- An article from Western Europe Food and Drinks Insights points out that French per capita consumption of coffee is among the highest in the world so that it would benefit SBUX greatly if it can make even the slightest inroad into the French coffee market. However, this might come with great difficulty as the article highlights that Starbuck's French operators are yet to breakeven.
- Starbucks opened its first store in Argentina on May 30. Although the company already operates in neighboring Brazil and Chile, SBUX was slow to enter Argentina due to the country's close links to espresso-style coffee and cafe culture, which have long been part of life there. Another Western Europe Food and Drinks Insights article said that the president of Starbucks Latin America has commented that the local coffeehouse culture in Argentina is the strongest of any Latin America country and because of this the company felt it would be a difficult market to be successful in.
- The opening in Argentina fits in with the company's renewed focus on International expansion and suggests that the company may try to push into markets that it had previously ruled out in order to offset weakness in the U.S. The company may face similar issues to that of France as it will be more difficult for SBUX to steal customers away from their independent cafes. The steady grow in Argentina coffee sales is tempting, but I hope SBUX pursues only high-return international growth and does not expand just for the sake of growth as it once did in the U.S.
In answer to the question How high can your market share go? Phil Knight was in print years ago with the answer 100% . In pouring through the share statistics on my previous post about the state of share change in the industry, I was reminded how simply dominant Nike's basketball franchise is, and how prophetic that seemingly impossible statement turned out to be.
Here's an amazing statistic for you. Adding up market share in basketball for the Nike Brand, Brand Jordan, and Converse, Nike Inc owns 92% of the category. If you ex out basketball shoes under $80, Nike's share goes to about 98%. I don't know about anyone else out there, but I cannot think of any consumer product in any category in any part of the globe that commands this kind of share. (Shoot me an email if you think of one).
- Based on my math, there are 917 styles on sale in the 'clearance' section. That's not unusual. But the fact that I had to count past 304 dress shoes to even get to the first sneaker was noteworthy.
- In fact, Famous' traditional product mix is 43% athletic, but less than 20% of its online 'clearance' inventory appears to be athletic. That's music to my ears if I am long anything in the Athletic arena.
- Yes, I know that these little anecdotes are dangerous given sample size, and lack of depth into number of pairs backing each advertized style. But when anything 'fashion' or 'style'-related hits my fairly unsophisticated eyes, I think it's usually worth calling out.
Risk Managed Long Term Investing for Pros
Hedgeye CEO Keith McCullough handpicks the “best of the best” long and short ideas delivered to him by our team of over 30 research analysts across myriad sectors.
Quite frankly, out of any footwear company in the industry, I'm least concerned about Crocs' cost pressures given that a stabilization of revenue will do more than any input cost increase. Also, I'm in the camp that the juice on the SG&A and capital intensity side of this model can more than offset any resin pressure.
No, I'm not making a bull call here. Not yet at least. But with the stock near $10 it's on my list.
More U.S. store closures on the horizon? - Starbucks said back on January 7, 2008 that it would close a number of underperforming U.S. stores as part of its turnaround strategy. The company quantified that number on January 30, 2008, saying it would close around 100 underperforming stores. Today, the company gave its first hint that the 100 number could be going higher when the CFO said he has a watch list for potential stores that may be on the bubble to close. Closing additional stores (beyond the already stated 100 stores) will only accelerate the company's ability to improve store-level operations and U.S. operating margins and will, more immediately, benefit same-store sales.
Today, Don Thomson President of McDonald's US said As you have heard before, we estimate that the sales potential for the entire new beverage lineup, from premium drip, specialty coffee, smoothies, frappes, bottle beverages and optimized travel drinks, that total is about $125K per restaurant, as you have heard us say before again.
We have not confirmed this with the MCD yet, but Don's comment represents a shift in the outlook for the new beverage line up.
daily macro intelligence
Relied upon by big institutional and individual investors across the world, this granular morning newsletter distills the latest and most vital market developments and insures that you are always in the know.