Business

Peloton’s fiscal first-quarter results beat Wall Street’s expectations.
The connected fitness company raised its full-year adjusted EBITDA guidance but posted a weaker-than-expected holiday forecast.
The Bike and Tread maker also announced a new CEO.

A Peloton bike is displayed at a Dick’s Sporting Goods store on May 08, 2024 in Daly City, California. 
Justin Sullivan | Getty Images

Peloton is back to generating free cash flow and is edging within reach of profitability as the connected fitness company reins in costs and looks to improve the unit economics behind its hardware, it said Thursday.  
Despite the progress, Peloton is expecting to lose more members and sell fewer bikes and treadmills than Wall Street analysts had expected during its all-important holiday quarter. 

Still, the stock rose 20% in premarket trading Thursday after the quarterly update and the announcement of a new CEO.
Here’s how Peloton did in its fiscal first quarter compared with what Wall Street was anticipating, based on a survey of analysts by LSEG:

Loss per share: zero cents vs. 16 cents expected
Revenue: $586 million vs. $574.8 million expected

The company’s reported net loss for the three-month period that ended Sept. 30 was $900,000, or effectively breakeven on a per-share basis, compared with a net loss of $159.3 million, or 44 cents per share, during the same period a year earlier. 
Sales dropped to $586 million, down about 1.6% from $596 million a year earlier. 
As Peloton prepares for its holiday quarter, which is typically its strongest for hardware sales, the company is expecting revenue to come in between $640 million and $660 million, below Wall Street expectations of $671.4 million, according to StreetAccount. 

It’s also expecting to have fewer paid app subscribers than analysts had forecast, reflecting its decision to shift marketing dollars toward product development and away from its low-priced app — a key focus area of former CEO Barry McCarthy.
Peloton announced in May that McCarthy would be stepping down after roughly two years in the top job. On Thursday, the company said Ford executive Peter Stern would be taking over.
The company is expecting to have between 560,000 and 580,000 paid app subscribers by the end of its current quarter, compared with expectations of 608,200, according to StreetAccount.
During Peloton’s fiscal first quarter, it cut operating expenses by 30% compared with the previous year and posted nearly $116 million in adjusted EBITDA along with almost $11 million in free cash flow. 
It’s expecting adjusted EBITDA of between $20 million and $30 million during its current quarter, compared with StreetAccount EBITDA estimates of $13.9 million. 
For fiscal 2025, Peloton raised its full-year EBITDA guidance – a key metric that investors are watching to gauge the company’s future value. It said it’s now expecting to generate between $240 million and $290 million in adjusted EBITDA, compared with a previous range of $200 million and $250 million. It’s projecting revenue to be between $2.4 billion and $2.5 billion, on par with analyst expectations of $2.46 billion, according to LSEG. 
The gains are a result of a previously announced cost-cutting plan and the company’s efforts to improve the unit economics of its hardware, which had long been a money-losing business for the company. 
During the fiscal first quarter, Peloton raised the recommended retail price for its Bike and Bike+ in its international markets and increased the price of its Row in North America, while also cutting down on discounts across its hardware portfolio. 
Those efforts, along with a better mix between its various revenue streams, boosted its connected fitness margin to 9.2% during the most recent quarter – an increase of 6 percentage points compared with the year-ago period. 
This story is developing. Please check back for updates. More

Starbucks CEO Brian Niccol said the chain will have to buy around 200,000 Sharpie markers for baristas as part of his plan to win back customers.
Some Starbucks customers think the coffee chain has drifted too far from its core, according to Niccol.
In the company’s latest quarter, traffic to its U.S. stores tumbled 10%.

Starbucks cups are pictured on a counter in Manhattan, New York, on Feb. 16, 2022.
Carlo Allegri | Reuters

Starbucks CEO Brian Niccol said the coffee chain plans to buy roughly 200,000 Sharpie markers as part of his plan to take the coffee chain back to its roots.
He’s betting that more personal touches — including bringing back Sharpies to write customer names or messages on cups — will bring customers back to cafes. For three consecutive quarters, the company has reported declining sales. In Starbucks’ latest quarter, reported Wednesday, traffic to its U.S. stores tumbled 10%.

