With a clear impact from the boycott campaigns launched in solidarity with Palestinians, the giant coffee company “Starbucks” announced losses due to a decline in profits and revenues.
These losses were driven by a decrease in the company’s store sales as a result of the boycott, leading to a sharp decline in stock prices by about 16%.
The company’s sales have declined in recent months due to boycott campaigns that have hit its product sales because of its support for the Israeli war on Gaza, according to “Al-Monitor.”
These campaigns also prompted the company to lower its profit and revenue forecasts for the fiscal year 2024 and expected its café performance to remain weak in the near future.
CEO Lakshman Narasimhan said in a statement, “In a challenging environment, the results of this quarter do not reflect the strength of our brand, our capabilities, or future opportunities.”
Store sales themselves fell by 4%, while experts had expected store sales to grow by 1%.
In the United States, store sales fell by 3% with a 7% decrease in traffic, representing the second quarter that suffered in the company’s local market.
In the last quarter, executives blamed the slowdown in sales on the boycott targeting the company because of its stance on Israel.
Starbucks’ international sector noted a 6% decrease in store sales, along with a decrease in average ticket and transactions.
In China, the second-largest market for Starbucks, store sales decreased by 11%.
Massive Decline in Net Income
The giant coffee company reported net financial income in the second quarter of $772.4 million, or 68 cents per share, down from $908.3 million, or 79 cents per share, in the previous year. Net sales decreased by about 2% to $8.56 billion.
For fiscal year 2024, Starbucks now expects revenue growth to be lower, down from its previous expectations of 7% to 10%.
Boycott Campaigns
Activists in many Arab and Islamic countries had launched widespread calls to boycott all companies suspected of supporting Israel, including Starbucks.
“Starbucks announces a sharp decline in profits and revenues due to the global boycott campaigns in solidarity with Palestinians. Learn about how the American giant is affected by the crisis and the company’s financial performance expectations in the near future.”
Starbucks owns more than 1,900 cafes in 11 countries in the Middle East and North Africa, employing more than 19,000 people.
Starbucks Affected by Boycott
In a move influenced by boycott campaigns launched in the aftermath of the Israeli war on Gaza, Al-Shaya Group, operating in the retail sector in the Gulf region and the licensee of Starbucks in the Middle East, decided to lay off more than two thousand employees.
Al-Shaya Group stated in a statement: “As a result of ongoing tough business conditions over the past six months, we have made a difficult and regrettable decision to reduce the number of colleagues in Starbucks cafes in the Middle East and North Africa.”
