Starbucks Halts 2026 Forecast as Sales Drop for Third Consecutive Quarter

Starbucks has suspended its fiscal 2026 outlook following a 7% drop in same-store sales, marking the third consecutive quarter of decline. CEO Brian Niccol introduced the “Back to Starbucks” plan, focusing on improving customer experience and streamlining the menu to boost growth.

Starbucks Faces New Challenges as CEO Brian Niccol Outlines Strategy to Revitalize Growth

What began as a small coffee shop in Seattle’s Pike Place Market in 1971 has grown into the global coffee giant known as Starbucks. With its iconic green and white double-tailed siren logo and distinct coffee aroma, Starbucks has become the world’s largest and most recognized coffee shop, boasting 39,477 locations worldwide as of June 30, per The Street.

From black coffee enthusiasts to those who prefer sugary Frappuccinos, Starbucks has been a staple for coffee drinkers for decades. However, despite its long-standing success, the company has recently faced significant challenges that could jeopardize its future.

In an open letter addressed to partners, customers, and stakeholders, Starbucks' new CEO, Brian Niccol, outlined his strategy to steer the company back to the success it once enjoyed. Niccol emphasized two primary areas of focus: community and customer experience.

He aims to ensure that all customers feel valued, not just Starbucks Rewards members, and plans to adopt a more personal approach by having baristas hand drinks directly to customers. While Starbucks' secret menu drinks have gained viral popularity on social media over the years, Niccol wants to simplify the menu to make it less overwhelming. He hopes to enhance product consistency and reduce wait times by streamlining the beverage crafting process.

Starbucks Reports Third Consecutive Quarter of Declining Sales, EPS Falls Short of Analyst Expectations

Two months into Niccol’s leadership, Starbucks released its preliminary results for the fourth quarter and the full fiscal year of 2024, and the figures reflect a troubling picture for the company. According to the earnings report, Starbucks’ preliminary net sales decreased by 3% compared to the previous year, while same-store sales fell by 7%, marking the third consecutive quarter of decline. It’s the lowest drop Starbucks has seen since the pandemic.

The company’s earnings per share (EPS) also declined 25%, dropping to $0.80—falling short of the $0.94 analysts had expected. Starbucks’ performance in North America was equally concerning, with a 10% decrease in in-store traffic and a 6% decline in same-store sales year-over-year. Meanwhile, in China, the company’s second-largest market, same-store sales plummeted by 14%.

“Despite our heightened investments, we were unable to change the trajectory of our traffic decline, resulting in pressures in both our top-line and bottom-line. While our efficiency efforts continued to produce according to plan, they were not enough to outpace the impact of the decline in traffic,” said Starbucks CFO Rachel Ruggeri.

Starbucks Suspends 2026 Forecast Amid Challenges, Announces ‘Back to Starbucks’ Turnaround Plan

In response to its ongoing challenges, Starbucks surprised investors by announcing it would suspend its outlook for the full fiscal year 2026. The company cited the recent leadership transition and the current state of the business as the primary reasons for the decision.

The suspension is intended to give Starbucks time to reassess its turnaround strategy, refine key business initiatives, and stabilize the company for long-term growth. Starbucks plans to provide more details about its revised strategy during its earnings call on Oct. 30.

“Our fourth quarter performance makes it clear that we need to fundamentally change our strategy so we can get back to growth, and that’s exactly what we are doing with our ‘Back to Starbucks’ plan,” said CEO Brian Niccol.