Shares of Starbucks (SBUX -7.02%) were heading lower today as the coffee chain reported disappointing results in its fiscal second-quarter earnings report last evening, though management said it continued to make progress in its turnaround strategy.As of 11:30 a.m. ET, the stock was down 7%. Starbucks' struggles continueComparable sales declined 1% in the quarter with transactions down 2% and a 1% increase in average ticket. Comparable sales were down 1% in North America, but up 2% in international markets, ...

Starbucks will scale back its automation plans and hire thousands of baristas in a significant shift aimed at winning back customers, CEO Brian Niccol announced Tuesday, as the coffee chain grapples with falling sales and a challenging consumer environment.Niccol, who took the helm of Starbucks in September 2024, acknowledged that previous efforts to cut labor costs by leaning heavily on technology had fallen short.“Over the last couple of years, we’ve actually been removing labor from the stores,” he told ...

Starbucks Corporation (SBUX) reported second-quarter fiscal 2025 results, with earnings and net revenues missing the Zacks Consensus Estimate. The top line increased year over year, while the bottom line declined from the prior-year quarter’s figure.Following the results, SBUX stock declined 6.4% in Tuesday’s after-hours trading session. Negative investor sentiments were witnessed as the company delivered underwhelming earnings performance, reflecting expense deleverage and heightened store investments.Mana ...

Financial Data and Key Metrics Changes - Total company revenue for Q2 FY2025 was $8.8 billion, reflecting a 3% increase in constant currency compared to the prior year, despite a 1% decline in comparable store sales [37][30] - Earnings per share (EPS) was $0.41, down 38% from the prior year, primarily due to expense deleverage and increased store investments [45][30] - Global operating margin contracted by 450 basis points to 8.2%, driven by labor investments and deleverage [43][30] Business Line Data and Key Metrics Changes - North America experienced a 2% decline in comparable store sales, with transaction declines improving to negative 4% [38][30] - Canada reported positive comparable store sales and transaction growth, with food sales up 12.5% [40][30] - China's comparable store sales were flat, but positive transactions and expanding margins were noted [41][30] Market Data and Key Metrics Changes - Eight of the top ten international markets returned to flat or positive comparable sales growth [27][30] - The UK and Middle East reported positive transaction comps, while Japan achieved its sixteenth consecutive quarter of comp growth [28][30] - In the U.S., market share, brand sentiment, and customer contacts regarding wait times are improving [38][30] Company Strategy and Development Direction - The "Back to Starbucks" strategy focuses on customer experience, partner engagement, and operational improvements [4][5] - Investments are being made in labor rather than equipment to enhance service speed and customer connection [19][60] - The company aims to reclaim its coffeehouse heritage and improve store designs to foster community connections [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround strategy, noting early indicators of recovery in North America and positive signs in Canada [9][30] - The company is committed to building a resilient business that can thrive in various economic environments [6][30] - Future growth is expected to be driven by improved customer experiences and operational efficiencies [31][30] Other Important Information - The company is evaluating its store portfolio and new store pipeline to ensure better unit economics [42][30] - A focus on reducing new store build costs is underway to enhance returns [42][30] - The company is committed to transparency throughout the turnaround process [36][30] Q&A Session Summary Question: Follow-up on labor investment and CapEx - Management confirmed that the focus is on labor investment rather than equipment, which allows for quicker improvements in service speed and throughput [51][53] Question: Margin concerns and labor investments - Management acknowledged that while labor investments have impacted margins, they are essential for improving customer experience and driving transaction growth [57][60] Question: Evaluation of the store portfolio - Management indicated that they are slowing down new builds to reset renovation and build costs, aiming for a more efficient growth strategy [64][66] Question: Menu simplification impact - Management noted that simplifying the menu has led to improved transaction comps, with a significant increase in stores reporting positive sales [68][70] Question: Resilience in a challenging macro environment - Management emphasized the importance of creating a strong third place experience to maintain customer traffic, even in economic downturns [75][76] Question: Mobile order sequencing pilot results - Early results from the mobile order sequencing pilot show improved service times and enhanced partner-customer connections [79][81] Question: Return on Invested Capital (ROIC) focus - Management highlighted the importance of durable growth and good returns on invested capital, indicating a shift in focus towards these metrics [84][86]

STARBUCKS Q2 FY25 - EARNINGS AT A GLANCE "My optimism has turned into confidence that our 'Back to Starbucks' plan is the right strategy to turn the business around and to unlock opportunities ahead. Improving transaction comp in a tough consumer environment at our scale is a testament to the power of our brand and partners getting 'Back to Starbucks.' We are on track and if anything, I see more opportunity than I imagined." - Brian Niccol, chairman and ceo GLOBAL NET REVENUE 1 74% 21% 5% NORTH AMERICA INTE ...

