Starbucks reports disappointing Q2 results, shares fall in after-hours trading

Starbucks (SBUX) is facing a bitter brew this quarter as the coffee giant missed expectations across the board in its Q2 earnings report. The company posted lower than expected revenue, earnings, and same store sales growth, signaling a challenging environment for the iconic brand.

CEO Laxman Narasimhan acknowledged the disappointing results, attributing them to a decrease in customer visits and order sizes. This marks Starbucks’ first quarterly sales decline since the onset of the COVID-19 pandemic in 2020.

Global same-store sales dropped 4% year over year, with a 6% decrease in transactions partially offset by a 2% increase in average ticket size. In the US and China, two key markets for the company, same-store sales declined by 3% and 6% respectively.

Shares of Starbucks plummeted more than 10% in after-hours trading following the earnings release. The company’s attempts to attract customers with new offerings like Lavender Lattes and Spicy Refreshers did not have the desired impact.

In addition to the challenges in its core markets, Starbucks also faced headwinds from conflict in the Middle East, which affected its performance. Despite the setbacks, CFO Rachel Ruggeri expressed confidence in the company’s ability to rebound, citing a comprehensive roadmap of actions to drive future growth.

Investors will be eagerly awaiting the company’s outlook for 2024, which will be shared in an upcoming conference call. With revised expectations for revenue and same-store sales growth, Starbucks is looking to regain its footing in the competitive coffee market.