Some customers think the coffee chain has drifted too far from its core, according to Niccol.

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While the company works on a more comprehensive turnaround strategy, Niccol unveiled some initial steps that the company is taking to rebuild the Starbucks brand in its home market. But even something as small as a marker isn’t an easy task for Starbucks, which has nearly 17,000 locations in the U.S.
“I thought the number I heard was something like close to 200,000 Sharpies we’ve got to track down,” Niccol said in an interview with CNBC’s “Squawk Box.” “Unfortunately, it’s not as simple as just going to the Staples and picking up some Sharpies.”
Other changes coming to U.S. cafes include the return of ceramic mugs, condiment bars and cozy furniture.
Niccol, who joined the company in early September, said he wants the chain to become a “third place” again, referencing the concept of a place to work and socialize outside of the home or office.

For decades, Starbucks positioned itself as a place to linger, but the company has lost that sheen over the years.
Niccol is also aiming to improve staffing at stores and cut service times for every order to under four minutes.
Shares of Starbucks have risen roughly 1% this year, trailing the S&P 500’s gains of 22%. The company has a market cap of $110 billion.
— CNBC’s Jacqueline Corba contributed reporting for this story. More

Starbucks investors heard more details about CEO Brian Niccol’s plan to bring back customers to U.S. stores.
Many of the changes are meant to help Starbucks cut service times down to under four minutes.
To finance the turnaround, the coffee chain is planning to open fewer locations over the next fiscal year.

Brian Niccols, CEO of Starbucks, speaking with CNBC on Oct. 31st, 2024. 

Starbucks CEO Brian Niccol shared more details about the company’s turnaround strategy during the company’s quarterly conference call on Wednesday.
For three straight quarters, Starbucks has reported declining sales. But the coffee chain is hoping that some easy tweaks to its U.S. business will pay off and help reverse the trend as it plots a more ambitious and comprehensive game plan.

Many of the coming changes are meant to help Starbucks achieve a smaller goal: delivering a customized drink to the customer in under four minutes. About half of current transactions are within that threshold, according to Niccol.

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As Starbucks focuses on the turnaround, the company is also planning fewer new locations and renovations in fiscal 2025 to free up capital, CFO Rachel Ruggeri told investors on the call.
Shares of Starbucks were flat in extended trading Thursday after the company reported that its revenue fell for the third straight quarter.
Here’s how Niccol plans to help Starbucks’ sales rebound:

Ending the disorder of mobile order and pay

Starbucks customers have become used to walking into a cafe and seeing a counter crowded with mobile orders. Niccol wants to change that.

“When it works well, it’s great, but sometimes it can be a challenge for both customers and partners,” he told investors on the company’s conference call.
Mobile orders account for more than 30% of Starbucks’ U.S. transactions.

Mobile order and Uber Eats and Doordash delivery pick up area at Starbucks coffee shop, Queens, New York. 
Lindsey Nicholson | UCG | Universal Images Group | Getty Images

Niccol said Starbucks is working to improve the accuracy of the app’s timing, so customers know when their drinks are ready. Plus, he wants to better separate mobile order pickups from in-person ordering inside restaurants and curtail how much customers can customize their drinks.
“Right now, I think there’s some customization specifically in the mobile order app execution that’s just really wide and unnecessary,” Niccol told CNBC. “So I just think that we need to put better guardrails in place so that we get you access to customization that’s correct for the drink you’re ordering, and then also it allows our baristas to be more consistent with what they execute.”

Cutting back an ‘overly complex’ menu

Spain, Barcelona, Plaza de Francesc Macia, Starbucks, coffee shop customer ordering. 
Jeff Greenberg | Universal Images Group | Getty Images

The Starbucks menu will be getting a makeover.
Niccol said the coffee chain needs to focus on “fewer, better” offerings. Slimming down the menu will make it easier for baristas to make every drink consistently. It should also improve speed of service since they’ll have fewer drink recipes to remember.
“There’s always a long tail on the menu, and those items, frankly, we don’t execute all that great,” Niccol said, adding that baristas often take longer to make drinks that are unfamiliar.
Niccol said Starbucks would also be taking a look at the items that it wouldn’t have put on the menu if the four-minute standard was already in place.
While the changes may disappoint some customers, Niccol said he thinks that they’ll appreciate faster, more consistent service in the long run.

