Starbucks Revenue Falls in Q2, Plans Expansion in China
On May 1, Starbucks released its second-quarter financial report for fiscal year 2024, revealing a decrease in revenue of 1.8% to US$8.563 billion. Despite this decline, the coffee giant saw an increase in the number of stores in China, reaching a total of 7,093, and announced plans to expand into new county-level cities.
The company’s Q2 same-store sales fell by 4%, with a 3% decline in the United States and an 11% decrease in China. Net profit also saw a decrease of 14.96% to US$772.5 million compared to the same period last year.
Starbucks Global CEO Na Sihan praised the Chinese team for achieving month-on-month growth in profit margins despite revenue pressure. The performance of single-store businesses in China remains healthy and profitable, with all stores maintaining double-digit operating profit margins.
In lower-tier markets, Starbucks China added a net of 118 stores in the second quarter, a 14% year-on-year increase, bringing the total number of stores to 7,093. The company has entered 20 new cities and nearly 900 county-level cities, with rapid growth in active members and membership sales in these regions.
The breakfast segment performed strongly during the quarter, with sales increasing by over 50% compared to pre-social distancing restrictions. Starbucks China also launched 27 new products, including the successful Yilanduo series of drinks, which will be promoted to nearly 2,500 stores nationwide in May.
Membership operations showed significant growth, with 90-day active members surpassing 21 million and total members exceeding 127 million. Member sales proportion increased to 75%, with the consumption frequency of Gold Star members also on the rise.
Starbucks China’s digital business accounted for 52% of sales, with coffee express business reaching a record high of 26%. Na Sihan emphasized the company’s focus on providing locally relevant innovative products, investing in technology, and expanding into new markets, especially in lower-tier cities.
As Starbucks navigates challenges in the global market, its strategic expansion into China’s growing regions demonstrates a commitment to long-term growth and success.