Starbucks posts smaller comparable sales decline than expected as turnaround takes root

(Reuters) -Starbucks reported a smaller-than-expected fall in first-quarter comparable sales on Tuesday, indicating early signs of success for CEO Brian Niccol’s turnaround efforts for the coffee chain battling sluggish demand.

The company’s shares shares rose 4% in extended trading. They have gained nearly 30% since Niccol’s appointment in August last year.

Niccol, credited with reviving burrito chain Chipotle Mexican Grill, has looked to return Starbucks to its coffee house roots in the U.S. by rolling out a simpler menu, ceramic cups, refills and condiment bars. He also addressed a key concern of diners by reducing wait times at the cafes to under four minutes.

Starbucks’ global same-store sales fell 4% in its fiscal first quarter, compared with analysts’ expectations of a 4.6% fall, according to data compiled by LSEG.

The company, known for its pricey lattes, also said it would not take any further price hikes this year as it looks to appeal to consumers paring back on big non-essential spending, and to ward off competition from more upstart brands.

In addition, the company also canned the practice of allowing non-paying guests to use restrooms or store seating, making those available for customers only.

The company’s North America comparable sales fell 4% in the three months ending Dec. 29, Niccol’s first full quarter at the helm, compared with expectations of a 4.7% fall.

Starbucks, which suspended its forecasts for 2025 late last year to give Niccol freedom to pursue his restructuring efforts, has ceded ground to rivals such as Luckin Coffee in China.

Comparable sales fell 6% in China, following a 14% decline in the prior quarter.

(Reporting by Juveria Tabassum in Bengaluru; Editing by Sriraj Kalluvila)