So, like, there was this dude walking down the street in Sacramento, California, right? And get this, he’s holding a Starbucks cup. I mean, who would’ve thought? It’s April 28, 2025, and this guy is just strolling along sipping on his coffee like it’s no big deal. Classic Sacramento move, if you ask me.
Anyway, turns out Starbucks had some not-so-great news to share on Tuesday. Their earnings were lower than expected, and their same-store sales were down again. But hey, they’re not giving up just yet. CEO Brian Niccol says their “Back to Starbucks” plan is starting to pay off, even if the numbers don’t show it yet. They’re trying out new things, making changes, you know, the usual corporate stuff.
One of the changes they’re making is dialing back on automating coffee-making. Instead, they’re putting more money into labor, which kinda hurt their earnings this quarter. But Niccol says not to worry about that for now. He’s more focused on the bigger picture, whatever that means.
But hold up, there’s more. The company is facing some external challenges too. Thanks to President Trump’s tariffs, there could be some issues with coffee bean prices. And since Starbucks spends a chunk of change on green coffee beans, well, you do the math. CFO Cathy Smith is keeping an eye on the situation, trying to soften the blow, you know?
After all this drama, Starbucks’ shares dropped 6% after hours. Ouch. Wall Street was expecting earnings of 49 cents per share, but Starbucks only delivered 41 cents. Revenue wasn’t too hot either, coming in at $8.76 billion instead of the expected $8.82 billion. Tough break, Starbucks.
The company’s net income took a hit too, dropping to $384.2 million from $772.4 million the year before. Operating margin? Down to 6.9% from 12.8%. Looks like Starbucks is spending more to get back on track. Labor costs are up, but equipment costs are down. They’re cutting back on fancy gadgets and focusing on the basics. Can’t argue with that logic, I guess.
To drum up more business, Starbucks is running more promos outside the U.S. to get people in the door. They’re also streamlining their corporate structure to save a few bucks. The company earned 41 cents per share after excluding restructuring costs.
But here’s the kicker: same-store sales fell for the fifth quarter in a row. Yikes. People in the U.S. and China are looking for cheaper coffee options, which isn’t great news for Starbucks. Niccol is trying to turn things around by getting “back to Starbucks” and focusing on what matters most: coffee and the customer experience.
Despite all the effort, global same-store sales were still down 1% in the second quarter. Transactions were down too, especially in the U.S. where they fell by 4%. China didn’t fare much better, with flat same-store sales for the quarter. Looks like Starbucks has some work to do to win back customers.
Looking ahead, Starbucks plans to spruce up its cafes with better seating and some “premium touches.” They’re also revamping their innovation process and tweaking the way they serve customers. Niccol wants to speed up service and make sure every order is out the door in four minutes or less. Talk about fast food, am I right?
So, yeah, Starbucks is going through some rough patches. But hey, they’re not giving up just yet. With a few changes here and there, maybe they’ll bounce back. Or maybe not. Who knows? It’s all just coffee at the end of the day.