Core Viewpoint - Starbucks reported quarterly earnings of $0.41 per share, missing the Zacks Consensus Estimate of $0.49 per share, and down from $0.68 per share a year ago, indicating an earnings surprise of -16.33% [1][2] Financial Performance - The company posted revenues of $8.76 billion for the quarter ended March 2025, missing the Zacks Consensus Estimate by 0.31%, but up from $8.56 billion year-over-year [2] - Over the last four quarters, Starbucks has surpassed consensus EPS estimates only once [2] Stock Performance - Starbucks shares have declined approximately 8.1% since the beginning of the year, compared to a -6% decline in the S&P 500 [3] - The current Zacks Rank for Starbucks is 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.87 on revenues of $9.51 billion, and for the current fiscal year, it is $2.92 on revenues of $37.25 billion [7] - The trend of estimate revisions for Starbucks is mixed, which could change following the recent earnings report [6] Industry Context - The Retail - Restaurants industry, to which Starbucks belongs, is currently in the bottom 19% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Core Insights - Starbucks' second-quarter results were slightly below expectations, with CEO Brian Niccol expressing optimism about the company's turnaround efforts [1][3] - The company is implementing a 'Back to Starbucks' plan, which includes various operational changes aimed at improving customer experience and efficiency [2] Financial Performance - Global comparable sales decreased by 1%, which was worse than the expected decline of 0.59% [3] - In the US, comparable sales fell by 2%, compared to the consensus estimate of a 0.26% decline [3] - Net revenue for the quarter was reported at $8.8 billion, slightly below the Bloomberg estimate of $8.83 billion [3] Operational Changes - Changes implemented since Niccol became CEO include new store furniture and an order sequencing algorithm to enhance service efficiency [2] - Initiatives aimed at improving customer experience include requiring employees to write messages on to-go cups and allowing customers to add milk to their drinks themselves [4]

Company Overview - Proactive is a financial news publisher that provides fast, accessible, informative, and actionable business and finance news content to a global investment audience [2] - The company has a team of experienced and qualified news journalists who produce independent content [2] Market Focus - Proactive specializes in medium and small-cap markets while also covering blue-chip companies, commodities, and broader investment stories [3] - The news team delivers insights across various sectors including biotech and pharma, mining and natural resources, battery metals, oil and gas, crypto, and emerging digital and EV technologies [3] Technology Adoption - Proactive is recognized for its forward-looking approach and enthusiastic adoption of technology to enhance workflows [4] - The company utilizes automation and software tools, including generative AI, while ensuring that all content is edited and authored by humans [5]

