Guardian staff and agencies 

Starbucks posts smaller-than-expected sales drop amid turnaround effort

World’s largest coffee chain in drive to boost sales and win back customers as new CEO urges ‘fundamental change’
  
  

Starbucks coffee sign
Global same-store sales at Starbucks fell 4% in its fiscal first quarter, against an expected 4.6% decrease. Photograph: Ashley Landis/AP

Starbucks reassured Wall Street with a smaller-than-expected drop in comparable sales, an early sign that its efforts to revive sluggish demand could be bearing fruit.

The world’s largest coffee chain, which earlier this month announced that people using its cafes cross North America need to buy something, is in the midst of a turnaround bid to win back customers.

Brian Niccol, who joined the firm as chief executive in September, has said Starbucks needs to “fundamentally change” its strategy. Changes have included the rollout of a simpler menu, ceramic cups, refills and condiment bars, and a drive to reduce wait times to under four minutes.

Global same-store sales at Starbucks fell 4% in its fiscal first quarter, the three months ending 29 December. Analysts had expected a 4.6% fall, according to data compiled by LSEG.

Comparable sales fell 4% in North America, compared with expectations of a 4.7% fall. Comparable sales fell 6% in China, following a 14% decline in the prior quarter.

Shares in the company’s shares rose 4% during after-hours trading on Wall Street. They have gained almost 30% since Niccol, credited with reviving burrito chain Chipotle Mexican Grill, was first announced as the new boss last August.

“While we’re only one quarter into our turnaround, we’re moving quickly to act on the ‘Back to Starbucks’ efforts and we’ve seen a positive response,” he said.

“We believe this is the fundamental change in strategy needed to solve our underlying issues, restore confidence in our brand and return the business to sustainable, long-term growth.”

Reuters contributed reporting

 

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