Starbucks CEO Brian Niccol promises fundamental changes with global sales under pressure

Starbucks Corporation (NASDAQ:SBUX) slipped in postmarket trading on Wednesday after reporting financial results for FQ4. The Seattle-based company said its results were primarily driven by softness in North America’s revenues during 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 earnings results were already released on a preliminary basis on October 22.

International comparable store sales declined 9%, driven by a 5% decline in average ticket and a 4% decline in comparable transactions; China comparable store sales declined 14%, driven by an 8% decline in average ticket and a 6% decline in comparable transactions.

Global comparable store sales declined 7% during the quarter, and consolidated net revenue fell 3% to $9.1 billion, vs. $9.4 billion consensus. Operating margin contracted to 14.9% of sales from 15.2% in the prior year, primarily driven by increased promotional activity and investments in store partner wages and benefits. Non-GAAP EPS was reported at $0.80 vs $0.89 consensus and $1.06 a year ago

CFO Rachel Ruggeri chief financial officer said the results do not reflect the strength of the brand. “I have seen what Starbucks is capable of when we focus on what we do best. I have confidence in our ability to turn around our business and expect we will return to long-term growth,” she added.

New CEO Brian Niccol said it is clear that Starbucks (SBUX) needs to fundamentally change its strategy to win back customers. He is expected to add some details on the earnings conference call at 5:00 p.m. ET.

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. The company reminded investors that it has recorded 58 consecutive quarters of dividend payouts with CAGR of approximately 20% over that time period.

Shares of Starbucks (SBUX) were down 1.01% in postmarket trading. Analysts think the conference call holds more weight than usual due to the earnings results being released early and with the spotlight on Brian Niccol.