Social divide $ucking life out of Starbucks
It’s not just the weather that can ruin a retailer’s quarter.
Wall Street analysts and CEOs are starting to blame civil and political tensions for changes in consumer behavior — for better and for worse.
Starbucks founder and chief executive Howard Schultz said Friday that the java joint’s comparable sales dipped below 5 percent growth for the first time in 25 consecutive quarters because consumers are scared.
“In 24 years of public life I can’t recall a quarter quite like Q3 of 2016 with a confluence of social and political turmoil at home, weakening consumer confidence, increasing global uncertainty and the launch of one of our most significant longterm initiatives,” Schultz said during a Thursday call with analysts — and then re- ported during a Friday interview on CNBC.
While Starbucks’ growth surpassed that of its competitors — revenue was up 7 percent to a record $5.2 billion in the quarter ended June 26 — its US same-store sales rose 4 percent, or as Schultz put it, “an anomaly” caused by a “profound decline in consumer confidence in Q3.”
But what’s keeping some consumers from going out to buy a frappuccino or espresso from Starbucks is fueling a huge run-up in pizza sales — at least according to KeyBanc analyst Chris O’Cull.
O’Cull believes so strongly that the political uncertainty and social divide gripping the US will fuel an increase in pizza sales that he upgraded Papa John’s rating this week.
Giving credence to that thought, Domino’s reported a stellar second quarter in which same-store sales rose 9.1 percent and revenue rose 12 percent.