Starbucks Corp. sales fell for the first time since 2020 as half-off deals and new lavender lattes weren’t enough to entice increasingly budget-conscious consumers.

The shares sank 9.5 per cent at 4:50 p.m. in postmarket trading in New York. The company’s stock had declined 7.8 per cent this year through Tuesday’s close, while a restaurant index had risen less than 1 per cent.

Starbucks’ performance reflects the impact of colder-than-usual weather in January that affected store visits across the industry, a more cautious consumer around the world and the conflict in the Middle East, Chief Financial Officer Rachel Ruggeri said in an interview.

More broadly, the quarter’s results highlight Starbucks’ struggle to keep up with lofty expectations first outlined by previous management. The company is grappling with boycotts over its perceived stance on the Israel-Hamas war as well as a customer base that’s balking at US$6 lattes. Under Chief Executive Officer Laxman Narasimhan, who has been on the job a little more than a year, the company has lowered its goals at least twice, but the latest results show investors might be looking for a bigger reset.

“We were not pleased with the performance this quarter,” Ruggeri said. “We really sharpened our focus, and we have a very clear path going forward.”

Starbucks reported a 4 per cent decline in same-store sales in the latest quarter, while analysts expected growth. The pullback by consumers was widespread, with overall transactions sinking 6 per cent and retreating in each of the company’s geographic segments. Consolidated net revenues fell, while earnings per share excluding some items also underperformed expectations. 

The chain is looking to reverse the slump by focusing on fulfilling demand in the mornings, Ruggeri said. Starbucks wants to boost product availability and cut wait times, including by updating how it makes some drinks. It’s also working on new products that attract customers in the afternoons and attracting more customers to its app.

Starbucks last quarter lowered its full-year sales guidance but kept its profit goal, as executives wagered that greater efficiency, new stores and loyal customers would offset sluggish revenue growth. It didn’t disclose changes to its targets in Tuesday’s press release. 

The chain has also said it expected sales to rebound in the second half of the year, which started in October, while adding that results in the quarter through March 31 would be lower than its annual targets.