Starbucks (SBUX) stock plunged more than 15% at the start of Wednesday's trading session after the coffee retailer came up short of top- and bottom-line expectations for its fiscal second quarter and lowered its full-year outlook.
In the three months ended March 31, Starbucks said its revenue decreased 2% from the year-ago period to $8.6 billion. Earnings per share (EPS) were down 14% to 68 cents, while global comparable-store sales fell 4% from its fiscal Q2 2023.
"In a highly challenged environment, this quarter's results do not reflect the power of our brand, our capabilities or the opportunities ahead," Starbucks CEO Laxman Narasimhan said in a statement. "It did not meet our expectations, but we understand the specific challenges and opportunities immediately in front of us."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The quarterly results fell woefully short of analysts' expectations. According to CNBC, Wall Street was calling for revenue of $9.1 billion, earnings of 79 cents per share and global comparable-store sales growth of 1%.
As a result of the disappointing first half of the year, Starbucks lowered its full-year outlook, with Narasimhan citing "a more cautious consumer" as one of the reasons for the downwardly revised forecast.
On the company's conference call, Starbucks Chief Financial Officer Rachel Ruggeri said fiscal 2024 revenue growth is now expected to be in the low single digits from its previous range of 7% to 10%, and EPS growth in the range of flat to low single digits from its previous range of 15% to 20%.
"While it was a difficult quarter, we learned from our own underperformance and sharpened our focus with a comprehensive roadmap of well thought out actions making the path forward clear," Ruggeri said. "On this path, we remain committed to our disciplined approach to capital allocation as we navigate this complex and dynamic environment."
Where does Starbucks stock stand with analysts?
Starbucks was already struggling on the charts ahead of its fiscal Q2 results. Shares were down nearly 8% for the year-to-date through the April 30 close vs a roughly 6% gain for the broader S&P 500.
And Jefferies analyst Andy Barish sees an "uphill battle ahead" for Starbucks. The "question facing the company and investors is whether these challenges are more transitory or longer-term issues, i.e. brand, relevance, and competitiveness, especially in China," Barish says. The analyst has a Hold rating on SBUX and lowered his price target to $84 from $91 after the company's appearance on the earnings calendar.
Still, most of Wall Street remains upbeat on the consumer discretionary stock. According to S&P Global Market Intelligence, the consensus analyst target price for SBUX stock is $94.47, representing implied upside of more than 27% to current levels. Additionally, the consensus recommendation is Buy.
Related Content
-
The Most Tax-Friendly State for Retirement in 2025: Here It IsRetirement Tax How do you retire ‘tax-free’? This state doesn’t tax retirement income, has a low median property tax bill, and even offers savings on gas. Are you ready for a move?
-
Plan for Higher Health Care Costs in 2026: Projected Medicare Part B and Part D PremiumsIn 2026, Medicare participants will pay more for their health care. Part B costs are expected to rise more than 10%. Here's what you can do.
-
Avoid Medicare's 'Shadow Tax' With This Financial Expert's IRMAA-Busting TipsYou're cruising along in retirement, and then bam: Your Medicare premiums soar because your income crossed the limit. Take a breath. There could be a solution.
-
Grilling Season and ETFs: There's More Than One Way to Cook Up a PortfolioExchange-traded funds come in a multitude of 'flavors' these days, from passive to active to factor-based. Their flexibility is what makes them so delicious.
-
You Don't Want It, But You Should Plan for It Anyway: An Expert Guide to Long-Term CarePlanning for long-term care is crucial to protect your independence, family and financial stability against unexpected health events and rising care costs not covered by standard insurance.
-
Japan Tariffs: 5 Things That Might Get More Expensive for YouPresident Donald Trump's trade agreement with Japan features a 15% reciprocal tariff for all imported products, which could impact the prices of these items when you go shopping.
-
Five Questions to Help Ensure a Happy, Secure RetirementYou need to drill down to what you really want out of retirement. Then you can get down to the business of crafting a financial plan to make it happen.
-
I'm a Financial Adviser: This Is How You Can Save for Big Goals Even if You Feel Like You're Barely Getting ByLearning good financial habits — building an emergency fund, paying down debt, saving consistently — gives you flexibility, options and a path to security.
-
How to Buy an Annuity Online (Without Regret)You should never be rushed into buying an annuity. But now that they can be sold quickly and easily online, you need to be more alert than ever to pushy salesmanship. Here are four signs you're working online with a professional.
-
Dow Dives 542 Points on Soft Jobs Data: Stock Market TodayThe last day of a busy week ends with the first greater-than-1% move in either direction in more than a month.