Making cafes more personal

As part of Niccol’s “Back to Starbucks” plan, he wants the company’s locations to feel like “third places” for customers to work and socialize in outside of their homes and offices.
The coffee chain’s positioning as a “third place” helped it grow into a global behemoth, but somewhere along the way, it lost that reputation. Niccol said he wants to reintroduce more personal touches, like serving coffee in ceramic mugs to customers who choose to linger in cafes. Sharpies will also be making their triumphant return, after being supplanted by printed labels.
Starbucks is also reviewing its store designs, with a focus on bringing back more comfortable seating and amenities.

Customers sit at a Starbucks in Manhattan Beach, California, on July 19, 2024. 
Etienne Laurent | AFP | Getty Images

“The reality is the majority of what we have are these cafes that I think don’t have the right seats, potentially have the right texture, don’t have the right layers, don’t have the right warmth. We need to bring that back,” Niccol said.
In recent years, the company has rolled out more pickup-only locations, with little to no seating, particularly in urban areas. Niccol said even those cafes could be more welcoming to customers.
“I think there are design elements that can still bring forward this idea of a community coffeehouse, even in some of the executions that we’ve made that just don’t lend itself to putting the full, traditional coffeehouse experience,” he told CNBC.

Bringing back the condiment bars

Starbucks brown sugar sachets are seen in Starbucks Coffee in Krakow, Poland on November 4, 2022. 
Beata Zawrzel | Nurphoto | Getty Images

In the early days of the Covid pandemic, Starbucks banished its condiment bars behind the counter. Since then, when customers want to add milk or sugar to their drinks — even a simple drip coffee — they have to ask baristas directly.
But that will change soon. Niccol said the condiment bars will reappear, freeing up more time for baristas and easing some customer headaches.

Better staffing in cafes

Merida, Mexico, Zona Paseo Montejo Centro, Starbucks Coffee shop, baristas and cashier at work smiling. 
Jeff Greenberg | Universal Images Group | Getty Images

Starbucks has already been increasing the average number of hours that it schedules baristas. More shifts — and more consistent scheduling — have lowered the company’s turnover and helped overall retention.
But Niccol also wants to make sure that cafes are properly staffed, from the busy morning rush to “shoulder hours,” leading up to and away from peak times.

A new approach to marketing

Since his first week on the job in early September, Niccol has said that he wants to revamp the company’s marketing. On Wednesday’s call, he said he wants its marketing to target a broader audience than Starbucks Rewards members and to showcase the quality of Starbucks coffee.
Customers can also expect to see fewer deals as part of the marketing shift. Niccol said discount-driven offers are “ineffective” and can overburden baristas.
Niccol comes from a marketing background and started his career at Procter & Gamble. He then moved to Yum Brands and worked in various marketing positions before ascending to lead Taco Bell. That marketing expertise was useful when he joined Chipotle and will likely also prove valuable at Starbucks. He’s already tapped a former Chipotle alum, Tressie Lieberman, as the new chief global brand officer of Starbucks.

Dairy alternatives finally won’t cost extra

After years of pleading from customers, Starbucks will finally drop the extra charge for its milk substitutes, starting Nov. 7. The change means some customers could save more than 10% on the cost of the drinks, according to the company.

Almond milk coming to certain Starbucks locations in the U.S. by the end of September.
Source: Starbucks

More broadly, Starbucks isn’t planning to change North American prices through the next fiscal year, which ends around early October, in the hopes of improving consumers’ perception of its pricing.
Executives have pointed to pushback against higher prices as one reason why occasional customers have stopped visiting its locations as often. More

Bristol Myers Squibb reported third-quarter earnings and revenue that blew past expectations on strong sales from its blood thinner Eliquis and a portfolio of drugs it expects to deliver long-term growth.
The pharmaceutical giant also raised its full-year revenue and adjusted earnings forecast.
The results come as Bristol Myers moves to slash $1.5 billion in costs by the end of 2025 and funnel that money into key drug brands and research and development programs.

