Key Stats:
- Today’s Price Change: -6.9%
- Current Share Price: $79
- 52-Week High: $117
- Year-to-Date Performance: -8%
- 5-Year Return: $1,000 invested in Starbucks stock 5 years ago would be worth $1,070 today
What Happened?
Starbucks (SBUX) stock is down almost 7% today after the coffee giant reported disappointing fiscal second-quarter results, for the quarter ending in March.
It reported adjusted earnings of $0.41 per share, well below consensus estimates of $0.48 per share. The company’s revenue was $8.76 billion, below the estimated $8.83 billion.
This marks Starbucks’ fifth consecutive quarter of declining same-store sales, with global comparable sales dropping 1% amid a 2% decline in transactions.
CEO Brian Niccol, who took over in September, acknowledged that financial results don’t yet reflect the company’s progress with its “Back to Starbucks” turnaround plan, stating that “earnings per share shouldn’t be used as a measure of our success” at this stage.
Adding to investor concerns, Starbucks warned about potential challenges from tariffs and volatile coffee prices, with CFO Cathy Smith noting that 10-15% of Starbucks’ product and distribution costs come from green coffee.
What the Market Is Telling Us
The sharp sell-off in SBUX stock indicates investors are growing impatient with Starbucks’ turnaround efforts, which have yet to translate into improved financial performance.
Its decision to scale back automation plans in favor of increased labor spending has compressed operating margins, which fell to 8.2% from 12.8% the previous year. This strategic pivot might ultimately strengthen customer connections, but it is putting pressure on near-term profitability.
The market is also reacting to the looming threat of tariffs on coffee beans, which could further strain the company’s margins or force it to raise prices at a time when consumers are already seeking cheaper alternatives.
With U.S. transactions down 4% and the stock now trading well below its 52-week high, SBUX stock investors appear skeptical about the recovery timeline despite management’s assurances of “real momentum” in its turnaround strategy.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
