Investing.com - Starbucks stock dipped Wednesday after fiscal second-quarter results fell short of Wall Street estimates as weaker sales in North America and China weighed on performance.
Starbucks (NASDAQ:SBUX) shares tumbled 12% in premarket trade following the report.
Starbucks reported earnings of $0.68 on revenue of $8.60 billion. Analysts polled by Investing.com anticipated EPS of $0.80 cents on revenue of $9.13B.
The weaker performance was driven by a slip in comparable store sales in the quarter amid a "highly challenged environment," the company said.
Comparable store sales decreased 4%, confounding consensus estimates for a 1% increase as North America comparable store sales fell 3%, and international comparable store sales fell 6%, pressured by a 11% decrease in China.
Management has outlined measures to counter the sales decline, including faster product innovations, new marketing strategies for casual customers, and operational improvements for increased peak throughput.
“Given the seemingly sudden step-up in the product innovation pace, we believe investors should focus on the launch quality and whether the new offerings can be executed at scale without negatively impacting operations,” analysts at Stifel said in their post-earnings note.
“At this juncture, the rapid deterioration in U.S. trends keeps us on the sidelines,” they added.
Meanwhile, KeyBanc Capital Markets analysts reduced their earnings per share (EPS) estimates for fiscal years 2024 and 2025 to $3.60 and $4.00, respectively, “to reflect the brand’s current challenges” while maintaining a Sector Weight rating.
Elsewhere, William Blair and Deutsche Bank analysts downgraded Starbucks stock from Buy to Hold following the disappointing print.
(Yasin Ebrahim contributed reporting)