Same Store Sales Market Hit: CE Transact Explores SBUX Earnings Miss
In its preliminary report, Starbucks blamed its weaker-than-expected results on soft demand. Despite key investments to engage customers with more frequent in-app promotions and an expanded product offering. CE data was quite predictive of these results. In this report, we dig deeper by exploring customer retention across coffee chains to see how the company is faring against competitors.
SBUX Sales Growth Year Over Year
CE’s Transaction data was predictive of Starbucks (SBUX) sales, as the coffee chain reported US SSS growth of -6%, in-line with CE’s SSS implied reported growth of -6% and below consensus estimates of -3%. In addition, SBUX reported topline total sales growth of -3.2%, in-line with CE’s Vantage Growth Forecast of -3.0% and below consensus estimates of -0.1%. As a result of the sales miss, the stock was down 4% post report.
Starbucks noted that the “decline was driven by a 10% decline in comparable transactions, partially offset by a 4% increase in average ticket” with both metrics consistent with CE transaction data.
Customer Retention Challenges Impact Starbucks and Competitors
Starbucks also mentioned that disappointing sales were driven by poor customer retention. Even as the company introduced initiatives like in-app promotions and new assortment to drive shopper engagement. CE Cohort data shows that for Starbucks shoppers, customer retention fell slightly in the fourth quarter. With only about 20%, (-5% from the year prior). Buying again this quarter after purchasing something last quarter.
This decline in customer loyalty is hitting some of its key competitors too. Where Starbucks was once dominant in keeping customers, another Pacific Northwest coffee chain, Dutch Bros, is now about equal with the coffee giant in bringing back shoppers.
As the holiday season approaches and many important days for Starbucks in the upcoming quarter, like Red Cup Day, CE data will follow how the new CEO leads the struggling chain into FY2025.
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About the Authors
Rachel Zucker is an Insights Analyst for the CEIC. Follow her on LinkedIn.
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