Starbucks Corp. (NASDAQ: SBUX) posted poor quarterly results, and its stock fell. When it announced its figures, Starbucks warned that labor costs could hurt results. The unionization of some of its workers could speed up the worsening of that problem.
Revenue dropped 2% year over year to $8.6 billion. Earnings fell 14% to $0.68 per share. Comparable store sales were down 4%, though the store count rose 3% to 18,065.
What about the future? Starbucks mentioned “the impacts of partner investments and changes in the availability and cost of labor including any union organizing efforts and our responses to such efforts.” The labor cost figure may be as important in raising Starbucks’ costs over time as the inflation in prices of ingredients like cocoa.
Starbucks is negotiating with its unions, represented by Workers United. At this point, hourly workers at about 400 stores are involved, which is not a large part of Starbucks’ total. Presumably, workers at other stores will join them as well, particularly if the results are good for labor.
Unions are not the only labor issue. California recently raised the minimum wage from $16 an hour to $20. There is no one with whom the coffee company can negotiate. The decision is set in stone. Twenty-two states increased their minimum wages in January. Many of the laws that triggered these increases also have future hourly increases. (See which coffee brands consumers are not avoiding in 2024.)
Starbucks may need help to draw enough new customers or raise prices enough to offset the cost of its workers in the United States. If so, its margins will be threatened permanently, affecting its stock price.
∴
Travel Cards Are Getting Too Good To Ignore (sponsored)
Credit card companies are pulling out all the stops, with the issuers are offering insane travel rewards and perks.
We’re talking huge sign-up bonuses, points on every purchase, and benefits like lounge access, travel credits, and free hotel nights. For travelers, these rewards can add up to thousands of dollars in flights, upgrades, and luxury experiences every year.
It’s like getting paid to travel — and it’s available to qualified borrowers who know where to look.
We’ve rounded up some of the best travel credit cards on the market. Click here to see the list. Don’t miss these offers — they won’t be this good forever.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.