The Bristol Myers Squibb research and development center at Cambridge Crossing in Cambridge, Massachusetts, US, on Wednesday, Dec. 27, 2023. 
Adam Glanzman | Bloomberg | Getty Images

Bristol Myers Squibb on Thursday reported third-quarter earnings and revenue that blew past Wall Street’s expectations thanks to its blockbuster blood thinner Eliquis and a portfolio of drugs it expects to deliver long-term growth. 
The pharmaceutical giant also raised its full-year revenue guidance for the year, expecting sales to increase by around 5%. Bristol Myers previously said it expected sales to rise in the “upper end” of the low single-digit range. 

The company also raised its 2024 adjusted earnings guidance to 75 cents to 95 cents per share, up from a previous forecast of 60 cents to 90 cents per share. 
The results come as Bristol Myers moves to cut $1.5 billion in costs by the end of 2025 and funnel that money into key drug brands and research and development programs. The company in April said that will involve laying off more than 2,000 employees, culling some drug programs and consolidating its sites, among other efforts. 
Shares of the company rose more than 2% in premarket trading Thursday.
Here is what Bristol Myers reported for the third quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG: 

Earnings per share: $1.80 adjusted vs. $1.49 expected
Revenue: $11.89 billion vs. $11.28 billion expected 

Bristol Myers posted net income of $1.21 billion, or 60 cents per share, for the third quarter. That compares with net income of $1.93 billion, or 93 cents per share, for the year-earlier period. 

Excluding certain items, it reported adjusted earnings per share of $1.80 for the quarter. 
The pharmaceutical giant’s revenue rose 8% from the same period a year ago to $11.89 billion. 
The increase came from Eliquis and the company’s so-called “Growth Portfolio” of drugs, which includes a cancer drug called Opdivo. But revenue was partially offset by leukemia treatment Sprycel, which is facing generic competition due to its loss of exclusivity.
The company is preparing to offset the loss in revenue from top-selling treatments slated to lose exclusivity on the market, including Eliquis, Opdivo and Revlimid, a blood cancer treatment. 
Sales of Eliquis could also take a hit in 2026, when a new price for the drug goes into effect for certain Medicare patients following negotiations with the federal government. The first round of those price talks, a key provision of President Joe Biden’s Inflation Reduction Act, wrapped up in the summer. 
Notably, the Food and Drug Administration approved Bristol Myers Squibb’s highly anticipated schizophrenia drug Cobenfy during the quarter. It is the first novel type of treatment for the debilitating, chronic mental disorder in more than seven decades.

Eliquis, new drugs post growth 

Eliquis booked $3 billion in sales for the quarter, up 11% from the year-ago period. That was above the $2.84 billion that analysts were expecting, according to estimates compiled by StreetAccount.
The blood thinner, which Bristol Myers shares with Pfizer, is expected to lose market exclusivity by 2028.
Revlimid took in $1.41 billion in sales, down 1% from the same period a year ago. That surpassed analysts’ revenue expectations of $1.11 billion for the treatment, according to StreetAccount. 
Revenue from the company’s Growth Portfolio was $5.8 billion for the third quarter, up 18% from the year-earlier period. 
That was driven in part by higher demand for anemia drug Reblozyl, which raked in $447 million in the third quarter, up 80% from the same period a year ago. Analysts surveyed by FactSet had expected that treatment to bring in $435 million in revenue. 
Advanced melanoma treatment Opdualag, lymphoma treatment Breyanzi and Camzyos, a drug for a certain heart conditions, also helped fuel the Growth Portfolio’s revenue during the third quarter, according to the company. 
Breyanzi and Camzyos posted sales above analysts’ expectations, while Opdualag fell short of estimates, according to StreetAccount. 
Opdivo brought in $2.36 billion in revenue for the third quarter, up 4% from the year-earlier period. That fell under analysts’ estimate of $2.41 billion for the quarter, StreetAccount said. 
Meanwhile, Abecma, a cell therapy for a rare blood cancer called multiple myeloma, drew $124 million in sales for the quarter. Analysts had expected $110 million in revenue. More

