Starbucks updates 2024 forecast following significant Q2 earnings shortfall

Starbucks (SBUX) is facing a challenging quarter as the coffee giant missed expectations across the board for its Q2 earnings. The company reported lower than expected revenue, earnings, and same store sales growth, leading to a 2% drop in revenue year over year to $8.6 billion. Adjusted earnings per share also fell by 8% to $0.68.

CEO Laxman Narasimhan described the current environment as “highly challenged,” citing macro headwinds and pressures that consumers are facing. Global same-store sales declined by 4%, with transactions dropping by 6%, although there was a 2% increase in average ticket size.

Shares of Starbucks plummeted more than 12% in after-hours trading following the disappointing earnings report. The company attempted to attract customers with new offerings like Lavender Lattes, but these menu innovations did not have a significant impact on sales.

In an effort to improve performance, Starbucks plans to add new promotions to its app and invest in its supply chain to enhance product availability and speed of service. The company also announced new products like boba tea-like pearls, zero to low calorie energy drinks, and more sugar-free syrups.

Despite the challenges, Starbucks remains optimistic about its future outlook. The company revised its 2024 guidance, expecting low single-digit global revenue growth and a low single-digit decline to flat in global and U.S. same-store sales. However, China saw the biggest drop in same-store sales, with a decline of 11%.

Overall, Starbucks is facing headwinds in the current market environment, but the company is taking steps to address these challenges and drive future growth.