A Starbucks logo displayed on a building in Yangpu District, Shanghai, China | Photo credit: Declan Sun

Starbucks has lowered its full-year outlook after posting a decline in second quarter sales and earnings as ‘cautious’ consumers cut back on the frequency of their visits globally. 
 

Following record $9.4bn sales last quarter, the Seattle-based coffee chain posted a 2% year-on-year fall in global sales to $8.6bn in the three months ended 31 March 2024 as footfall and like-for-like sales in its key US and China markets declined. 

Starbucks posted flat sales of $5.9bn in the US – its largest market with 16,600 stores – with like-for-like sales declining 3% during the quarter driven by a 7% fall in comparable transactions. The coffee chain attributed the performance to price-conscious consumers and ‘fewer visits from more occasional customers’. 

In China, Starbucks’ like-for-like sales fell 11% year-on-year amid an 8% reduction in average ticket price and a 4% decline in comparable transactions. The coffee chain’s revenues in China fell 8% year-on-year to $705.8m. 

On an earnings call, Starbucks CEO Laxman Narasimhan said the business is facing ‘fierce competition among value players’ in China but would continue to focus on ‘strengthening our premium position'. 

The US and China currently comprise 61% of Starbucks’ 38,951-store global portfolio. 

The coffee chain performed strongly in Latin America and Japan, where it reported double-digit sales growth. Revenues in Asia Pacific also increased despite ongoing store boycotts in Indonesia and Malaysia. However, total global like-for-like sales growth fell 4% due to weaker sales in the US and China and ongoing ‘economic volatility in the Middle East’. 
 

“In a highly challenged environment, this quarter’s results do not reflect the power of our brand, our capabilities or the opportunities ahead,” Narasimhan said. 

Starbucks opened 364 net new stores in its second quarter, including 134 new outlets in the US and 118 in China. The Seattle-based coffee chain expects to open more than 3,000 new stores globally across the next 12 months as it seeks to reach 55,000 stores globally by 2030. 

Starbucks has revised its full-year revenue growth forecast from between 7-10% to low single digits. The coffee giant also lowered its projections for global and US like-for-like sales growth from 6% to low single digits while outlining an expected single-digit decline in China like-for-like sales.