Starbucks’ Punished For Same-Store Sales Growth

Aug 27, 2004
George Anderson

By George Anderson

The insanity that is Wall Street was on full display yesterday, although nary a white coat was to be seen, as Starbucks’s saw its share prices drop 6.5 percent on the disturbing news its same-store sales in August grew eight percent.

Starbuck’s eight percent increase was above its monthly forecast but investors didn’t seem to be in a forgiving mood when the coffee shop chain failed to post its first double-digit monthly increase in the last nine months.

Standard & Poor’s equity analyst Dennis Milton explained the reason for the share’s slide to the Seattle Times. “(Wall Street) had built up the stock price so much in the last couple of months. It’s just retracing where it was.”

He added, “I would caution more investors not to be too obsessive over one month of sales. It’s interesting to look at, but it’s not always the best gauge.”

Ya think?

Moderator’s Comment: Would Starbucks be better off taking itself private? How do companies such as Starbucks protect themselves from market timers and
investors mood swings?

Starbucks guidance has been that it expects to see same-store increases of three to seven-percent on a monthly basis. We think it’s time investors in the
company switched to decaf.

George Anderson – Moderator

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