The Conference Board's consumer-confidence index came in at 97.3 in July. Economists surveyed byThe Wall Street Journal had expected a reading of 96.3 in July. An economist at Capital Economics said the higher-than-expected reading indicated that consumption will continue at a decent pace in the third quarter."
That will likely include the purchase of food and drink outside the home. Starbucks (SBUX) - Get Report , the world's best known purveyor of coffee, should benefit from the trend. The stock price was on a slow, but steady, upward course for most of this year, although it has dropped in recent sessions. Shares fell almost a percentage point in Monday trading.
Starbucks has pursued a smart strategy of getting its brand into larger retail outlets like supermarkets, allowing customers who may not have been thinking about coffee or a snack to make these purchases on impulse.
R.J. Hottovy, consumer strategist for Morningstar, recently said he views the company as "one of the few food-service operators that could evolve into a world-class consumer packaged goods company due to its ability to connect with grocery and mass-channel customers through licensed on-premises stores."
The stock has shown its resilience before. The share price was below 30 four years ago at this time, but even with its recent pullback it is still around 55. The chain became a sensation in the 1990s but had adapted to 21st century business, in part by investing in mobile ordering and payments to serve customers faster.
The decline in the stock price is largely due to one number in the third-quarter statement: comparable U.S. sales in the last earnings report showed a 4% increase; most analysts had expected a 5% gain.
But there were some other figures in that earnings report that were heartening, including strong 7% comparable sales growth and record revenues and profits in China, plus 18% year-over-year growth in the Starbucks Rewards loyalty program. Seeing that U.S. store locations had reached something of a saturation point in many big U.S. cities, management has pursued an aggressive strategy of reaching more customers in emerging markets like China and India.
Starbucks also offers more food options than it did even a decade ago. For the busy urbanite looking for a quick bite to eat, Starbucks presents almost as many choices as McDonald's or Burger King, and the quality is higher.
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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.