Starbucks Corporation has halted its fiscal year 2025 financial guidance after releasing unexpected results for 2024 that revealed a decline in revenue and a drop in quarterly earnings.

The world's largest coffee chain reported disappointing financial results for the fourth quarter and full fiscal year 2024, with a global sales slump leading to a 7% decline in global comparable store sales for the quarter and a 2% decline for the entire year.

The preliminary results, released more than a week earlier than expected, mark the first under the leadership of new CEO Brian Niccol, who took the helm last month.

The company said: "Given the company’s CEO transition coupled with the current state of the business, guidance will be suspended for the full fiscal year 2025. This will allow ample opportunity to complete an assessment of the business and solidify key strategies, while stabilising and positioning the business for long-term growth."

The company’s Q4 revenues dropped 3% to $9.1 billion, with US sales particularly affected by a 6% decline in comparable store sales, driven by a 10% drop in transactions. The decline in US sales was attributed to increased customer dissatisfaction, as efforts to expand product offerings and ramp up promotions failed to draw more traffic.

In China, comparable sales fell by 14%, as both average ticket size and transaction volume plummeted under the weight of intensified competition and a soft macroeconomic environment ​that impacted consumer spending.

In a video released on Tuesday, 22 November, Niccol said: "I've heard from some customers that we've drifted from our core, that we've made it harder to be a customer than it should be, and that we've stopped communicating with them. As a result, some are visiting less often, and I think today's results tell that same story."

He added that the company needed to "fundamentally change" its recent strategy to return to growth. He detailed plans to simplify the "overly complex" menu, adjust the pricing structure and modify the mobile ordering and payment system to prevent it from overwhelming the café experience.

Rachel Ruggeri, Starbucks' chief financial officer, commented: “Despite our heightened investments, we were unable to change the trajectory of our traffic decline, resulting in pressures in both our top-line and bottom-line. While our efficiency efforts continued to produce according to plan, they were not enough to outpace the impact of the decline in traffic."

"We are developing a plan to turn around our business, but it will take time. We want to amplify our confidence in the business, and provide some certainty as we drive our turnaround. For that reason, we have increased our dividend."

Niccol concluded: “Our fourth quarter performance makes it clear that we need to fundamentally change our strategy so we can get back to growth and that's exactly what we are doing with our ‘Back to Starbucks’ plan. I’ve spent my first several weeks in stores engaging with and listening to feedback from our partners and customers."

"We need to focus on what has always set us apart – a welcoming coffeehouse where people gather and where we serve the finest coffee, handcrafted by our skilled baristas."

The company is set to announce its actual fourth-quarter and full fiscal year 2024 financial results on Wednesday, 30 October 2024.

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