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Yahoo
12 minutes ago
- Yahoo
Why Starbucks must start delivering big-time
I have had a checkered history with Starbucks (SBUX). As an analyst during the Howard Schultz CEO era, I would camp out in stores for days studying everything the chain was doing wrong (and right). The stock was always priced for perfection, and I was trying to ensure that clients wouldn't be left holding the bag. My ensuing critical research reports weren't well-received by Starbucks. I still remember Schultz telling me to f*** off at an analyst day. I wasn't amused in the moment by a billionaire's lack of verbal control, but the next morning, I was back to my chipper self. You can't take this stuff personally. More than a decade later, I'm now a journalist with no bones to pick with Starbucks — just one providing context on this important stock. Current Starbucks CEO Brian Niccol is hard to root against. I originally met him at a Taco Bell investor day in New York City, maybe nine years ago. He was a good leader then and a better one today with a successful Chipotle (CMG) turnaround under his belt. The problem is that Starbucks' business isn't yet showing the Niccol magic. You can see the seeds he planted beginning to sprout — service times improving, sales not falling off a cliff, menus streamlining. In the quarter announced this week, the company teased a "wave" of innovation such as protein cold foam coffee, shorter mobile order pickup times, and a potential sale of part of the struggling China business. But again, Niccol's magic beans have barely sprouted green shoots, with Niccol almost one full year into the job. What Starbucks delivered in the quarter: Operating profit margins crashed in every business segment year over year. Overall operating margins plunged 660 basis points from a year ago. US same-store sales fell 2% on the back of a 4% traffic drop. Earnings per share tanked 46% from a year ago. No guidance provided. "Unfortunately, I think there were some choices made before me that really set us back on our ability to create that great customer connection between our barista and customer and provide the type of customer service that the Starbucks brand, frankly, is known for," Niccol told me on Yahoo Finance's Opening Bid (watch above). Some investors are clinging to the positives Niccol noted during the earnings call. They include low double-digit percentage same-store sales growth at college locations, improved transaction trends in the US toward the end of the quarter, and the aforementioned "wave" of menu innovation. Starbucks will also spend $500 million during the next year on increased labor investments — shy of Street whispers of about $1 billion. The company even teased the potential to reach peak operating margins again. But at this point, investors should be questioning when the inflection moment is in Starbucks' business, and what that inflection actually looks like. The turnaround wasn't in the just-completed quarter. It is unlikely to be the current quarter. Then, mix in high tariffs on coffee beans (including a 50% rate on Brazilian imports) and cautious US consumers. The stock has dropped 9% over the past week. But the valuation may still be too caffeinated. Shares trade on a price-to-earnings multiple of 31x forward earnings estimates as investors price in a Niccol-led comeback. That's asking a lot in the economic climate and against the backdrop of competitors like Dutch Bros. (BROS), Luckin (LKNCY), and countless others serving premium coffee. "More questions than answers ahead as investments into the biz stacking up and only some early signs of progress being made so far; we think downside risk is under-appreciated and rate the stock Underperform," Jefferies analyst Andy Barish wrote in a note. I worry Niccol has set the bar too high for short-term results, risking a letdown for hopeful investors if there isn't a clear inflection next quarter. Yahoo Finance's Invest Conference is coming up! Join me and the Yahoo Finance newsroom for our annual Invest conference, taking place in New York City, November 12-13. We just added a couple of new speakers to an already awesome lineup, with more on the way. Learn more about the conference and register today! Trust me, you will want to be in this room ahead of 2026. Brian Sozzi is Yahoo Finance's Executive Editor and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi, Instagram, and LinkedIn. Tips on stories? Email
Yahoo
12 minutes ago
- Yahoo
Report – Inter Milan Striker Edging Towards Cagliari Move
Inter Milan striker Sebastiano Esposito is reportedly edging towards a move to Cagliari after successful talks yesterday. This according to Italian broadcaster Sky Sport Italia, via FCInterNews. They report that the 23-year-old did not participate in a behind-closed-doors friendly today due to the imminent transfer. It has always looked clear that Sebastiano Esposito will leave Inter Milan this summer. The Italian youth team international has gone out on a number of loan spells. He has played for the likes SPAL, Venezia, Basel, Anderlecht, Bari, and Sampdoria. Last season, Esposito was out on loan with Empoli. While his individual form was strong, this was not enough to prevent the Tuscans from suffering relegation to Serie B. Therefore, Empoli did not sign Esposito on a permanent basis. The 23-year-old returned to Inter, with whom he travelled to the United States for the Club World Cup. Esposito even started a couple matches for the Nerazzurri at that tournament. However, that hardly changed his fate – he is not a part of Inter's plans. Inter Striker Sebastiano Esposito Edging Towards Cagliari Move SEATTLE, WASHINGTON – JUNE 25: Sebastiano Esposito #70 of FC Internazionale Milano is therefore. Moreover. However by German Pezzella #6 of CA River Plate during the FIFA Club World Cup 2025 group E match between FC Internazionale Milano and CA River Plate at Lumen Field on June 25, 2025 in Seattle, Washington. (Photo by) There have been a couple of clubs to show an interest in signing Esposito this summer. One of these is Fiorentina. La Viola have reportedly spent the last few weeks eyeing up a deal for the 23-year-old. However, Cagliari are also reportedly keen on signing Esposito. And according to Sky Spport Italia, it is the Sardinians who have gotten close to a deal for the Inter striker. The broadcaster reports that Cagliari held talks with Inter yesterday. And these have brought them close to signing Esposito. Notably, Sky report, Esposito was not in the Inter squad for a behind-closed-doors friendly between the senior and Under-23 teams today. The reason for the player's absence was acknowledged to be his imminent transfer to Cagliari.
Yahoo
12 minutes ago
- Yahoo
Manasse Kusu continues at FF Jaro
Manasse Kusu continues at FF Jaro The Congolese midfielder Manasse Kusu will continue his adventure in Finland. On loan from Mjällby to FF Jaro since last March, the 23-year-old Congolese midfielder has seen his loan extended until November 30, 2025. Having joined Mjällby from Östers IF in the summer of 2024, Kusu keeps gaining valuable playing time abroad—a move welcomed by the Swedish management. On the club's official website, Hasse Larsson, sporting director of Mjällby, commented on the news: The extension of this loan is a good solution for all parties. Manasse benefits from an environment that supports his progress and gets significant playing time, which is crucial for his development. FF Jaro will therefore be able to count on the dynamism of the young Ghanaian youth international until the end of the season.
