Decline in traffic
The decline in traffic negatively impacted comparable store sales. In Q4, Starbucks’ comparable store sales decreased 7% year-over-year, with an 8% drop in transactions and a 2% gain in average ticket. In the US, comparable store sales fell 6%, driven by a 10% decline in transactions, partly offset by a 4% increase in average ticket mainly from pricing.
Decrease in revenue and profits
SBUX’s revenue and profits have continued to decline over the past few quarters. In Q4 2024, consolidated revenue decreased 3% year-over-year to $9.1 billion, mainly due to a decrease in comparable store sales. Adjusted earnings per share decreased 25% to $0.80. The company’s operating margin fell 380 basis points to 14.4% in Q4, mainly due to higher investments in wages and benefits as well as higher promotions.
Headwinds in China
Starbucks continues to face a challenging environment in China, its second largest market. The company’s performance in this region has been pressured by heavy competition and macroeconomic headwinds that have impacted consumer spending.
In Q4, comparable store sales in China declined 14%, driven by an 8% decrease in average ticket and a 6% drop in comparable transactions. Although the coffee giant added 2.2 million new members to reach 23.5 million SR Active members in this market during the quarter, comps were negatively impacted by a decline in non-SR member traffic, higher discounts due to heavy promotions, and lower sales of high-ticket items impacted by consumer sentiment.
Starbucks is working on driving growth in its business through various measures such as menu changes, pricing, marketing, and investments in improving its digital capabilities. It is also exploring growth opportunities across international markets beyond China. The company believes these measures will yield benefits over time.