Starbucks has seen a 4 per cent drop in global comparable store sales for the first quarter ending January 29. 

Revenue remained flat year-over-year at $9.4 billion. At the same time, the operating margin declined 390 basis points to 11.9 per cent, due to increased labour costs, benefits, and the removal of extra charges for non-dairy milk alternatives.

Despite the results, which chairman and CEO Brian Niccol described as “less than ideal”, he expressed confidence in the company’s Back to Starbucks strategy to improve profitability.

“We believe this is the fundamental change needed to solve our underlying issues, restore confidence in our brand, and return the business to sustainable, long-term growth,” he added.

The coffee chain’s sales in North America – including the US – declined 4 per cent, with an 8 per cent decrease in transactions partially balanced by a 4 per cent increase in average tickets. International sales also fell 4 per cent with China reporting a 6 per cent decline.

Amid softer sales, Starbucks still opened 377 net new stores, taking its global network to 40,576, with the US and China accounting for 61 per cent of locations.

“We are in the beginning chapter and have much more work ahead,” added Rachel Ruggeri, CFO at Starbucks. “We will continue to prioritize shareholder value through dividends while we turn around our business,” she said.