Starbucks admits boycott calls over Gaza war have hampered its sales Economy

Starbucks CEO, Laxman Narasimhan, admitted in a conference call with analysts this Tuesday that there were calls to boycott the coffee chain for the company’s alleged support for Israel in the Gaza war, which the company has repeatedly denied, Due to which their work has been hampered. Business. According to Narasimhan, those calls had a “negative impact” on its business in the Middle East, which, in turn, had an impact in the United States “fueled by misperceptions” about Starbucks’ position.

The call for a boycott was sparked by a lawsuit against Workers United, the union that organizes its workers, because a social media account of that organization posted pro-Palestinian messages in the wake of the conflict in Gaza. The company alleged that the lawsuit was for inappropriate use of her name and because she wanted to stay away from taking political positions.

Following calls for a boycott, Narasimhan published an open letter to employees in December stating that Starbucks condemns “violence, hate and armed speech and lies against innocents.” “We are a company with a mission and promise based on humanity and charity. We hate hate. We strongly reject violence against innocents. Our values ​​deliver performance through the lens of humanity. We support courage, belonging and happiness with an art that leads to the results we deliver. And we pursue ambitious goals for our partners and stakeholders with intention, transparency and responsibility,” he said.

That letter did not quell matters, and some Starbucks coffee shops became the target of protests in the United States. A few days later, Narasimhan published a new message in which he condemned the “misrepresentation” of his position. “Although I am grateful for many things, I am concerned about the state of the world we live in. Fighting is taking place in many parts. The violence unleashed against innocents, the hate and armed speech and lies, all of which we condemn. Protests have intensified in cities around the world, including North America. There have been incidents of vandalism in many of our stores. We see protesters being influenced by misinterpretations of what we represent on social media. We have worked with local authorities to ensure the safety of our partners and customers. There is nothing more important than this. Our position is clear. We protect humanity” he said.

The coffee chain’s revenue rose 8.2% to $9,425 million, a record for the first quarter of its fiscal year (October to December), which, however, was slightly lower than expected. Analysts say. According to accounts presented this Tuesday by the Seattle (Washington)-based company, consolidated net profit increased by 19.8% to $1,024.4 million. Experts were already cutting forecasts, fearing the impact of the boycott call.

Part of that growth comes from the opening of new establishments. The company opened 549 net new stores in the first quarter of the year, ending the period with 38,587 cafeterias: 51% company-operated and 49% licensed. At the end of the first quarter, installations in the United States (16,466) and China (6,975) represented 61% of the company’s global portfolio.

Total sales at comparable locations increased 5%, driven by a 3% increase in comparable transactions and a 2% increase in average tickets. Comparable sales at North America and United States locations increased 5%, driven by a 4% increase in average tickets and a 1% increase in comparable transactions. This marks a slowdown compared to the growth rate a year ago.

In contrast, comparable sales at international establishments increased 7%, driven by an 11% increase in comparable transactions and a 3% decline in average ticket. It’s in China where consumers are spending less at Starbucks: Sales increased 10%, but because operations increased 21% and the average ticket decreased 9%. Competitive pressure in the country has increased due to new coffee chains offering cheaper products. Although Starbucks has refused to engage in the price war, its average ticket price has declined sharply.

“The first quarter results have been good in many aspects. What is remarkable is the unwavering commitment of our most loyal customers, growth in the number of rewards members, offers and spend per member,” commented Lakshman Narasimhan, CEO. “Despite the adverse circumstances, our brand remains very strong,” he said.

“I am proud of the significant margin expansion and double-digit profit growth we achieved in the first quarter, as it highlights our many opportunities for profit growth,” said Rachel Ruggeri, Chief Financial Officer. “We are working on these many aspects throughout the rest of the year to meet our balanced growth model,” Ruggeri said.

Starbucks faced some more complications this quarter. Workers at more than 200 U.S. locations walked off the job Nov. 16 to protest the lack of progress in negotiating an agreement with the company in the largest strike in more than two years of efforts to unionize the workforce.

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