Move Over Pumpkin Spice, Lavender Is The New Queen Bee — Starbucks CEO Finds A Silver Lining In Disappointing Q2 Results, Drops Hints Of Future 'Texture-Based Innovations'

The CEO of Starbucks Corporation SBUX, Laxman Narasimhan, recently unveiled a surprising success story amid the company’s lackluster second-quarter performance.

What Happened: Despite a quarter marked by economic challenges, Starbucks found a bright spot in the unexpected popularity of its new Lavender Latte.

The beverage, featuring a trendy botanical twist, resonated with Gen Z and Millennial customers, providing a much-needed boost to the company’s otherwise disappointing quarterly results

The CEO, however, highlighted the surprising success of the Lavender Latte, which performed almost as well as the iconic Pumpkin Spice Latte (PSL).

“Our new Lavender platform performed nearly as well this past quarter as the PSL,” Narasimhan said during the earnings call.

Despite economic and weather-related challenges, the Lavender Latte’s popularity provided a much-needed morale boost. Narasimhan even hinted at future “texture-based innovations,” suggesting that the executive team may be exploring new and unconventional flavors.

“When we innovate well, it’s meeting our own expectations,” said CFO Rachel Ruggeri.

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Why It Matters: Starbucks’ second quarter results were indeed disappointing, with a 2% year-over-year drop in revenue to $8.6 billion, a 4% decline in global comparable store sales, and a 7% decrease in overall earnings per share. These results were attributed to a 3% comp growth decline in North America, an 11% comp growth decrease in China, and other economic and weather-related challenges.

Starbucks’ ability to innovate and adapt to changing consumer tastes has been a recurring theme. In 2023, the company partnered with K-pop group BLACKPINK to introduce limited-time beverages and merchandise, a move aimed at tapping into new customers.

In 2022, Starbucks introduced a chocolate-flavored beverage inspired by “nostalgic summer moments,” showcasing its commitment to staying relevant and appealing to customer sentiments.

Price Action: Starbucks experienced a significant decline in after-hours trading on Tuesday, dropping 11.57% to $78.25, according to the data from Benzinga Pro.

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This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.