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starbucks Pumpkin drinks and improved service brought customers back to its stores, halting a long decline in sales in the fiscal fourth quarter.
seattle The coffee giant said Wednesday that its global same-store sales, or sales at locations open for at least a year, rose 1% in the July-September period compared with a year earlier. It was the first time in nearly two years that the company reported same-store sales growth.
The increase was primarily due to international markets, where same-store sales increased 3%. In the US, same-store sales were flat; Spend per transaction increased by 1% but transactions decreased by 1%. Still, it was an improvement from the third quarter, when same-store sales in the U.S. fell 2%.
President of Starbucks and ceo Brian Niccol said the results indicate that a turnaround at the company, which he founded after joining Starbucks a little more than a year ago, is working. Nicholl has set new hospitality standards, redesigning stores to be cozier and more welcoming and adjusting staffing levels to better handle peak hours.
New software is also helping stores sequence drive-thru, in-store and mobile orders, reducing wait times. Niccol said in-store wait times average four minutes or less in 80% of U.S. stores operated by the company, even on high-volume days, such as the record-breaking U.S. launch of fall drinks in August this year.
“We still have a lot of work ahead of us, but it’s clear we’re moving in the right direction,” Niccol said during a conference call with investors on Wednesday.
Niccol said this year’s holiday season, which begins Nov. 6, will give even more customers a chance to see the difference in Starbucks’ investment from last year.
Still, those changes have been costly. In addition to hiring more employees and redesigning stores, Starbucks incurred $755 million in restructuring charges in the fourth quarter. Late last month, the company laid off 900 non-retail employees and closed 627 stores as part of that restructuring; 90% of them were in North America,
As a result, Starbucks said its fourth-quarter profit fell 85% to 12 cents a share.
Starbucks said that adjusted for one-time items, including its restructuring costs, it earned 52 cents per share in the fourth quarter. This was less than the 56-percent gain wall Street That’s expected, according to analysts surveyed by FactSet.
Starbucks shares were flat in after-market trading on Wednesday.
Nicoll stressed that improvements in service and speed as well as innovations such as protein drinks will drive strong sales.
Starbucks’ net revenue rose 5% to $9.6 billion in the July-September period. That was better than Wall Street’s expectations of $9.3 billion, according to analysts surveyed by FactSet.
“I believe we are best positioned to provide the best customer experience in the industry,” Nicole said. “It’s as simple as feeling welcomed when you come into our store. And that’s changed.”
Nicholl said Starbucks also plans to keep price increases in check despite rising costs of labor, coffee and other items. The company had vowed not to raise prices in its 2025 fiscal year.
“We’re going to be very strategic, very targeted,” Nicole said. “I don’t envision pricing on a wide scale across my menu.”
Starbucks Chairman and CEO Brian Niccol, who completed his first year with the company in September, said the fourth-quarter results indicate that Starbucks is making progress in its multi-year turnaround.
Starbucks shares were up about 2% in after-hours trading Wednesday.