A great reluctance to visit Starbucks cafes in the Middle East due to its support for Israel (Al Jazeera)

Starbucks' quarterly data showed

that its sales in the United States of America and abroad, especially in the Middle East, fell below expectations against the backdrop of boycott campaigns that began after the company showed support for the Israeli occupation army in its war on the Gaza Strip, in addition to other effects related to labor demands in the company's branches. In the United States.

Experts speaking to Al Jazeera Net expected that the boycott campaigns would increase pressure on Starbucks during the next few months.

The profits and revenues of the American café company were below expectations in its first quarter ending at the end of last December. The company's fiscal year begins on the first of October of each year.

The company also acknowledged a decline in its sales volume in the Middle East and China.

The Israeli occupation has been waging a war on the Gaza Strip since last October 7, which has left tens of thousands of martyrs and injured, most of them children and women, in addition to massive destruction of buildings, hospitals and infrastructure.

Boycott

The company's CEO, Laxman Narasimhan, said in a conference the day before yesterday - after announcing the financial results - that the chain is facing challenges, including the boycott in the United States and competition from cafes in China, and has lowered its full-year revenue expectations.

The company's earnings per share reached 90 cents in its first quarter, compared to 93 cents that was expected, but it achieved profits of one billion dollars, up from 855 million dollars in the same quarter.

The company's revenues amounted to $9.43 billion in its first quarter, compared to $9.6 billion that was expected, but the recorded figure is an increase from the $8.7 billion recorded in the first quarter of the company's last fiscal year.

The number of global Starbucks branches increased by 5%, which is less than the Street Account market research estimate of 7.2%.

In North America, store sales rose 5% during the same quarter, driven largely by customers spending more on their drinks and food

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Starbucks was negatively affected by boycott campaigns (Pixabay)

 The beginning of the unrest

The company's unrest began when the Starbucks Workers Union - which represents hundreds of workers in the coffee chain - posted support for the Palestinians on the X platform, which led to a violent reaction from supporters of Israel. The company later sought to distance itself from the tweet, which the union deleted, and filed a lawsuit against United Workers Organization for trademark infringement.

Narasimhan wrote a letter to employees last December, condemning what he described as “misinformation” in an effort to get Starbucks out of the confusion.

Starbucks' first fiscal quarter included the most important holiday season, during which it typically generates excess sales.

Outside of Starbucks' domestic market, the coffee chain recorded a growth in international store sales of 7%, contrary to expectations of 13.2%, and Narasimhan said that sales in the Middle East declined against the backdrop of the expanding repercussions of the war on Gaza.

Chinese competition

Starbucks has seen increasing competition in China as the economic recovery continues to lag.

Starbucks executives said the challenges it faced this quarter were "temporary," but disruptive enough that the company revised its full-year sales forecast, and Rachel Ruggieri, chief financial officer, said January sales were lower than expected.

For fiscal 2024, the company now expects revenue to grow 7% to 10%, down from its previous forecast of 10% to 12%.

Starbucks also lowered its global store sales forecast to a range of 4% to 6%, from its previous range of 5% to 7%.

First Quarter

Ahmed Najm, head of the market research department at XS.com, told Al Jazeera Net that the effectiveness of the boycott has begun to appear in the results of the last three months of last year, but it will likely be more effective in the first three months of the new year.

He added that the peoples of the Arab and Islamic world have proven through previous boycott campaigns that they do not last long, as they return to consuming the goods that fall under the penalty of boycott after a while when the motive for that stops, which in this case is the Israeli aggression against the Gaza Strip.

But he added that the longer the boycott in the region lasts, the greater the pressure on the targeted companies, which may ultimately push them to exit the region's markets.

For his part, economist Samir Raouf says that Starbucks' results were affected by the boycott to some extent, but the impact from the Chinese market was greater, as the population is increasing.

In an interview with Al Jazeera Net, he suggested that companies might resort to amending their strategy in the markets to focus on those that are not witnessing boycott campaigns.

Raouf expected that these companies would launch promotional offers after the war on Gaza to win back their consumers in the region.

Source: Al Jazeera + agencies + websites