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Customers at a Starbucks in Manhattan Beach, California, earlier this month. (Etienne Laurent/AFP via Getty Images)

Starbucks just keeps taking it on the chin

Same-store sales declined for the second quarter in a row. Outside of the pandemic and the financial crisis, that hasn’t happened this century.

Nate Becker

7/30/24 5:02PM

Being the CEO of Starbucks must be exhausting.

The company is locking horns with an aggressive activist investor, Elliott Investment Management, which owns a big chunk of Starbucks stock. It is routinely getting unsolicited advice — including on how to deal with Elliott — from its three-time former CEO, Howard Schultz, who seems like the worst helicopter parent ever. It’s also embroiled in a high-profile labor battle with baristas who want to unionize.

And its stock is colder than an iced latte.

On top of all that, Starbucks is dealing with a mounting business problem that has been causing migraines for retail and food-and-drink CEOs all across America: Consumers who are beleaguered by inflation are finally deciding to pull back.

On Tuesday, Starbucks reported its second straight quarter of declining same-store sales — something that, outside of the pandemic and the financial crisis, hasn’t happened this century, according to FactSet data. The metric declined 3% for the quarter that ended June 30.

The company said its North American same-store sales dropped 2%, which was driven by a 6% decline in transactions and was partially offset by a 3% increase in average ticket.

Translation? The thing saving Starbucks’ same-store sales is that they’re keeping prices high. How does that go over the long term? Ask McDonald’s.

Revenue and profit both declined from a year earlier, too, though per-share earnings were in line with analysts’ expectations. One bright spot was that CFO Rachel Ruggeri said in the earnings release that the company’s efficiency efforts were “tracking ahead of expectations.” Investors sent the stock up 1.7% after hours before the earnings call started.

Starbucks CEO Laxman Narasimhan has been doing the job for a little over a year after coming in as an outsider. Now he’s dealing with conflicting signals from one of his biggest investors and the guy who did the job before him, who is theoretically responsible for the company’s greatness. (For a look inside that push and pull, check out the FT’s deep dive here.)

Meanwhile, things just keep getting worse financially. Somebody get Narasimhan some more caffeine.

Max Knoblauch23h

Electronic Arts launches a platform to put more ads in its games

Video game publishing giant EA launched a new platform on Monday designed to make the process of selling immersive ad space in its popular games easier.

The company says the platform, called EA Advertising, allows brands to “integrate directly into gameplay through dynamic, real-time placements, from stadium signage to custom in-game content.”

More so than other studios, EA has incorporated advertising into its most popular titles. As Kotaku points out, the company’s ad efforts stretch as far back as 2006. Several of its sports franchises already feature partnerships with brands like Visa, Lowe’s, Red Bull, and PepsiCo.

In-game advertising hasn’t exactly been embraced by fans, but industry experts expect it to ramp up as companies seek more revenue to offset higher games budgets and surging memory costs. EA rival Take-Two has taken a different approach, with CEO Strauss Zelnick recently saying the company was “not at risk of doing brand partnerships” in the forthcoming “Grand Theft Auto VI,” and that ads in full-price games seems “unfair.”

The $55 billion deal to take EA private, led by Saudi Arabia’s Public Investment Fund, is set to close at the end of this month. Being the largest leveraged buyout in history, EA will likely look for more ways to boost revenue to cover interest payments.

Electronic Arts Makes Push for Ad Dollars Tied to Sports

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JM Smucker says it sold $1 billion worth of Uncrustables in FY2026

After years of booming sandwich sales, JM Smucker has finally earned a billion-dollar crust.

On Tuesday, the company reported results for fiscal year 2026, highlighting better-than-expected profits driven by higher prices for coffee and sweet baked goods. However, at another point on the earnings call, CEO Mark Smucker pointed to one particularly jammy figure: in line with previous forecasts, the company sold $1 billion worth of its (almost always) crustless sandwiches, Uncrustables, in the last year alone.

Max Knoblauch6/8/26

Paramount reportedly offers concessions to resolve multistate antitrust investigation

Paramount has reportedly offered up some concessions in an effort to prevent an antitrust lawsuit by California and about 10 other states, according to Bloomberg reporting on Monday.

Reuters first reported on the potential suit from a group of unnamed states last week, which could throw a wrench in Paramount’s plans to buy rival Warner Bros. Discovery in a Hollywood megamerger.

The list of concessions is unknown, though Bloomberg previously reported that Paramount is open to divesting some of its kids TV assets to appease EU regulators.

Late last month, reports said US regulators appeared likely to approve the $110 billion merger, following a meeting between Paramount CEO David Ellison and DOJ antitrust staffers.

Paramount Offers Concessions to Head Off State Antitrust Lawsuit

The list of concessions is unknown, though Bloomberg previously reported that Paramount is open to divesting some of its kids TV assets to appease EU regulators.

Late last month, reports said US regulators appeared likely to approve the $110 billion merger, following a meeting between Paramount CEO David Ellison and DOJ antitrust staffers.

$98B ⛽

Max Knoblauch6/8/26

The IATA released its latest financial outlook for the airline industry over the weekend, forecasting a $98 billion jump in the sector’s collective fuel bill. The world’s largest trade group representing airlines expects the oil spike to halve profits by 49% from last year to $23 billion.

The group also expects profit margins to halve year over year, falling from 2025’s 4.2% to 2%. Still, revenue is expected to climb to $1.17 trillion from $1.07 trillion.

A surge in the cost of jet fuel has rocked US and global airlines this year, leading Delta Air Lines, United Airlines, American Airlines, Southwest Airlines, JetBlue, and others to raise fares and ancillary charges like bag fees. Low-cost carriers, which operate on smaller margins, have been squeezed the hardest, resulting in Spirit’s shutdown.

“It’s a tough year for all airlines, especially those whose balance sheets had not yet recovered from COVID. And, of course, for those operating in the Gulf,” said IATA Director General Willie Walsh, who added that demand is holding up and about half of passengers expect to spend more on travel this year. “That bodes well for a strong northern summer peak season. The big unknown is how long travelers and shippers can tolerate the higher costs of connectivity.”

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