The weather "boggish" coffee giant Starbucks performance?

On August 4, the weather in Seattle, where Starbucks was headquartered, was still hot, but Wall Street investors’ enthusiasm for the world’s largest coffee beverage retailer was cooling off quickly because the company’s third quarter results were below market expectations.

A customer is enjoying coffee and sunshine at a Starbucks store in Beijing.

Share price plummeted 14% in two days

After the US stock market closed on Wednesday, Starbucks released its third fiscal quarter financial report.

All-quarter revenue increased by 23%, same-store sales increased by 6%, profit was 145 million US dollars, an increase of nearly 16%, and earnings per share were 18 cents. From these figures, Starbucks' performance in the third quarter was good.

However, Starbucks's same-store sales data for July was also disappointing. Starbucks said that in July, the same-store sales of Starbucks stores that had been in stores for more than one year increased by only 4%. This was not only lower than the growth rate of 7% in the same period of last year, but also lower than the 6.4% predicted by Wall Street earlier. This kind of news is horrifying. The slowdown in sales growth at the same store has completely overshadowed the good news of the earnings report. Investors began to sell their Starbucks shares one after another.

On the same day, the shares of Starbucks listed on the Nasdaq fell rapidly from after-hours trading from US$33.30 to US$30.72, a decrease of nearly 8%. On the second day, Starbucks’ share price even experienced a more serious decline. In early Thursday morning, the stock's stock price hit a new intraday low of $28.72. This price fell by nearly 14% compared with the regular trading of US$33.30 on Wednesday.

Are the weather "hot" disasters?

Michael Casey, Starbucks’ chief financial officer, said at a conference call after the close on Wednesday that “Usually, we don’t want to use the weather as a factor that affects the company’s operations.” But this time, the weather did bring a lot to Starbucks. trouble.

For many Chinese people, they may like to spend a leisure time at Starbucks leisurely holding a cup of coffee to chat with friends. In the United States, many people are used to starting a day of work with a cup of Starbucks coffee.

However, due to the unusually hot weather this year, the billowing heat wave caused "more customers to switch from hot drinks such as espresso espresso to cold drinks such as Frappuccino during the morning sales season." Since it takes a long time to make cold drinks, people have to wait long queues in Starbucks stores, so some customers are scared away by a long team.

Michael Casey acknowledged that Starbucks ignored this new trend.

"To be honest, we did not do well enough.

If we realize this early, we can speed up the promotion of cold drinks shops. “

Starbucks CEO Jim Donald evidently confirmed this on the conference call. "At 5:45 in the morning today, I was waiting in line with a team of customers to buy Frappuccino.

There are only 6 people in the team and the time is just right. “

No, Jim, if you stay there three months ago, it will be "just right."

Will open 4,400 new stores in two years

Although Starbucks attributed the slowdown in same-store sales in July to the effects of weather and said that the slowdown was completely "healthy", there are still many investors worried that this coffee retailer is not faced with It is a short-term service problem, and the disappointing July same-store sales performance may mean that lower consumer spending may have a greater adverse impact on the company.

Jim Donald, CEO of Starbucks, said that the company has a clear understanding of consumer spending cuts and weak retail conditions, but the company believes that the slowdown in sales is not a reflection of the above macroeconomic conditions, but more importantly, "The chance of improving this situation is still firmly in our hands."

JimDonald pointed out that it is obviously Starbucks' global new store plan.

As the world's largest coffee beverage retail company, as of July 2 this year, Starbucks has opened 11,784 stores in 37 countries and regions around the world.

In the third fiscal quarter of fiscal 2006, Starbucks opened 559 new stores worldwide, which set a new record in the history of its company. Just one month in July, there were 162 Starbucks stores opened worldwide. There are more than 600 Starbucks stores in Japan and the UK has the 500th Starbucks store in the current quarter...

Even in the Philippines, Jim Donald has just recently attended the opening ceremony of the 100th Starbucks store here. According to Starbucks' initial prediction, this small country can only accommodate 50 Starbucks stores at most.

JimDonald said that this clearly confirms the global acceptance of Starbucks, and shows how broad the Starbucks global chain plan has.

Due to the poor sales of old stores, the smooth opening of a considerable number of new stores has made Starbucks more effective. It is under the impetus of new store sales that Starbucks’ operating revenue growth in July still maintained a 20% level.

This undoubtedly strengthened Starbucks' plans to continue opening new stores.

For this year’s new store plan, Starbucks’ latest statement is that in fiscal year 2006, the company will open 2,000 new stores globally, and in the fiscal year 2007, it will open 2,400 new stores. The number previously released by the company was 1800.

In the 2006 fiscal year, Starbucks has already entered the Brazilian market. Now they are eyeing Russia and India.

The third eye

China: Starbucks Expands Second Market

Starbucks, a coffee company founded in Seattle in 1971 and started with coffee beans, has attracted worldwide attention with its “fairy-tale” miracle for more than a decade since its listing in 1992. According to statistics, less than every eight hours, there will be a new Starbucks coffee shop hanging signs in a corner of the earth.

This is the speed of opening stores, Starbucks still feel unsatisfied. According to Reuters, Howard Schultz, chairman of Starbucks’s board of directors, said that the company’s goal of setting up 30,000 franchise stores worldwide at the end of 2004 was too conservative.

The analysis of the industry, Starbucks was able to expand rapidly in the world, the reason why Schultz dared to boldly declare that "30,000 chain stores are too conservative", and their access to franchise in China is inseparable.

According to reports, Starbucks had a consensus within China that Starbucks is the country with the greatest opportunities for development outside the United States. In this context, Starbucks estimated the number of chain stores opened in China to 10,000.

In fact, as far as Starbucks' current development in China is concerned, "10,000" is not yet a small number. According to figures from May, the American company has 165 coffee shops in 18 cities in mainland China, of which about 120 are located in Beijing or Shanghai. In Greater China, including Hong Kong and Taiwan, there are fewer than 400 Starbucks stores. When the “thousands of families” has not yet been reached, the gap with “ten thousand homes” is obviously still on the order of magnitude.

However, Starbucks' ambition in China is undoubtedly certain. According to reports, Beijing Meida Starbucks will maintain the speed of opening a dozen new stores a year this year. In addition to major cities such as Beijing and Shanghai, Starbucks has begun to expand China's second-tier market. At the beginning of June this year, Schultz especially stated that he is very optimistic about the Chinese market and will invest more in the business in China in the future. In his words, “China has become the company in both current and long-term considerations. Strategic focus."