Starbucks reports decline in quarterly revenue due to decreased foot traffic in US and China

Starbucks experienced a 1% decline in revenue during the April-June quarter, with weakening customer traffic observed in both the U.S. and China. The company’s revenue for the fiscal third quarter was reported at $9.1 billion, falling short of the $9.2 billion anticipated by Wall Street analysts surveyed by FactSet. Global same-store sales dropped by 3%, compared to an expected decrease of 2.7% by analysts.

In China, Starbucks faced challenges from lower-priced competitors, resulting in a significant 14% decline in same-store sales. This decline was attributed to Chinese customers reducing their visits and spending less per visit. In the U.S., same-store sales also saw a 2% decrease, but higher spending per visit partially offset the decline in customer traffic. Despite these challenges, Starbucks noted a positive development with a 7% increase in U.S. loyalty members during the quarter.

The company reported a 7.6% decrease in net income to $1.05 billion, equivalent to 93 cents per share, in line with analysts’ expectations. Starbucks is not alone in facing a slowdown in consumer spending, as inflation-wary consumers are impacting sales across various chains. McDonald’s similarly reported a 1% decline in same-store sales for the same period, the first decrease since the fourth quarter of 2020, with weaknesses noted in both China and the U.S.

Following the financial report, Starbucks shares increased by 1% in after-hours trading on Tuesday.