On January 29, 2025, Starbucks reported better-than-expected sales for its fiscal first quarter, indicating progress in its turnaround efforts. The Seattle-based coffee chain’s revenue remained flat at $9.4 billion for the 13-week period ending December 29, surpassing Wall Street’s forecast of $9.3 billion.
- Starbucks reports better-than-expected fiscal sales.
- Revenue flat at $9.4 billion for quarter.
- CEO Brian Niccol implements customer-focused changes.
- Same-store sales decline less than anticipated.
- New rule requires purchase for restroom access.
- Starbucks announces executive departures and reshuffling.
Starbucks is actively working to enhance its customer experience as part of its turnaround strategy. Chairman and CEO Brian Niccol, who joined the company in September, stated that customer-focused changes, such as eliminating extra charges for non-dairy milk and streamlining the menu, are contributing to improved service and increased store traffic. The company aims to reestablish itself as a community gathering place, introducing ceramic mugs and offering free refills of coffee or tea for in-store customers.
Despite the positive revenue report, Starbucks experienced a 4% decline in same-store sales compared to the previous year, which was less than the anticipated 5.5% drop. Notably, U.S. same-store sales also fell by 4%, with an 8% decrease in transactions, although customers are spending more per visit. The company has reduced discounts during this period, aligning its business strategy more closely with its identity as a coffee company.
In addition to the sales report, Niccol announced the departure of two senior executives and a reshuffling of responsibilities within the company. Mike Grams, previously president of Taco Bell, will take on the role of chief stores officer for North America, while Meredith Sandland, former chief development officer at Taco Bell, will become the chief store development officer at Starbucks. Niccol also mentioned plans for corporate layoffs by early March.
Starbucks’ shares rose by 3% in after-hours trading following the announcement. The company’s efforts to improve customer engagement and operational efficiency appear to be taking effect, even as it navigates challenges in same-store sales.
In summary, Starbucks reported $9.4 billion in revenue, exceeding expectations, while same-store sales declined by 4%. The company is making strategic changes under CEO Brian Niccol to enhance customer experience and streamline operations, alongside executive leadership changes.
