On January 28, Starbucks announced Q1 earnings beating the expectations of Wall Street analysts. This was the first full quarter under the new CEO Brian Niccol, who joined on September 9, 2024. The coffee giant outperformed expectations amid the year-after-year decline in sales and profit. Niccol said, “The first quarter in 2025 results met our expectations, clearly show[ed] some signs of progress … we still have much work to do.”
During the earnings call with investors, he said that the “Back to Starbucks” plan is receiving a positive response, which calls for focusing on core coffee items, improving prices, and speeding up service.
Inside Starbucks Q1 Earnings Report
As per Starbucks’ Q1 Earnings Report, revenue stayed flat at $9.4 billion, slightly beating expectations of $9.32 billion. Earnings per share dropped 23% to $0.69 but were higher than the expected $0.66. The decline was partly due to “increased investments” for Niccol’s turnaround plan.
Global same-store sales and foot traffic fell 4% and 6%, marking the fourth consecutive quarter of decline. However, the average ticket size rose by 3%. In North America and the US, same-store sales dropped 4%, and foot traffic fell 8%, but a 4% increase in average ticket size helped offset some losses.
Starbucks Earnings Forecast 2025
The Seattle-based coffee did not release an earnings forecast for 2025 but CFO Rachel Ruggeri hinted that it plans to cut off 30% of beverages and dishes from the menu by the end of the fiscal year. Recently, the company also canceled the extra charges on non-dairy milk paused the price hike, and also plans to improve staff in 700 stores.
During the quarter, Starbucks reduced promotions, resulting in 40% fewer discounted transactions compared to last year. CFO Rachel Ruggeri mentioned on the earnings call that they’re increasing marketing spend as a percentage of revenue, balancing out the savings from fewer promotions.
Starbucks Brings Back Customer Perks
On January 27, a day before the earnings report, Starbucks introduced some changes to retain guests for longer hours by introducing free refills in-store. The company is also bringing back its condiment bar, which will allow guests to add their cream and sugar to beverages. Customers will be asked if they’re ordering to go or “for here.” If they choose “for here,” their drink will be served in a porcelain mug or a plastic cup.
Under new CEO Brian Niccol, these changes are taking place as he unfolds his “get back to Starbucks” strategy.
Starbucks Stock Update
Over the past year, Starbucks stock has risen 5%, trailing the S&P 500’s 24% gain. However, the stock has jumped 32% in the last six months since Niccol was named CEO in August.
