as Starbucks suspended its annual forecast for the upcoming fiscal year. In a press release, Starbucks cited a significant drop in customer traffic, a cautious consumer climate, and underperforming investments as key reasons for the lower-than-expected results.

Additionally, challenges in China’s economic and competitive landscape have added further pressure on the company’s performance.

Chief Financial Officer Rachel Ruggeri mentioned that despite increased investment, the coffee chain saw no significant improvement in customer traffic.

Why it matters

Starbucks has also been affected because of the recent global call to boycott brands and franchises that directly or indirectly benefit "Israel" economically. The Starbucks employee union was transparent in its support for Palestine, as "Israel" launched a genocide in Gaza in October, and took the opportunity to demand better work conditions, including scheduling and the freedom to negotiate contracts. Since then, employee strikes have been consistent.

The company lowered its annual sales outlook for the October-December period last year, citing sales drops in the Middle East. Revenue fell 2 percent in the January-March period, while global sales dropped 4 percent, the first decline since 2020. Global sales also decreased by 3 percent in the April-June quarter.