SBUX - JULY GRASS ROOTS SURVEY

The “grass roots” survey, which represents a geographic mix of stores across the U.S., indicates that July same-stores sales growth continued to improve from June levels with 76% of respondents reporting a sequential improvement.  In fiscal 3Q09, U.S. reported comparable sales declined 6% (better than the 8% decline in 2Q09) and management stated that the numbers got stronger throughout the quarter.  Based on that statement, it is reasonable to assume that June same-stores sales were about -5% or better, and July looks to have improved from that level. 

 

Over 75% of respondents reported flat to positive same-store sales growth.  Overall, the survey indicates that same-stores sales growth was flat to +1%, which like in past months seems too good to be true.  Providing a haircut to the numbers would put comparable sales growth at -2% to -3%, which at first look also seems aggressive, but it is important to remember that SBUX is lapping a -8% number in the U.S. from 4Q08 so comparisons definitely get easier.  A 3% decline in U.S. same-store sales for 4Q09 would represent a 2-year average trend similar to that of 3Q09. I continue to think that it is more important to focus on the numbers on a directional basis, rather than looking at the absolute numbers, and directionally, the respondents are seeing better results in July than they did in June.

 

As we stated following SBUX’s 3Q09 results, MCD’s McCafe does not appear to be negatively impacting SBUX’s sales.  The survey’s findings actually seem to mimic CEO Howard Schultz’s comment that the increased level of advertising around the QSR coffee segment seems to be benefiting SBUX by increasing trial with more respondents saying that MCD’s premium coffee initiative is having a positive impact than those experiencing a negative impact.  

 

SBUX - JULY GRASS ROOTS SURVEY - SBUX SSS 4Q09E


Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more