The stock is soaring, and it could keep going up -- as long as comps do, too.
Who says megarestaurant chains can't be high-octane growth
companies? Starbucks (NASDAQ:SBUX) has rocketed 46% higher in the last year as
the world's third-largest restaurant chain by number of locations has reignited
existing store sales growth. Despite the surge in stock price, though, the
coffee shop and retailer can keep climbing if it can demonstrate that its
recent momentum in comps is more than just fleeting.
What's the deal with comps?
Comparable-store sales is a combination of the number of
transactions (foot traffic) and ticket size per order at existing stores -- in
Starbucks' case, stores that have been open for at least 13 months. For a
company with over 30,000 locations worldwide, rising comps is one of the
primary ways Starbucks can increase profitable sales.
Comps were touch-and-go in 2018. Though the metric ended the
year up 2%, there were quarterly declines at times -- especially in the
important growth region of China and greater Asia. The annual rate was a
deceleration from years past. As early as 2016, Starbucks was still putting up
6% global comps growth.
For fiscal 2019 to date, though, Starbucks has had a
resurgence in comps -- up 4% in the second quarter and 3% in the first. Leading
the charge has been the U.S. Though new store openings in North America have
slowed to a low single-digit crawl, it's where the majority of global locations
are located (currently over 17,700). Thus, comps are the most important way to
grow overall sales in what is still Starbucks' largest market.
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