Starbucks CEO Laxman Narasimhan, who officially took over the coffee behemoth just over a year ago, cut annual guidance for a third straight quarter Tuesday after the company’s worst performance since the pandemic. Each of Starbucks’ geographic segments posted a decline — including all-important China, where comparable sales fell 11%.
In a sign that Starbucks expects more pain ahead, the chain cut its full-year revenue growth forecast to a low-single-digit percentage from as much as 10%. Adjusted earnings per share could be flat. Shares plunged by as much as 16%, in the worst drop since March 2020.
The downbeat performance raises questions about how Narasimhan will lure customers back to Starbucks, which as recently as November said demand for iced shaken espressos was resilient and expressed confidence in its forecast. Narasimhan will have to convince investors — including his predecessor, Howard Schultz, who made Starbucks a global household name — that his plan will be enough as persistent inflation finally breaks demand for little treats.