Starbucks (SBUX) has seen its share price drop by 17% in the last month, with a 14% fall the day following the release of its Q2 earnings figures.
Starbucks Under Pressure Following Earnings Miss
Now, Howard Schultz, the former CEO of the multinational coffeehouse chain, has added his thoughts in the debate around what the company should do next. Schultz was replaced by Laxman Narasimhan in 2023. The current CEO plans to boost the company’s profits through new offerings such as energy drinks and boba tea, as well as by speeding up its service.
However, Schultz said that people from inside and outside of Starbucks have asked his opinions on the fact that the company missed its earnings target. While he no longer carries out any sort of formal role with SBUX, the former CEO wrote on LinkedIn that they need to overhaul their current strategy and focus on what he called coffee-forward innovations.
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Starbucks CFO Rachel Ruggeri pointed out that the company didn’t respond quickly enough when customer spending dropped, but said that they don’t plan to drop their prices. Instead, they’ll be relying on their rewards programme and other digital initiatives to boost revenue.
When announcing the recent Q2 results, SBUX confirmed that it expects its coffeehouses to carry on underperforming for the next few quarters. Narasimhan said that “in a highly challenged environment, this quarter’s results do not reflect the power of our brand, our capabilities or the opportunities ahead”. Among the results, it reported same-store sales dropping by 4%, with traffic in the quarter down by 6%.
