Starbucks Q2 - The Good and The Bad


Last night Starbucks reported Q2 results. This company is quite obviously heavily impacted by COVID 19. Let's start with the bad news.


Starbux Impact From Covid


Restaurants and coffee shops around the world are almost all closed right now. In some countries they are allowed to deliver to homes through businesses like Uber Eats or supply kerbside pick-up service.


Starbucks Q1 - Good Growth, Virus Concerns


On Tuesday evening Starbucks reported their Q1 numbers. The company made more money than analysts were expecting but had slightly less revenue - a top-line miss with a bottom-line beat. Even though the earnings report looked solid, the stock dropped 2% yesterday. With something like jewellery or handbags, if there is pent up demand due to the China shutdown, those customers will come back after the shutdown and still spend all that money. Looking at coffee though, if you don't buy a drink today, you won't go and buy two tomorrow. For Starbucks, over half of its Chinese stores have been closed due to the coronavirus. Those sales will be lost forever.


Starbucks Q4 - A Chinese Growth Story


Seattle-based coffee juggernaut Starbucks released their earnings for the quarter ending in September saying that the company now operates over 31 256 stores across 70 countries. The loyalty programme continues to keep those same-store sales very strong, both in the US and China.


Starbucks - A Global Brand


Starbucks has had an interesting couple of years. More than half of Vestact clients in New York own this stock. Although we generally avoid retailers in US portfolios, affluent urban-dwellers drinking more coffee seems to be a major global trend.


Starbucks Pickup Only Store


You heard of cloud kitchens right? They are kitchens built for the sole purpose of online delivery. This allows them to be located in cheaper areas, have less staff and less space. That in turn makes them cheaper than normal restaurants. It is a very smart concept.


Starbucks In-App Cash


We have written before about the cash flow boost that Starbucks gets from its loyalty program. Currently, they have $1.6 billion in cash from people preloading their Starbucks app with money. What a brilliant business model! People pay you now for products that they will use in the future. In effect it is an interest-free loan to the company.


Starbucks Q3 - Soaring Higher


Seattle-based coffee giant Starbucks is another core recommended stock in Vestact New York portfolios. On Thursday night last week they published their second quarter numbers. They were very good, lifting the outlook for annual revenues and profits. Starbucks stock rose 9% on Friday, coming to within a whisker of $100 a share. Wow!


Starbucks Q2 - Increased Purchase Sizes


If you are one of our 272 customers who own Starbucks shares, treat yourself to an extra cup of coffee at your nearest store this morning. The company was out with pleasing Q1 results last night, and the stock rallied to a new all-time high after-hours, of around $78 per share.


Nestle Doing Well on Starbucks


The worlds largest FMCG company Nestle seems to be doing better than before. The company reported a 4.3% increase in sales in the first quarter and this is thanks to their partnership with Starbucks as people enjoy drinking a Starbucks coffee outside of Starbucks.


Nestle and Starbucks Products Hit the Shelves


Remember that fantastic deal Starbucks managed to secure with Nestle? Nestle paid Starbucks $7.15bn in cash for exclusive rights to sell Starbucks labelled coffee beans and pods. Starbucks will still receive a percentage of the sales. The power of a strong brand!


Starbucks Q1 - Strong Cash Flows


Last night Starbucks released their first quarter results for the period ending 31 December. Remember that Starbucks went through a slump in the US which resulted in a 2-year share price lag. However, since June last year the share is up 28% and was extremely resilient during the end of year sell-off. It does pay to be patient.


Starbucks Beats


Every year at this time, Starbucks rolls out its range of "holiday drinks". This means fancy coffee-based concoctions for Halloween, Thanksgiving, Christmas, Hanukkah, New Year and even Kwanzaa. Hey, anything for a bit of media buzz, right? Holiday season is spending season, a good time for customers to spend, businesses to make a profit and investors to enjoy share price gains.


Ackman piles into Starbucks


I have always enjoyed following Bill Ackman's antics within the investment community. For a hedge fund billionaire, he is relatively young and likes to ruffle the feathers of some of the grumpy, old-school titans of the industry. I don't necessarily agree with all his investment decisions but none the less he is very smart and talented.


Starbucks 3Q - Same store slows


On Thursday last week Starbucks released their Q3 results. Revenues were up 11%, resulting in EPS growing by 13% to 62c. Comparable store sales, however, were only up 1% which means most of their growth came from new stores. Another important metric is the 15.1m active Starbucks Rewards members. Amazon Prime has proven how much more loyal members end up spending. That subscriber number is becoming significant for Starbucks.


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