Starbucks Corporation (NASDAQ:SBUX) reported its fiscal first-quarter earnings for the year 2025 on January 28, showcasing results which exceeded analysts' expectations, prompting the company's stock to rise in after-hours trading.
The Seattle-based coffee giant recorded earnings per share of $0.69, surpassing the consensus estimate of $0.68 by one cent. Although this figure reflects a decline of 23% compared to the $0.90 per share reported for the same quarter last year, it signals the company’s resilience amid turbulent market conditions.
Starbucks' consolidated revenues remained steady at $9.4 billion, marginally down 0.3% year-over-year but higher than the anticipated $9.32 billion, according to analysts compiled by Visible Alpha. These results reflect Starbucks’ strategic pivot, backed by new leadership under CEO Brian Niccol, who emphasized the benefits of their 'Back to Starbucks' turnaround strategy.
Comparable store sales showed a notable decline of 4% globally, primarily driven by a 6% drop in transactions, which was somewhat mitigated by a 3% increase in the average ticket price. North America, which remains Starbucks' largest market, saw sales decline by 4%, with foot traffic down by 8%. Despite the downturn, the company successfully opened 377 new stores, bringing its global total to 40,576 stores.
“While we’re only one quarter_into_ our turnaround, we’re moving quickly to act on the 'Back to Starbucks' efforts and we’ve seen a positive response,” commented Niccol, who has been leading the company since September. He elaborated on plans aimed at reinstatement of certain policies, including requiring customers to make purchases before using store facilities.
Rachel Ruggeri, the company's CFO, pointed out the commitment to shareholder value, stating, “We will continue to prioritize shareholder value through dividends.” The announcement of a quarterly cash dividend of $0.61 per share, payable on February 28, stands as proof of the company's efforts to deliver returns to its investors.
The North America segment reported revenues of $7.1 billion, reflecting slight decreases impacted by the declining comparable store sales. Operating margins contracted to 16.7%, down from 21.4% year-over-year. Factors contributing to this drop included significant investments related to the 'Back to Starbucks' strategy, including wage increases for store partners and the removal of fees for non-dairy milk customizations.
Turning to the international segment, net revenues rose by 1% to $1.9 billion, buoyed by new store growth, even as comparable sales dipped 4%. Regions such as China presented challenges, with same-store sales declining by 6%, largely due to strategic discounting to maintain competitiveness against domestic brands.
Starbucks did not provide formal guidance for the remainder of fiscal year 2025, which has led to increased speculation among investors. The company aims to closely evaluate its initiatives under the current leadership. Despite the mixed sales figures, shares managed to climb nearly 4%, reflecting investor confidence as they look toward the potential for recovery.
Investors appear optimistic as Starbucks continues to adapt and implement its strategy. The stock price had already risen 10% year-to-date through January 28, indicating some level of market confidence, which may have increased after the company announced this earnings beat.
Commenting on the performance, Niccol stated, “We believe this is the fundamental change needed to solve our underlying issues, restore confidence in our brand, and return the business to sustainable, long-term growth.” The company remains committed to engaging with stakeholders and addressing concerns as it refocuses its operations back to core strengths.
Starbucks has enjoyed significant brand loyalty, with 34.6 million active members enrolled in its Starbucks Rewards loyalty program. These members increase their engagement and spending, offering Starbucks some buffer against potential revenues challenges.
Following the figures released, Starbucks has garnered recommendations from investment analysts, many maintaining their “Moderate Buy” ratings. Morgan Stanley, for example, raised its price target for shares from $98 to $115, reaffirming the company's potential for long-term stability.
Starbucks remains committed to balancing innovative customer engagement strategies and rigorous financial management against the backdrop of shifting market dynamics.<\/p>