Starbucks slumped in late trading on Tuesday after reporting a sales decline that was deeper than expected and the departure of Chief Operating Officer Roz Brewer.
Global same-store sales, a key gauge of restaurant success, fell 5% in the fiscal first quarter. That’s worse than the estimated decline of 4.2% compiled by Consensus Metrix. A 5% drop in the U.S. was just ahead of estimates, while a 5% gain in China beat expectations.
The results show the company is facing an uneven road back following the deep impact of the global pandemic. Despite the continued weakness in many markets, strength in China and overall same-store sales that are better than the previous quarter suggest it’s past the worst.
Brewer’s exit, however, shows a substantial shakeup is underway in the coffee giant’s C-suite. Starbucks announced earlier this month that Chief Financial Officer Pat Grismer is leaving the company due to retirement. He will be replaced by Rachel Ruggeri, senior vice president of finance for the Americas.
Brewer is leaving to become chief executive officer of Walgreens Boots Alliance.
In spite of the management changes, Starbucks sees performance turning around quickly from here, and the current quarter’s results will be bolstered by a year-ago comparison with the start of the pandemic when commerce was the most restricted.
In the second quarter, U.S. same-store sales will grow 5% to 10%, the company said. Comparable sales in China will nearly double, the company said, although the result will be skewed by the pandemic comparison.
Starbucks reported fewer transactions overall, but customers spent higher amounts, continuing a trend established earlier in the pandemic. Revenue fell 5% from the prior year.
The U.S. and China are the company’s two largest markets, together making up 61% of its global portfolio, with 15,340 and 4,863 stores, respectively, it said. Starbucks opened 278 net new stores in the quarter, underscoring how the company is looking to aggressively expand in spite of the global upheaval caused by COVID-19. The company also reported a 15% increase in members to its loyalty program.
Brewer’s responsibilities are being distributed to other members of the leadership team, the company said in a filing, without naming her successor. She’ll also depart the Starbucks board.
Brewer is a former executive with Walmart and a current director of Amazon.com. She joined Starbucks in 2017 and is among the most prominent Black female executives in Corporate America.
Starbucks shares fell as much as 3.2% in late trading before paring some of the decline.
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