Prime Highlights:
- Net profit of Starbucks declined 50% to $384.2 million in Q2 2025, even as revenue grew 2% at $8.8 billion.
- CEO Brian Niccol’s “Back to Starbucks” drive is aimed at enhancing in-store experiences over technological expansion.
Key Facts:
- Store operating expenses rose 12.1% to $4.2 billion, as staff levels improved to reduce wait times.
- Global same-store sales fell 1%, with U.S. transactions down 4%.
- The company added 213 new stores for a total of 40,789 globally.
Key Background:
In the second quarter of 2025 fiscal year, Starbucks recorded a steep 50% decline in net income to $384.2 million while revenues increased mildly by 2% to $8.8 billion. The precipitous plunge in profitability is attributed mainly to increasing operating costs involved in CEO Brian Niccol’s “Back to Starbucks” retransformation plan. The plan has a heavier focus on the upgrading of the working conditions and enhancing store customers’ experiences compared to expansion of the Siren Craft System, which is an IT plan aimed at computerizing the processes.
Its costs of operating its stores went up 12.1% to $4.2 billion primarily due to greater staffing levels designed to respond to customer gripes about lengthy waiting times in heavy traffic hours. Nevertheless, global comparable store sales fell 1%, its fifth consecutive quarter of decline, as U.S. transactions dropped 4%.
During the quarter, Starbucks opened 213 new locations, taking its global count to 40,789. Chief Financial Officer Cathy Smith acknowledged, however, that there are opportunities for improving store performance. Outside pressures also have taken their toll on the company’s bottom line, including rising coffee beans in particular. Raises are fueled by President Trump’s 10% tariffs and all-time-high wholesale prices, adding to expenses.
Following the earnings release, Starbucks shares declined nearly 7%, reflecting investor concerns about the profitability and future of the company. Yet CEO Brian Niccol is optimistic about the long-term reversal, pointing to the necessity of investing in labor and customer experience to drive future growth.
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