SEATTLE Negative customer traffic trends continued into Starbucks’ September-ended fourth quarter, but a slight improvement so far this month may indicate a corner has been turned for the struggling coffee chain, corporate officials said late Wednesday.
Howard Schultz, Starbucks' chairman, president and chief executive, said the chain “may have hit bottom in terms of negative transactions in our fourth quarter.” The company added that October same-store sales improved slightly because of a higher average value per transaction. At least one analyst noted that Starbucks' guest traffic in October most likely remained negative, albeit improved.
Schultz was speaking at the company’s annual Leadership Conference in New Orleans where the company announced initiatives including a partnership with (RED), the charity formed by rock star Bono to raise funds to combat AIDS in Africa. Starbucks will donate a portion of the proceeds from certain holiday drinks to the charity's Global Fund. The new partnership is part of Starbucks’ Shared Planet initiative that encourages more environmentally friendly corporate practices.
The company said its fourth quarter same-store sales were “relatively stable” compared to those of the June-ended third quarter, which analysts had pegged at a decline of between 6 percent and 7 percent for U.S. locations. Starbucks stopped reporting official same-store sales results in January when Schultz regained control of the coffeehouse giant to instigate a turn around.
“While encouraged by the less negative trend in October, we are concerned that comps remain solidly below the rate that is needed for Starbucks to reach É expectations,” said securities analyst David Tarantino of Robert W. Baird & Co.
Starbucks’ fourth quarter and full-year earnings results are scheduled for Nov. 10. The company posted its first quarterly net loss as a public company in July, which officials blamed on economic headwinds as well as costs associated with the company’s efforts to slow growth and boost traffic. Earlier this year, Starbucks announced plans to close more than 600 underperforming locations and cut 1,000 workers, while reorganizing management, upgrading equipment and reworking the menu.