Starbucks wins a shareholder lawsuit over its sales slump
A federal judge has dismissed a lawsuit filed against the coffee shop giant, agreeing that its former CEO did not make “flagrantly false” statements about its sales results.
July 17, 2026
Starbucks has shed another problem from its recent sales slump: A shareholder lawsuit over its former executives’ statements on the company’s results.
A federal court judge this week dismissed a complaint from a trio of pension funds arguing that the company misled investors in 2023 when top executives provided rosy sales projections that would later prove brutally false.
U.S. District Judge John Chun agreed with Starbucks, saying that former CEO Laxman Narasimhan did not intend to deceive investors in comments made on an earnings call in January 2024 regarding the company’s sales results.
The judge had earlier allowed the case to proceed.
The pension funds had sued, arguing that the company announced overly rosy projections in late 2023 and then concealed weaker-than-expected results that would later prove problematic for the company.
Starbucks had first revealed sales and traffic weakness that January. The company the following April reported a 3% same-store sales decline in what would become a landmark earnings call.
Its stock price fell 16% after the call. Continued sales weakness ultimately triggered the firing of Narasimhan later that year and the hiring of current CEO Brian Niccol.
Rachel Ruggeri, who was the CFO under Narasimhan, has also since departed and was replaced by Cathy Smith.
Niccol at Starbucks has largely overhauled the company, its operations and marketing in a “Back to Starbucks” plan. That plan has largely focused on making its stores more inviting for customers who plan to stick around and drink their espresso-based beverages. The company has added workers to its coffee shops and has taken small steps, such as having baristas write names on coffee cups.
The coffee shop giant’s same-store sales rose 7% in its most recent quarter after more than two years of weak results.
About the Author
Jonathan Maze
Editor in Chief, Restaurant Business
Restaurant Business Editor-in-Chief Jonathan Maze is a longtime industry journalist who writes about restaurant finance, mergers and acquisitions and the economy, with a particular focus on quick-service restaurants. He writes daily about the factors influencing the operating environment, including labor and food costs and various industry trends such as technology and delivery.
Content Spotlight
The Technomic Top 500: Another tough year for chain restaurants
Top 500 chain restaurant sales slowed again in 2025 as consumers cut back on dining, but sectors like coffee, beverages and snacks and chicken thrived
Featured
Jul 16, 2026
Jul 8, 2026
Recent News
Content Spotlight
Get to know Rick Cardenas, the Darden CEO who started there as a busser
The executive shares his advice, along with his most-binged TV show, favorite sports team, and most-used app
Source: This story originated with Nation's Restaurant News.
View Original Article →