Coffee chain titan Starbucks (NASDAQ: SBUX) just released a preliminary report for the fourth quarter of 2024. Sales are coming in lower than expected due to fewer (but more profitable) transactions. The newly installed management team under food service turnaround expert Brian Niccol canceled their full-year guidance targets and said there won't be any firm financial targets for the next fiscal year.

At the same time, CFO Rachel Ruggeri noted that a turnaround plan that includes some cost-cutting moves is already underway, and will be further explained in next week's full earnings report.

So Starbucks is getting back to the basics of running a coffee shop. While waiting for a fuller overview next week, let's see what's new in the company's preliminary report.

Declining sales and strategic shifts

Starbucks saw same-store sales fall 7% year over year on a global level. The large and important Chinese market showed a deeper same-store sales drop of 14% amid tighter competition and a weakening Chinese consumer market. In North America, comparable-store foot traffic declined by 10% while the average ticker price rose by 4%. All in all, Starbucks' total sales are down 3% and earnings fell 24.5% below the year-ago period's tally.

Niccol's commentary for this early look at the fourth-quarter results didn't provide much color commentary about the financial results. Instead, he focused on the turnaround effort and what Starbucks is doing to get back on track.

It's not exactly rocket surgery, but a simple return to what made Starbucks great once upon a time. The marketing plan used to focus on members of the Starbucks Rewards loyalty program, but is now more broadly aimed at the general coffee-drinking population. Niccol is simplifying the menu and making the product prices more uniform across different product lines.

"If you stay true to your core identity, take care of customers and your team, simplify the business, deliver consistently high-quality products and experiences, and tell your story effectively, you will be successful," Niccol said in a short video of prepared remarks. "So we have a lot of work ahead of us, but I am confident we can get all these things right at Starbucks."

Fixing the menu and focusing on the customer experience will "remind people of why they love Starbucks," Niccol said. That should motivate them to visit the store more often, rekindling Starbucks' faded business growth. The damaged brand moat can be repaired.

Brian Niccol's impact on Starbucks' turnaround

I like Niccol's brand-building mentality. He also comes with a sterling pedigree of successful turnarounds at Chipotle Mexican Grill and two Yum! Brands divisions. This superstar gives Starbucks a serious chance to fire up its stalled growth. In particular, I think it's the right decision to preach a little less to the loyalty-program choir of Starbucks lovers. Reaching out to new groups of potential customers could fix the store traffic issue in a hurry.