Former CEO Schultz Urges Starbucks Overhaul Amid Sales Slump: Report
Portfolio Pulse from Shivani Kumaresan
Former Starbucks CEO Howard Schultz has called for a major overhaul of the company amid a sales slump, citing a need to revamp operations and improve the customer experience. Starbucks faces challenges from inflation, competition in China from Luckin Coffee, and a significant drop in sales due to various factors. The company's second-quarter results fell short of expectations, with a 4% decline in global comparable store sales and earnings missing analyst estimates. Despite these challenges, Schultz remains optimistic about Starbucks' recovery, especially in China. Starbucks stock has declined over 31% in the last 12 months, but shares are trading higher in premarket.
May 06, 2024 | 10:31 am
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Starbucks faces a sales slump, with Schultz urging an overhaul. Q2 results missed estimates, with a notable decline in global comparable store sales.
The call for an overhaul by Schultz and the reported sales slump could lead to short-term volatility in Starbucks' stock. However, the premarket uptick suggests a mixed investor reaction, balancing optimism with the reported challenges.
CONFIDENCE 90
IMPORTANCE 95
RELEVANCE 100
NEUTRAL IMPACT
Starbucks is also part of the Vanguard Total Stock Market Index Fund ETF, offering broader market exposure.
VTI's broad market exposure means that the impact of Starbucks' performance on the ETF is minimal, offering investors a diversified investment option that includes but is not heavily influenced by Starbucks.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 50
NEUTRAL IMPACT
Investors can gain exposure to Starbucks through the Consumer Discretionary Select Sector SPDR Fund.
While XLY includes Starbucks in its holdings, its diversified nature across the consumer discretionary sector means Starbucks' performance has a diluted impact on the ETF's overall performance.
CONFIDENCE 75
IMPORTANCE 60
RELEVANCE 50
POSITIVE IMPACT
Luckin Coffee has overtaken Starbucks in sales in China, intensifying competition.
Luckin Coffee's overtaking Starbucks in sales in China could positively impact LKNCY's stock in the short term, as it highlights the company's growing market presence and competitive edge in a key market.
CONFIDENCE 85
IMPORTANCE 85
RELEVANCE 80