Financial Performance - Total net revenues for the quarter ended March 30, 2025, were $8,761.6 million, an increase of 2.3% compared to $8,563.0 million for the same quarter in 2024[10]. - Net earnings attributable to Starbucks for the quarter were $384.2 million, down 50.2% from $772.4 million in the same quarter last year[10]. - Earnings per share (EPS) - diluted for the quarter was $0.34, a decrease of 50% compared to $0.68 in the prior year[10]. - Operating income for the quarter was $601.0 million, a decline of 45.3% from $1,098.9 million in the same quarter of 2024[10]. - Total operating expenses increased to $8,219.7 million, up 9.2% from $7,532.1 million in the same quarter last year[10]. - Comprehensive income attributable to Starbucks for the quarter was $438.8 million, down from $708.8 million in the same quarter last year[13]. - Cash provided by operating activities was $2,364.0 million, down from $2,889.9 million year-over-year, reflecting a decrease of 18.2%[17]. - Net earnings for the quarter ended March 30, 2025, were $1,165.1 million, a decrease of 35.0% compared to $1,796.9 million for the same period in 2024[17]. - Store operating expenses for the quarter ended March 30, 2025, totaled $4,176.0 million, up from $3,724.1 million in the same quarter of the previous year[55]. - The effective tax rate for Q2 fiscal 2025 was 23.5%, up from 22.2% in the same period of fiscal 2024, primarily due to the lapping of a prior tax benefit[118]. Assets and Liabilities - Current liabilities as of March 30, 2025, totaled $10,429.3 million, an increase from $9,070.0 million as of September 29, 2024[15]. - Total assets as of March 30, 2025, were $31,633.1 million, compared to $31,339.3 million as of September 29, 2024[15]. - Cash and cash equivalents decreased to $2,671.4 million from $3,286.2 million as of September 29, 2024[15]. - The balance of retained earnings as of March 30, 2025, was $(7,565.5) million, compared to $(7,970.7) million as of March 31, 2024, indicating an improvement in retained earnings[20]. - Total long-term debt amounted to $15.7 billion, with an estimated fair value of $14.2 billion as of March 30, 2025[67]. Cash Flow and Investments - Net cash used in investing activities was $1,499.2 million, an increase of 18.6% from $1,264.0 million in the prior year[17]. - Net cash used in financing activities decreased to $1,421.3 million from $2,423.6 million in the same quarter last year, a reduction of 41.4%[17]. - Cash dividends paid during the quarter totaled $1,384.9 million, compared to $1,293.5 million in the same quarter last year, marking an increase of 7.1%[17]. - Cash and investments were $3.2 billion as of March 30, 2025, down from $3.8 billion as of September 29, 2024[145]. - Approximately $2.0 billion of cash and short-term investments were held in foreign subsidiaries as of March 30, 2025[145]. Store Operations and Market Performance - Starbucks operated over 40,700 stores as of March 30, 2025, representing a 5% increase from the prior year[92]. - Global comparable store sales declined by 1% in the quarter, with a 2% decline in the U.S. market and a 2% improvement internationally[96]. - Beverage sales accounted for 60% of total revenue, amounting to $5,293.6 million, while food sales contributed 19% with $1,691.9 million[83]. - North America total net revenues for Q2 fiscal 2025 increased by $93 million, or 1%, driven by a 5% growth in company-operated stores (504 stores) and partially offset by a 1% decrease in comparable store sales ($70 million)[123]. - International total net revenues for Q2 fiscal 2025 increased by $110 million, or 6%, primarily due to an 8% growth in company-operated stores (779 stores) and higher product sales and royalty revenues[128]. Strategic Initiatives and Future Outlook - Starbucks plans to adopt new segment disclosure requirements for the fiscal year ending September 28, 2025, which may enhance transparency in segment performance[31]. - The company plans to focus on new store returns and enhancing the coffeehouse experience while reducing new store build costs[97]. - Starbucks aims to navigate challenges in the macroeconomic environment, including tariffs and volatile coffee prices, while continuing to invest in its "Back to Starbucks" strategy[97]. - The company expects to utilize available cash and investments, including potential future borrowings, to support core businesses, repay debts, and return cash to shareholders through dividends and share repurchases[154]. - The company is currently not aware of any trends or uncertainties that would materially impact liquidity or capital needs over the next 12 months[155]. Restructuring and Expenses - The company reported a restructuring expense of $116.2 million for the quarter, which was not present in the same quarter of the previous year[10]. - The company recognized stock-based compensation expenses of $178.3 million, slightly up from $173.0 million year-over-year[17]. - The company recognized pre-tax restructuring charges of $116.2 million during the quarter, primarily related to partner severance costs[86]. - Corporate and Other operating loss increased 12% to $558 million for the second quarter of fiscal 2025, largely due to restructuring costs associated with the "Back to Starbucks" strategy[143]. Derivative Financial Instruments - The company has entered into various derivative financial instruments to hedge against interest rate and foreign currency fluctuations, impacting cash flow management[36]. - As of March 30, 2025, the company reported net losses of $2.1 million from interest rate hedges, reflecting market volatility[45]. - The fair value of derivative assets totaled $271.7 million, with $51.2 million classified as prepaid expenses and other current assets as of March 30, 2025[48]. - The company recognized losses of $2.8 million from non-designated derivatives related to foreign currency for the quarter ended March 30, 2025[46].