Merck reported third-quarter revenue and adjusted earnings that topped expectations.
The company saw strong sales from its top-selling cancer drug Keytruda, recently launched treatments and its animal health business. 
But Merck’s vaccine that prevents cancer from HPV, the most common sexually transmitted infection in the U.S., posted another quarter of lighter-than-expected sales.

The exterior view of the entrance to Merck headquarters in Rahway, New Jersey, on Feb. 5, 2024.
Spencer Platt | Getty Images

Merck on Thursday reported third-quarter revenue and adjusted earnings that topped expectations as the company saw strong sales from its top-selling cancer drug Keytruda, recently launched treatments and its animal health business. 
But Merck’s vaccine that prevents cancer from HPV, the most common sexually transmitted infection in the U.S., posted another quarter of lighter-than-expected sales. Revenue from the shot, Gardasil, fell 11% compared to the year-earlier period, mainly due to lower demand in China. 

The pharmaceutical giant narrowed its full-year sales forecast to a range of $63.6 billion to $64.1 billion, from a previous guidance of $63.4 billion to $64.4 billion. 
Merck also lowered its adjusted profit guidance from a range of $7.72 to $7.77 per share, from a previous forecast of $7.94 to $8.04 per share. That updated outlook reflects a one-time charge of 24 cents per share related to business development deals with Curon Biopharmaceutical and Daiichi Sankyo. 
Here’s what Merck reported for the third quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG: 

Earnings per share: $1.57 adjusted vs. $1.50 expected
Revenue: $16.66 billion vs. $16.46 billion expected

Merck posted net income of $3.16 billion, or $1.24 per share, for the third quarter. That compares with net income of $4.75 billion, or $1.86 per share, during the year-earlier period. 
Excluding acquisition and restructuring costs, Merck earned $1.57 per share for the three-month period. 

The company booked $16.66 billion in revenue for the third quarter, up 4% from the same period a year ago.
The results come as Merck shows substantial progress in preparing for Keytruda’s patent expiration in 2028. The loss of exclusive rights to the medicine will likely cause sales to fall, forcing the company to draw revenue from elsewhere.
But Merck has a handful of new deals under its belt and key drug launches that will help it offset those losses. That includes Winrevair, a medication approved in the U.S. in March to treat a progressive and life-threatening lung condition. 
And Capvaxive, a vaccine designed to protect adults from a bacteria known as pneumococcus that can cause serious illnesses and lung infection, was approved in the U.S. in June. 

Pharmaceutical unit beats estimates

Merck’s pharmaceutical division, which develops a wide range of drugs, booked $14.94 billion in revenue during the third quarter, up 5% from the same period a year ago.
The company’s immunotherapy drug Keytruda recorded $7.43 billion in revenue during the quarter, up 17% from the year-earlier period. Analysts had been expecting $7.33 billion in Keytruda sales, according to estimates from StreetAccount. 
That increase was driven by higher uptake of Keytruda for earlier-stage cancers and strong demand for the drug for metastatic cancers, which spread to other parts of the body. 

