• Wednesday, July 24, 2024

Buisness

Starbucks profits drop amid weakening consumer sentiment

Starbucks has observed numerous instances where consumers initiate digital orders but fail to complete transactions.

PLAINVIEW, NEW YORK – SEPTEMBER 15: A general view of a Starbucks store on September 15, 2022 in Plainview, New York, United States. Many families along with businesses are suffering the effects of inflation as the economy is dictating a change in spending habits. (Photo by Bruce Bennett/Getty Images)

By: Vivek Mishra

Starbucks posted lower profits on decreased sales, attributing the decline to weakening consumer sentiment and challenging conditions in China.

CEO Laxman Narasimhan expressed disappointment, citing adverse weather in the US as an additional factor.

“Our performance fell short of expectations,” Narasimhan said, acknowledging the impact of cautious consumers and economic uncertainties on sales.

Quarterly profits totalled £613.33 million, down 15 per cent compared to the same period last year, with revenues declining two per cent to £6.83 billion.

Comparable store sales in North America dropped by three per cent, while China experienced an 11 per cent decrease.

Chief financial officer Rachel Ruggeri mentioned that the company had a “comprehensive” plan to address the challenges following a “difficult” quarter.

Narasimhan said that the chain was implementing technologies to enhance consumer awareness regarding the status of online orders.

Starbucks has observed numerous instances where consumers initiate digital orders but fail to complete transactions.

“Here lies opportunity,” remarked Narasimhan, emphasising the intention to enhance the communication system, especially during the morning rush.

Shares of Starbucks experienced a roughly 10 per cent decline in after-hours trading.

(AFP)

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