Starbucks quarterly revenue falls on weak traffic in US and China

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Starbucks’ revenue fell 1% in the April-June period as customer traffic weakened in the U.S. and China

Starbucks’ revenue fell 1% in the April-June period as customer traffic weakened in the U.S. and China.

But the Seattle coffee giant expressed optimism Tuesday that successful new products and improvements in efficiency — including faster drive-thru service and better equipment — will help turn things around in its next fiscal year, which begins later this fall.

“We are focused on what we can control in a consumer environment that can best be described as ‘complex,'” Starbucks CEO Laxman Narasimhan said during a conference call with investors.

Narasimhan said consumers in many markets have gotten more cautious with their spending and are staying home. Starbucks' comments mirrored those at McDonald’s, which said earlier this week that its same-store sales fell 1% in the April-June period.

Starbucks' same-store sales — or sales at locations open at least a year — fell 3%. That was slightly higher than the 2.7% drop Wall Street had expected, according to analysts polled by FactSet.

In China, where Starbucks is feeling pressure from lower-priced rivals, same-store sales plunged 14%. Chinese customers visited less often and spent less per visit, Starbucks said.

Narasimhan said Starbucks believes it still has immense opportunity in China, which is its second-largest market with 6,500 stores. But he said the company is in the early stages of exploring a strategic partnership or joint venture in China that could help it accelerate its growth. Such a partnership could also lessen Starbucks' exposure to the market's volatility.

“What we want to be sure of is that we are further strengthening our advantage in this market because