Purchase Date: July 30th, 2017
Purchase Price: $54.11
Current Price:[stock_ticker symbols="SBUX" show="name" static="1" nolink="" speed="10" class=""]
Why We Like Starbucks
Starbucks (Nasdaq: SBUX) is the dominant coffee chain worldwide – they have incredible brand recognition, and are expanding heavily internationally, specifically in China.
They reported solid quarterly results on Friday, July 28th, 2017 – revenue and earnings were mostly in line with analyst expectations, and same store sales increased by 5%. However, they reduced future guidance due to the retail apocalypse. CFO Scott Maw elaborated:
At the time of our last earnings call, we were seeing significant positive momentum in our principal global retail markets, particularly the U.S. However, that momentum ebbed and flowed over the quarter. The actions we have put in place are beginning to gain traction, but stiff consumer and industry headwinds remain. So, while lowering current year guidance as we enter Q4 is difficult, given the uncertainty we are seeing in the marketplace, we feel that doing so is the better part of valor and the appropriate action to take.
Starbucks also closed all of their Teavana stores due to low mall traffic – although retail declines will have some impact to Starbucks earnings, we believe this price drop is an extreme reaction to short-term concerns. Starbucks has invested heavily on their digital experience – while their online orderings still need work, we have full confidence in their management to resolve this and build on their digital competitive advantage.
On top of this – more and more studies are being released on the health benefits to drinking coffee, and studies this month showed how coffee drinkers even live longer. How many addictive products improve health and increase life spans? Coffee is loaded with potential, and Starbucks is best positioned to capitalize on this trend.