Starbucks falls after soft preliminary FQ4 results, suspended guidance

Starbucks Corporation (NASDAQ:SBUX) fell sharply in postmarket trading on Tuesday after reporting preliminary financial results for FQ4.

Global comparable store sales declined 7% during the quarter, and consolidated net revenue fell 3% to $9.1 billion, vs. $9.4 billion consensus. Non-GAAP EPS was reported at $0.80 vs $1.03 consensus and $1.06 a year ago.

Starbucks (SBUX) said the results were primarily driven by softness in North America’s revenues in the quarter, specifically a 6% decline in U.S. comparable store sales, driven by a 10% decline in comparable transactions, partially offset by a 4% increase in average ticket. The accelerated investments in an expanded range of product offerings coupled with more frequent in-app promotions and integrated marketing to entice frequency across the customer base did not improve customer behaviors, specifically traffic across both Starbucks Rewards and non-SR customer segments, resulting in lower-than-expected performance. Additionally, China comparable store sales declined 14%, driven by an 8% decline in average ticket compounded by a 6% decline in comparable transactions, weighed down by intensified competition and a soft macro environment that impacted consumer spending.

Due to the CEO transition and the current state of the business, Starbucks (SBUX) said guidance will be suspended for the full fiscal year 2025. This is anticipated to allow ample opportunity to complete an assessment of the business and solidify key strategies, while stabilizing and positioning the business for long-term growth.

On the capital allocation front, the Starbucks (SBUX) board approved an increase in the quarterly cash dividend from $0.57 to $0.61 per share of outstanding common stock.

Shares of Starbucks (SBUX) were down 4.95% in postmarket trading.