Source: Merck

Gardasil brought in $2.31 billion in sales, down 11% from the third quarter of 2023. Merck said the decline was primarily due to lower demand in China compared with the year-earlier period. It was partially offset by higher sales in the U.S. 
That is below the $2.51 billion that analysts expected, according to StreetAccount. 
Winrevair posted $149 million in revenue for the third quarter following its approval in March. Analysts had expected the treatment to book $127 million in sales. 
The company’s Type 2 diabetes treatment, Januvia, saw $482 million in sales, down 42% from the same period a year ago. Merck said the decline was primarily due to lower prices of the drug in the U.S., along with generic competition in several countries. 
Analysts had expected the drug to rake in $610 million in sales, StreetAccount said. 
Januvia is one of 10 drugs targeted in ongoing Medicare drug price negotiations, a policy that aims to make costly medications more affordable for seniors. Those price talks, a key provision of President Joe Biden’s Inflation Reduction Act, will end at the beginning of August.
Sales of Merck’s Covid antiviral pill, Lagevrio, also fell 40% to $383 million during the quarter. 
Still, that topped analysts’ expectations of $124.2 million in sales, according to StreetAccount.  
Merck’s animal health division, which develops vaccines and medicines for dogs, cats and cattle, posted $1.49 billion in sales for the third quarter. That is up 6% from the year-earlier period and slightly above what analysts surveyed by StreetAccount were expecting. More

Morgan Stanley is introducing a new portfolio for investors tied to the most prominent sports leagues.
It will target high net worth sports fans and will carry a minimum investment of $250,000.
Sports have proven to be an attractive and growing asset class as valuations have skyrocketed over the past decade.

The Morgan Stanley headquarters in New York on Dec. 27, 2023.
Angus Mordant | Bloomberg | Getty Images

Morgan Stanley is introducing a new portfolio for investors tied to the most prominent sports leagues.
The investment bank’s wealth management division on Thursday announced the launch of what it is calling Parametric Custom Core Sports League strategy. The portfolio, aimed at high net worth sports fans, will allow them to invest in a curated index of companies with strong sponsorship, media and advertisement ties to the most prominent sports leagues.

There is a $250,000 investment minimum to participate.
Sports have proven to be an attractive and growing asset class as valuations have skyrocketed over the past decade. That has left those who are still on the sidelines wanting to get in. But for most Americans, owning a pro sports team is financially well out of reach. Morgan Stanley is hoping to change that.
The idea for the new offering first came about when a Morgan Stanley client asked the bank to design a portfolio made up of the companies that support a specific sport.
“We saw that there was a bigger opportunity to do something here,” said Sandra Richards, managing director and head of Morgan Stanley’s Global Sports and Entertainment Division. “This one person represents many, and multiples of many that are looking to invest in sports as a fan looking to get engaged.”
The portfolio’s holdings are selected from large-cap U.S. equities and will consist of between 250 and 400 securities from companies that you may see on the sidelines, in the tickers or among the advertisers of major sporting events.

Morgan Stanley says the portfolio will mimic the risk characteristics of the S&P 500.
The bank, which has $516 billion of assets under management, will tap into Nielsen Sports as its data source to track the activity, spending and visibility of the companies with exposure to professional sports leagues.
“We see the demand from our clients that are asking about ways to invest in sports,” said Richards. “And it’s going to continue.”

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Starbucks will eliminate the extra charge for dairy alternatives after years of pleading from customers.
In recent months, the coffee giant’s higher prices have scared away some of its occasional customers.
The surcharge can reach up to 80 cents in some markets.

Starbucks offers oat milk as a dairy-free option.
Source: Starbucks

Starbucks said Wednesday that it will remove the surcharge for dairy substitutes, saving some U.S. customers more than 10% on their drinks.
The change goes into effect Nov. 7 and follows years of pleading from customers to eliminate the extra fee, especially as milk alternatives have grown more popular. More recently, Starbucks has seen its U.S. sales fall as its higher prices scare away occasional customers whose wallets have already been stretched by inflation.

“This is just one of many changes we’ll make to ensure a visit to Starbucks is worth it every time,” CEO Brian Niccol said in a statement.
Substituting a nondairy milk is the second-most requested customization from customers, trailing only adding a shot of espresso, according to Starbucks.
The change to its surcharge pricing coincides with the launch of the company’s holiday menu, as well as the discontinuation of the chain’s line of olive oil-infused drinks.
Niccol joined the company in early September after six years as CEO of Chipotle. At Starbucks, he is tasked with leading a turnaround to reinvigorate its business, particularly in its home market. His early strategic focuses include changing the coffee chain’s marketing, simplifying menus and fixing pricing.
The surcharges for dairy alternatives can reach up to 80 cents per drink in some markets. Currently, Starbucks customers can already add up to 4 ounces of a dairy substitute at no extra charge to hot or iced brewed coffee or tea, cold brew and Americano drinks. But other drinks made with milk in the standard recipe, such as lattes, currently have surcharges.

