Starbucks reports 3% revenue decline in Q4 2024 amid decreased global sales, traffic pressures

USA – Global coffee chain Starbucks has reported a 3 percent drop in consolidated net revenues for the fourth quarter of fiscal year 2024, amounting to US$9.1 billion.  

The company attributed the decline primarily to weaker sales in North America, specifically in the United States, and continued pressures from the Chinese market. 

Global comparable store sales fell by 7 percent, with U.S. comparable store sales declining by 6 percent, driven by a 10 percent reduction in customer transactions. 

Starbucks revealed that despite implementing a range of new product offerings, frequent in-app promotions, and enhanced integrated marketing efforts, it failed to improve customer traffic in the U.S. market.  

Both Starbucks Rewards (SR) members and non-SR customers showed reduced engagement. 

Rachel Ruggeri, Starbucks’ Chief Financial Officer, acknowledged the company’s challenges, stating, “Despite our heightened investments, we were unable to change the trajectory of our traffic decline, resulting in pressures in both our top-line and bottom-line.”  

She added that while the company’s efficiency measures were on track, they were insufficient to counteract the declining foot traffic. 

In addition to struggles in North America, Starbucks experienced a significant drop in sales in China, where comparable store sales fell by 14 percent.  

The company attributed this decline to an 8 percent decrease in the average ticket size, coupled with a 6 percent decline in transactions. 

For the full fiscal year 2024, Starbucks reported a modest 1 percent increase in consolidated net revenues to US$36.2 billion, although global comparable store sales decreased by 2 percent.  

The company cited a cautious consumer environment, traffic declines, and intensifying competition in China as contributing factors to its lower-than-expected performance. 

In response to these challenges, Starbucks CEO Brian Niccol announced that the company would suspend its financial guidance for fiscal year 2025 to allow time for a thorough reassessment of the business and a revamp of its growth strategies.  

Niccol emphasized the need for a shift in approach, stating, “Our fourth quarter performance makes it clear that we need to fundamentally change our strategy so we can get back to growth.” 

Starbucks will release its full financial results for the fourth quarter and fiscal year 2024 on October 30, 2024. 

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