Starbucks CEO Laxman Narasimhan acknowledged that the coffee chain has been negatively impacted by boycott calls due to its alleged support for Israel in the Gaza war. Narasimhan attributed the impact on its business in the Middle East and the United States to “misperceptions” about Starbucks’ position. The boycott calls were triggered by a lawsuit against Workers United, the union that organizes Starbucks workers, after a pro-Palestinian message was posted on social media. Despite a public letter condemning hate and violence, protests continued, and some stores were the target of violent incidents.
The coffee chain reported a record income of $9,425 million in the first fiscal quarter. This represents an 8.2% increase, although it fell somewhat below analysts’ expectations. A significant part of the growth was due to the opening of 549 new stores, bringing the total number of Starbucks establishments to 38,587.
Sales at comparable locations also saw an increase of 5%, with businesses in North America and the United States experiencing a 5% growth. The situation in China presents a different picture, with sales increasing by 10% but the average ticket dropping due to competitive pressure from other coffee chains. Narasimhan expressed his satisfaction with the results of the first quarter and emphasized the brand’s strength.
While the first quarter results demonstrated margin expansion and double-digit profit growth, Starbucks faced some labor-related challenges, with workers at more than 200 American locations staging a strike to protest stalled negotiations. Despite these complications, the company remains focused on continuing its balanced growth model throughout the year.
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