Starbucks first started serving nondairy milk in 1997, when it added soy milk to menus. In 2015, coconut milk landed on menus nationwide, and then came almond milk the following year. In 2021, Starbucks locations across the U.S. began using oat milk.
Recently, PETA has targeted Starbucks for the nondairy surcharges, relying on stunts to call attention to the cause. For example, two years ago, actor and activist James Cromwell, known for his roles in “Succession” and “Babe,” glued himself to the counter of a New York City location. When Niccol joined the company, PETA said it would pause the campaign to give him time to change the strategy.
In March, three lactose-intolerant women sued Starbucks in federal court, alleging that the surcharge discriminated against customers with allergies. The company has been seeking to dismiss the case. The next scheduled court appearance is Nov. 6, according to court filings.
Starbucks declined to comment on the suit, citing the company’s policy against discussing pending litigation.

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Starbucks on Wednesday reported quarterly earnings and revenue that missed analysts’ expectations.
The company previously released a preliminary report of its quarterly results on Oct. 22 and announced it was suspending its fiscal 2025 outlook. 
Investors are expecting that Niccol will share more details about his turnaround strategy during the company’s conference call, scheduled for 5 p.m. ET.

Brian Niccol speaking on CNBC’s “Squawk Box” on Oct. 30, 2018.
Anjali Sundaram | CNBC

Starbucks on Wednesday reported quarterly earnings and revenue that missed analysts’ expectations as sales in the U.S. and China, its two biggest markets, disappointed.
The company previously released a preliminary report of its quarterly results on Oct. 22 and announced it was suspending its fiscal 2025 outlook. 

This report marks the first under CEO Brian Niccol, who joined the company on Sept. 9 to revive the floundering business. 
“It is clear we need to fundamentally change our strategy to win back customers,” CEO Brian Niccol said in a statement. “We have a clear plan and are moving quickly to return Starbucks to growth.”
Niccol outlined a multipart plan to improve the company’s U.S. business immediately. Many of the steps address a new goal for Starbucks: hand delivering a customer’s drink in under four minutes. Roughly half of current transactions are within that threshold, according to Niccol.
Cafes will bring back the condiment bars that disappeared behind counters during the pandemic, get rid of extra charges for milk alternatives and cut back menus. Niccol also told investors that he wants to bring “order to mobile order and pay” and improve restaurant staffing.
“I’m very optimistic, despite the near-term challenges,” Niccol said. “I believe we have significant strengths, a strong, enduring brand. We have a clear plan. We’re going to be moving quickly.”

For now, the strategy is focused on North America. Niccol said he’d need to spend time in China to better understand the company’s operations and the market before deciding how to revive sales there.
In fiscal year 2025, Starbucks also plans to cut back on new cafes and renovations. CFO Rachel Ruggeri said the shift is to “accommodate a redesign” across its locations and free up capital to spend on the broader turnaround.
Shares of the company were flat in extended trading on Wednesday.
Here’s what the company reported compared with what Wall Street was expecting, based on a survey of analysts by LSEG:

Earnings per share: 80 cents vs. $1.03 expected
Revenue: $9.07 billion vs. $9.36 billion expected

Starbucks reported fiscal fourth-quarter net income attributable to the company of $909.3 million, or 80 cents per share, down from $1.22 billion, or $1.06 per share, a year earlier.
Net sales dropped 3% to $9.07 billion. 
The company’s global same-store sales fell 7%, fueled by weak demand in the U.S. and China. Traffic to its stores worldwide fell 8% during the quarter.
The company’s U.S. restaurants reported same-store sales declines of 6%, fueled by a 10% tumble in traffic.
In China, the company’s same-store sales plummeted 14% as both traffic and average ticket fell. Starbucks has been facing greater competition from local rivals, such as Luckin Coffee, which can undercut the company’s prices.

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