Financial Performance - Q2 consolidated net revenues increased by 2% to $8.8 billion, or a 3% increase on a constant currency basis[2] - GAAP earnings per share (EPS) of $0.34 declined by 50% year-over-year, while non-GAAP EPS of $0.41 declined by 40% year-over-year[6] - Net earnings attributable to Starbucks decreased by 50.3% to $384.2 million compared to $772.4 million in the prior year[23] - Operating income fell by 45.3% to $601.0 million from $1,098.9 million in the same quarter last year[23] - For the two quarters ended March 30, 2025, total net revenues were $18,159.4 million, a 1.0% increase from $17,988.3 million in the prior year[24] - Net earnings attributable to Starbucks for the two quarters decreased by 35.2% to $1,165.0 million from $1,796.8 million year-over-year[24] - Operating income in North America decreased by 34.8% to $748.3 million compared to $1,148.3 million in the same quarter last year[25] - Operating income for the International segment decreased by 7.2% to $217.0 million, down from $233.8 million in the same quarter last year[26] - Operating income for Channel Development fell by 10.5% to $193.5 million, down from $216.3 million year-over-year[27] - Total operating expenses for Corporate and Other increased by 12.5% to $570.6 million, up from $507.0 million in the previous year[28] Revenue Breakdown - Global comparable store sales decreased by 1%, with North America down 1% and international sales up 2%[6] - North America segment net revenues increased by 1% to $6.5 billion, driven by a 5% growth in company-operated store count[7] - International segment net revenues rose by 6% to $1.9 billion, supported by an 8% increase in company-operated store count and a 2% increase in comparable store sales[8] - Channel Development segment net revenues declined by 2% to $409 million, primarily due to a decrease in revenue from the Global Coffee Alliance[10] - Total net revenues for the quarter ended March 30, 2025, were $8,761.6 million, a 2.3% increase from $8,563.0 million in the same quarter of 2024[23] - Company-operated stores generated $7,285.0 million in revenues, up 3.3% from $7,052.6 million year-over-year, accounting for 83.1% of total net revenues[23] - Total net revenues for the International segment increased by 6.2% to $1,867.1 million in Q1 2025, compared to $1,757.3 million in Q1 2024[26] - Net revenues for Channel Development decreased by 2.2% to $409.0 million in Q1 2025, compared to $418.2 million in Q1 2024[27] Store Operations - The company opened 213 net new stores in Q2, bringing the total to 40,789 stores globally[6] - The total number of stores increased to 40,789 as of March 30, 2025, up from 38,951 as of March 31, 2024, reflecting a growth of 4%[37] - The company opened 213 new stores in the quarter, while closing 364 stores, resulting in a net decrease of 151 stores[37] Dividends and Cash Flow - The company declared a cash dividend of $0.61 per share, marking 60 consecutive quarters of dividend payouts[17] - Cash dividends declared per share increased to $0.61 from $0.57 in the prior year[23] - The company incurred $1,384.9 million in cash dividends paid, an increase from $1,293.5 million in the prior year[32] - Cash provided by operating activities was $2,364.0 million, down from $2,889.9 million in the previous year[32] - Net cash used in investing activities was $1,499.2 million, compared to $1,264.0 million in the same period last year[32] Operational Efficiency and Strategy - The "Back to Starbucks" strategy is expected to drive long-term growth and improve operational efficiency[4] - Store operating expenses increased by 12.1% to $4,176.0 million, representing 47.7% of total net revenues[23] - Current liabilities increased to $10,429.3 million from $9,070.0 million year-over-year[30] - The company reported a retained deficit of $7,565.5 million as of March 30, 2025, compared to $7,343.8 million in the previous year[30] - Total liabilities rose to $39,248.5 million from $38,780.9 million year-over-year[30] Assets and Financial Position - Total assets as of March 30, 2025, amounted to $31,633.1 million, a slight increase from $31,339.3 million as of September 29, 2024[30]