NEW YORK: Starbucks has posted its first quarter of global comparable sales growth after nearly a year-and-a-half, led by international markets, though growth still eluded its US operation, and margins came under pressure from the surging cost of wholesale coffee beans.
The results follow several quarters of falling sales that spurred the hiring of Brian Niccol as chief executive officer in August 2024, who embarked on a brand reset known as “Back to Starbucks.”
Since taking the top job, Niccol has closed hundreds of stores, simplified the menu and made efforts to speed up service.
He told analysts that the quarter “marks a turn” for the coffee chain’s US operations.
However, the high cost of coffee beans will act as a headwind for at least the next two quarters, executives said.
Global prices for raw arabica beans are up more than 20% this year after soaring 70% in 2024. That, along with hefty tariffs on imported goods and the cost of its revamp, squeezed margins.
Global comparable sales rose 1%, but in the United States, its largest market, comparable sales were flat and the average spending per customer fell.
Niccol said Starbucks would be judicious with price increases next year and said he did not expect any broad menu price hikes.
Chief financial officer Cathy Smith said the chain’s turn away from discounts last year increased average transaction amounts.
“Turnarounds are difficult to forecast, and while we have good reason to believe that our US company-operated comps should build through the year, we know recoveries are not linear,” Smith said on a post-earnings call.
The company said in July it would invest more than half a billion dollars of additional labour hours into its US company-operated stores over the next year. Its shares have fallen 7% so far this year. — Reuters
