Sales decline at Starbucks leads to slide in share price and suspension of outlook.

• Starbucks reported its preliminary results for the fiscal fourth quarter and suspended its forecast for fiscal 2025.
• For the third quarter in a row, the company's North American store traffic decreased by 10%, resulting in a decline in same-store sales.
• To provide some certainty to investors, Starbucks increased its quarterly dividend.

The coffee chain posted preliminary quarterly results on Tuesday, revealing that its sales had decreased once more as it continues to attempt a turnaround.

CEO Brian Niccol stated that our fourth quarter performance indicates the need for a fundamental change in strategy to achieve growth, which is why we are implementing our 'Back to Starbucks' plan.

On the Starbucks earnings call on Oct. 30, Niccol plans to reveal more information about the measures the company is taking to improve its performance.

The company's preliminary net sales decreased by 3% to $9.1 billion, while its preliminary adjusted earnings per share were 80 cents.

LSEG surveyed analysts who predicted the company would report fiscal-fourth quarter earnings per share of $1.03 and revenue of $9.38 billion.

Starbucks experienced a decline in its same-store sales for the third quarter in a row, with a 7% drop in sales worldwide.

Despite increased investments in the business, including more frequent promotions in its mobile app and an expanded range of product offerings, the company's sales decreased 6% in its home market and 10% in North America due to weaker demand.

In China, the company's second-largest market, same-store sales dropped by 14%. The company attributed this decline to competition in the country, which it stated is affecting consumer behavior and prompting the company to adjust its strategy for the market.

The company has suspended its fiscal 2025 outlook due to the recent CEO transition and the current state of the business.

Although the quarter was bleak, the company boosted its dividend from 57 cents to 61 cents per share.

CFO Rachel Ruggeri stated, "Our goal is to boost our confidence in the business and offer some assurance as we navigate our turnaround."

Nearly two months after Niccol became CEO of Starbucks, the company made a surprise announcement of its preliminary results, which came after two quarters of falling sales and several activist investors building stakes in the company.

Niccol aims to reverse the decline in demand for Starbucks' drinks, particularly in the U.S. and China. In the U.S., the chain has been losing occasional customers who have opted to save money instead of spending on its macchiatos and Refreshers. Starbucks' business in China has been struggling to recover since the pandemic, and the rise of cheaper local rivals like Luckin Coffee and a more cautious consumer have dented sales in recent months.

As CEO of Starbucks, Niccol led the company through a turnaround after its foodborne illness crises, invested in its digital business, and turned it into a top industry performer, even during the pandemic.

To revive Starbucks' declining sales, Niccol intends to prioritize the improvement of the company's underperforming U.S. business. In his inaugural letter, he stated that he will concentrate on enhancing four key areas: the barista experience, morning service, the ambiance of cafes, and the company's branding.

Starbucks has appointed Tressie Lieberman as its global chief brand officer, and Michael Conway, the North American CEO, has retired after just five months in the role. Niccol has also been reshuffling the company's executive ranks.

As of Tuesday's close, Starbucks' shares have increased by 1% this year, and the company's market capitalization is over $109 billion.

The company will release its fiscal-fourth quarter earnings after the market closes on Oct. 30.

This story is developing. Please check back for updates.