Slowing Americas Transactions Growth
Whether this surfaced because of the "seismic" shift in how people consumed goods (hurt Starbucks' December U.S. same-store sales) as noted by Howard Schultz, or from store operating issues born from an expanding menu (denied by the company), it's a development that occurred and is not factored into the valuation on a publicly traded Starbucks. Starbucks fetches its premium P/E multiple relative to other specialty retailers, the Dow, and S&P 500 due to it being a destination for individuals throughout the day, and that is supposed to stay intact regardless if goods are being bought on handheld devices from home. Basically, you are to order a pocketbook from Nordstrom (JWN) on their iPad app and then head to Starbucks, consume food and a frappe, and stay in the store for an hour to buy more on the Nordstrom iPad app.
Starbucks pointed out that in response to a December traffic slowdown in the U.S., it ramped promotions in the latter portion of the month. Starbucks, promoting. We aren't talking JC Penney (JCP) and Sears (SHLD) promoting to sell non-essential merchandise sourced from China, and Mr. Market is not accustomed to hearing the mighty Starbucks promoting for products that are thought to be daily essentials. Be advised that Starbucks' earnings per share estimates on the Street are already set above the top-end of the company's guidance, despite another worthy risk to consider.
Let this piece be a classic that you save forever. Separate love and obsession for a company from the factual financials and comments from a company and go onto be Howard Schultz more often than not, a winner.
--By Brian Sozzi in New York.