SBUX: Starbucks Stock Pops Despite Weakening Demand for High-Priced Coffee

Starbucks sales declined on an annualized basis as coffee lovers withheld in the face of inflation-fueled prices.

  • Starbucks stock SBUX popped about 3% in pre-market trading Wednesday after investors scooped up coffee-flavored shares following the company’s weak earnings report. Yes, you read that right — Starbucks whipped up fewer caramel brulee lattes as loyal customers skipped their regular detour, spooked by higher prices. The world’s largest coffee chain picked up $9.1 billion in sales, marking a 1% drop from the same quarter last year.
  • What’s more, global same-store sales declined 3% from a year ago, logging back-to-back falling demand with the 4% slide in the March quarter. In the US, the homegrown $86 billion coffee giant posted a drop in traffic by 2% from last year. Transaction volume decreased 6%. Fortunately for investors, CEO Laxman Narasimhan spoke openly about the company’s shrinking business and vowed to make amends.
  • ”We are making real progress on our three-part plan,” the Starbucks boss said on the earnings call, “We are focused on what we can control in a consumer environment that can best be described as complex. Our teams are moving with urgency.” Earnings per share came in above estimates at 93 cents a piece but still 6% lower from the year-ago quarter. Net profit landed at $1.05 billion, above consensus.

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