Despite tight budgets, Americans still want their cup of Joe

investmentnews.com:

Starbucks Corp. delivered results that were in line with expectations, assuaging investors who had been bracing for another meltdown after being blindsided by the previous quarter’s slump. 

Sales at coffee shops open at least a year fell 3% in the company’s fiscal third quarter, the second straight drop. While the number of transactions fell, US diners are spending more each visit, helping to prop up revenue. The company reaffirmed its guidance for the full year. 

“The decline in same-store sales and the decline in traffic were pretty much in line with what people were expecting,” said Brian Yarbrough, an analyst with Edward Jones. 

The shares rose 5% at 6:37 p.m. in extended New York trading. The company has faced intensified scrutiny since its previous quarterly results, when an unexpected slump in sales and guidance cut sparked the biggest fall in the stock since the start of the pandemic. 

Starbucks’ business has taken a hit as consumers pressured by inflation and dwindling savings tighten their spending. In the US, its largest market by number of stores, the company has sought to lure customers in with discounts and new products. It’s also looking to speed up service, while facing renewed pressure from an activist investor.

During Tuesday’s call with analysts, Chief Executive Officer Laxman Narasimhan confirmed that Elliott Investment Management had taken a stake in Starbucks, adding that conversations with the activist have been constructive. Elliott’s stake was previously reported by the Wall Street Journal. 

Chief Financial Officer Rachel Ruggeri said the chain’s efficiency efforts “are tracking ahead of expectations” and partially offset investments the company made to cope with the cautious consumer