Starbucks said yesterday that its Q3 US same-store sales were up nine percent compared to the same period a year ago; global same store sales were up just three percent, and were hit hard by the fact that same-store sales in China were down 44 percent because of pandemic-related shutdowns.
The company said that Q3 sales were up nine percent to $8.15 billion, though net income was down 21 percent to $912.9 million, hit by higher wages, higher costs for ingredients, and higher training costs.
The Wall Street Journal reports that "Starbucks’s results come about four months after Howard Schultz returned to the chief executive role for the third time. Mr. Schultz said Tuesday that he has spent the previous months identifying weaknesses in the business, some of which resulted from the pandemic. Consumer demand has overwhelmed many baristas, as have anxieties about their physical, mental and financial health, Mr. Schultz said … Mr. Schultz said that about 75% of U.S. company store sales now come from cold beverages, many of which customers order with added flavors and colors. Such customization is helping Starbucks compete, as is the company’s loyalty program. Mr. Schultz said the company hasn’t noticed customers reducing their spending or buying less expensive items, as other chains have reported in recent weeks."
The New York Times reports that "Mr. Schultz also said that the company was interviewing potential candidates for the chief executive job and that he was likely to stay on 'as long as necessary' to make sure the candidate had a seamless start. He said he would then make a transition to the board of directors to 'mentor and help' the next chief executive."
- KC's View:
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Let's be clear. "As long as necessary" is almost certainly going to be longer than originally planned, and Schultz certainly feels that Starbucks needs him, it seems fairly obvious to me that he also needs Starbucks. And that's okay … as I've said here before, Schultz seems to have a kind of messiah complex, but he does have a record of helping the company when he makes his returns.
I continue to believe that the recent chapters in the Starbucks story serve as a cautionary tale for every other retailer. For the most part, Starbucks stores do an enormous amount of pick-up business in locations built to be "third places," and do the majority of their business in cold drinks in stores engineered to make a lot more hot drinks.
That's a disconnect that, I think probably could be seen in a lot of other businesses.
