Starbucks Stock Slips After Preliminary Earnings, 2025 Guidance Suspension: Retail Sentiment Weakens

Shares of Starbucks Corp ($SBUX) fell nearly 5%in Wednesday’s pre-market trading after the coffee chain released its preliminary fourth-quarter and full-year earnings.

Starbucks’ same store sales declined for the third consecutive quarter with metric falling 7% during the fourth quarter, its steepest decline since the pandemic.

Consolidated net revenues fell 3% to $9.1 billion while earnings per share (EPS) stood at $0.80. Compared to this, Wall Street analysts expect fourth-quarter EPS of $1.03 and revenue of $9.38 billion.

For the full fiscal year 2024, global comparable store sales fell 2% while consolidated net revenues increased 1% to $36.2 billion.

Starbucks attributed the lower-than-expected performance to pronounced traffic decline, including a cautious consumer environment, and its targeted and accelerated investments not improving customer behaviors. The macro and competitive environment in China also added to the pressure, it said.

The firm also suspended its guidance for the full fiscal year 2025. The measure is expected to allow ample opportunity to complete an assessment of the business and solidify key strategies, while stabilizing and positioning the business for long-term growth.

Meanwhile, Starbucks’ board approved an increase in the quarterly cash dividend from $0.57 to $0.61 per share of outstanding common stock.

CEO Brian Niccol said the fourth-quarter performance makes it clear that the firm needs to fundamentally change its strategy to get back to growth.

Starbucks will release its actual fourth quarter and full fiscal year 2024 financial results after the closing bell on Oct. 30.

Meanwhile, retail sentiment on Stocktwits inched lower into the ‘neutral’ territory (53/100) from ‘bullish’ a day ago.

One Stocktwits user believes the shares are overvalued at current levels.

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