Starbucks says its turnaround is starting to work

Starbucks hasn't reported same-store sales growth for nearly two years, so Wednesday's earnings announcement, which included a mention of a 1% increase in those sales last quarter should have been cause for celebration.

It was – for a very brief period. While the company's stock saw a bump immediately following its fiscal fourth quarter earnings report, shares quickly slid. The company is poised to open more than 3% lower on Thursday.

That caution comes as Starbucks management argues that the turnaround the coffee chain has been focusing on for the past year is bearing fruit.

“It’s clear that our turnaround is taking hold,” CEO Brian Niccol said on an earnings call.

Despite that announcement, Starbucks's earnings per share came in slightly lower than expectations. The company posted EPS of 52 cents after adjustments, while analysts were looking for 56 cents. Revenues topped the forecast, though, hitting $9.57 billion vs. $9.35 billion.

The company said it had closed 627 locations last quarter and laid off 900 or so nonretail employees. Since Nicol joined the company, roughly 2,000 corporate jobs have been cut, as well as thousands of retail workers.

Prior to Wednesday's earnings report, Starbucks had reported six consecutive quarters of same-store sales declines. To lure customers back, the company has rolled out a series of changes reviving policies and habits that haven’t been seen since before the pandemic. Workers now once again hand write customers’ names on the cups with a Sharpie and the chain is offering free refills on some “for here” orders, a perk that was previously restricted to its loyalty-program members. Some menu items were also cut to expedite service.

Milk and sugar stations are making a return as well, which will not only let people prepare their coffee just how they want it, but will lighten the load for baristas and should result in quicker turnaround times for getting your drink.

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