What once started as a small coffee shop on the cobblestone streets of Seattle's Pike Place Market in 1971 has become the coffee giant we know today as Starbucks.
From its unique green and white double-tailed siren logo to its unmistakable coffee smell, Starbucks is the most popular and largest coffee shop globally, with 39,477 stores worldwide as of June 30.
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Whether you're a plain black coffee drinker or a sugary frappuccino lover, Starbucks has been people's go-to coffee shop for decades.
However, the company has been experiencing some tumultuous times recently that could threaten its future.
Starbucks CEO dedicates a letter to the business
In an open letter dedicated to all partners, customers, and stakeholders, the new Starbucks CEO, Brian Niccol, stated his plan to return Starbucks (SBUX) to the hyper-successful company it once was.
Niccol said he plans to get the company back on track by addressing two main aspects of its business: its beloved community and customer experience.
Related: Analysts revise Starbucks stock price target after preliminary results
He wants to make all customers feel prioritized, not just Starbucks rewards members, and wants to ensure drinks are handed directly to customers for a more personal approach.
Although Starbucks' secret menu drinks have gone viral on every popular social media platform for the past decade, he wants to simplify the company's overly complex menu to make it less overwhelming, make the product more consistent, and reduce waiting times by increasing the efficiency of the crafting process.
Starbucks releases its preliminary results, and things aren't looking up
On Tuesday, nearly two months after Niccol began his reign as Starbucks' new CEO, the company dropped the preliminary results for its fourth quarter and full fiscal year of 2024, and they look just as bad as burnt coffee tastes.
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As stated in the earnings report, Starbucks' preliminary net sales decreased by 3% compared to last year, and same-store sales fell by 7%, marking the third consecutive negative quarter and its lowest drop since the pandemic.
Quarterly earnings per share (EPS) declined by 25% to $0.80, which was below analysts' average expected EPS of $0.94.
Starbucks' North American market isn't doing so well either. It reports a 10% decline in in-store traffic and a 6% fall in same-store sales compared to the year prior.
However, China, the company's second-largest market, reported an even steeper decline of 14% in same-store sales.
“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. While our efficiency efforts continued to produce according to plan, they were not enough to outpace the impact of the decline in traffic,” said Starbucks' CFO Rachel Ruggeri.
Related: Starbucks is scaling back a privilege customers love
Starbucks makes a startling announcement that shocks investors
In its preliminary results, Starbucks startled investors by announcing that it would suspend its outlook for its full fiscal year 2026 due to the recent transition of the company’s new CEO and the current state of the business.
The suspension would allow the company to reanalyze its turnaround plan, assess the business, solidify key strategies, and stabilize and position the business for long-term growth.
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Starbucks said it will share more details of its revised turnaround plan during its earnings call, scheduled for Oct. 30.
“Our fourth quarter performance makes it clear that we need to fundamentally change our strategy so we can get back to growth and that's exactly what we are doing with our ‘Back to Starbucks’ plan,” said Starbucks' CEO Brian Niccol.
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