From Yahoo Finance: 2025-05-03 04:45:00

Starbucks’ same-store sales improved, but profitability fell short due to increased labor investments. Share prices dropped after missing earnings expectations. CEO Niccol prioritized human labor over equipment for efficiency and customer experience. Despite increased expenses, Starbucks saw a positive impact on same-store sales, with an improvement in global traffic and average ticket.

Starbucks’ operating margin contracted due to labor investments. Previous understaffing led to unsustainable cost-cutting. Analysts were surprised by increased expenses, causing adjusted earnings per share to fall. Despite this, the investment in labor is showing early positive effects on same-store sales. Revenue slightly missed analyst expectations, but the company remains focused on menu innovation and brand marketing.

CEO Niccol’s decision to increase labor aims to enhance customer experience. While this may affect profitability in the short term, it’s a long-term strategy for growth. Valuation shows the stock is not a bargain but is at an attractive level. Investors should consider the long-term potential of Starbucks under Niccol’s leadership for gradual improvement and profitability. Join Stock Advisor to access the latest top 10 stock list. *Stock Advisor returns as of April 28, 2025. Geoffrey Seiler has no position in mentioned stocks. The Motley Fool recommends Chipotle Mexican Grill and Starbucks, with a disclosure policy. Should investors buy Starbucks stock as it looks to turn the corner?

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