Starbucks posts steeper-than-expected drop in global sales on tepid demand

Starbucks reported a bigger-than-expected fall in third-quarter global comparable sales on Tuesday, as cautious consumer spending cooled demand at the coffee chain operator.

The company saw overall same-store sales decline 2% for the quarter ended June 29, its sixth straight quarterly contraction. Analysts on average had estimated a 1.19% dip, according to data compiled by LSEG.

CEO Brian Niccol has pushed for a simplified menu, freshly baked food items, cups with handwritten messages and quicker service as he tries to drive a brand reset since taking the helm in last August.

He has also pledged to increase investments in staffing in all 10,000-plus Starbucks-owned US stores by the end of the summer.

“We are making tangible progress in our ‘Back to Starbucks’ strategy. In the quarter, we made a significant non-recurring investment in our Leadership Experience 2025 and also incurred a discrete tax item, which in the aggregate, negatively impacted Q3 EPS by 11 cents,” CFO Cathy Smith said.

In its largest North America market, same-store sales fell 2%, compared with 2% drop last year.

Customer visits to the coffee chain operator were down an average 0.1% from April to June, data by research firm Placer.ai showed. That was better than a 0.9% drop in the prior three months, suggesting that Niccol’s “Back to Starbucks” initiative and recent menu innovations were beginning to drive a turnaround, Placer.ai said.

The company’s shares were down 1% at $92 in volatile extended trading.