Starbucks’ sales are on the upswing again, with the company reporting its first quarterly sales increase in more than a year in the January-March period.
But the coffee giant said Tuesday that its turnaround effort is far from complete, and its fiscal second quarter also saw lagging store traffic and lower-than-expected earnings.
“Some of the investments we’re making now will take some time to create material returns. And some elements of our plan will move faster than others,” Starbucks Chairman and CEO Brian Niccol said in a video message to employees. “We have a lot of work ahead, but we are on the right track and moving quickly.”
The Seattle coffee giant said Tuesday that its quarterly revenue rose 2% to $8.76 billion in the January-March period. That was short of Wall Street’s expectations of $8.83 billion, according to analysts polled by FactSet.
Niccol, who joined the struggling company last fall, said Starbucks’ efforts are paying off. Service is faster and , he said, helped by optimizing staffing levels. are also making store operations easier.
But those efforts have been costly. Starbucks said its net income dropped 50% to $384 million in its fiscal second quarter. Adjusted earnings fell nearly 40% to 41 cents per share. That was lower than the 49-cent per share profit Wall Street forecast.
The Seattle company said its same-store sales, or sales at locations open at least a year, fell 1% globally. That was slightly worse than the 0.8% drop analysts forecast.
While international same-store sales increased 2% — and store traffic improved in China — U.S. same-store sales fell 2%.
Starbucks’ shares fell less than 1% in after-hours trading Tuesday.
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