Starbucks Corp. reported mixed results for its fiscal second quarter ended March 30, as global same store sales declined by 1 percent due to a 2 percent drop in transactions. This was partially offset by a 1 percent rise in the average ticket size.
In North America, comparable store sales also slipped by 1 percent. A 4 percent decrease in transactions was partly mitigated by a 3 percent increase in ticket value. U.S. sales mirrored the trend, falling 2 percent due to fewer transactions despite higher per-visit spending.
International operations fared better. Comparable sales grew 2 percent, supported by a 3 percent uptick in transactions, though average ticket size declined by 1 percent. In China, sales remained flat, with a 4 percent increase in transactions offset by a 4 percent drop in ticket value.
The company added 213 net new stores, bringing its global footprint to 40,789 stores—53 percent company-operated and 47 percent licensed. The U.S. and China together now represent 61 percent of Starbucks’ global presence, with 17,122 and 7,758 stores, respectively.
Revenue rose 2 percent year-over-year to USD8.8 billion, or 3 percent on a constant currency basis. However, GAAP operating margin fell 590 basis points to 6.9 percent, weighed down by higher labor costs and restructuring related to the “Back to Starbucks” plan. Non-GAAP operating margin declined 460 basis points to 8.2 percent.
“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,” said Brian Niccol, chairman and chief executive officer.
“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,” he added.
“While our financial results are far from Starbucks potential, we are working to build back a better business,” said Cathy Smith, chief financial officer. “We are developing new muscles to test, iterate and scale quickly, in service of long-term, durable growth and strong returns on invested capital,” she added.07:26 AM
