Starbucks on Tuesday reported better-than-expected sales in its fiscal first quarter as some of its turnaround efforts start to take hold.
The Seattle coffee giant said its revenue was flat at $9.4 billion for the 13-week period ending Dec. 29. That beat Wall Street’s forecast of $9.3 billion, according to analysts polled by FactSet.
Chairman and CEO Brian Niccol, who joined the company in September, said customer-focused changes — such as a decision to stop charging extra for non-dairy milk and a streamlining of the menu — were helping to improve service and drive store traffic.
Starbucks is trying to re-establish itself as a gathering place, and this week announced that it will start using ceramic mugs and offering in-store customers free refills of coffee or tea. The company is also trying to appeal to customers with a new rule that requires people to buy something if they want to hang out or use the restroom.
Starbucks’ same-store sales — or sales at locations open at least a year — fell 4% compared to the same period last year. The decline was less than the 5.5% analysts anticipated, according to FactSet. It was also better than the previous quarter, when global same-store sales were down 7%.
U.S. same-store sales also fell 4% in the first quarter. Starbucks said transactions were down 8% but customers spent more per visit. Starbucks also pulled back on discounts during the quarter, Niccol said.
“We’ve taken steps to refocus the business, our mission and our marketing to better align with our identity as a coffee company,” he said in a video message.
Also Tuesday, Niccol announced the departure of two senior executives and a reshuffling of their job responsibilities.
Niccol said Mike Grams, who most recently served as president of Taco Bell, will become Starbucks’ chief stores officer for North America. Meredith Sandland, the CEO of Empower Delivery and the former chief development officer at Taco Bell, will become Starbucks’ chief store development officer. Niccol led Taco Bell until 2018, when he left to run Chipotle.
Niccol also announced earlier this month that Starbucks plans an unspecified number of corporate layoffs by early March.
Starbucks’ shares rose 3% in after-hours trading Tuesday.
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