Starbucks Reaches Record-Breaking Streak of Losses

In an unexpected turn of events, Starbucks Corp. is currently in the throes of a record-breaking streak of losses. Investor concern is mounting around the recent slump in Starbucks’ sales trends, which caused the stock to drop 1.6% on Monday, marking the 11th straight day of decline — the longest yet since Starbucks stepped into the public domain in 1992. This prolonged downturn has wiped out 9.4% of Starbucks’ market value, translating to an almost $12 billion reduction.

The sales slowdown became evident during November, an observation supported by third-party sales data, following a previously strong period of comparable sales growth of 8% in the fiscal fourth quarter. These insights were shared by JPMorgan Chase & Co. analyst John Ivankoe in a note released on Monday.

In light of recent trends, Ivankoe has moved to adjust his Q1 U.S. comparable sales growth expectations from an optimistic 6% to a more conservative 4% compared to the same period last year. The adjustment reflects a less triumphant Christmas holiday promotion compared to the fall’s successful Pumpkin Spice Latte event.

Despite Starbucks’ shares rallying in the early weeks of November due to quarterly results exceeding predictions and a positive sales outlook for fiscal 2024, the stock has been on a downward spiral over the past two weeks. Ivankoe highlights subdued China data and sales trends as areas of concern, although he maintains an “overweight rating on the stock.”

Another voice in the conversation is Wedbush Securities Inc. analyst Nick Setyan, who shares that investors are apprehensive about U.S. comparable sales falling short of consensus expectations this quarter, a fear fueled by recent credit card data indicating a potential slowdown. He maintains a neutral stance on Starbucks, highlighting its sensitivity to signs of consumer weakness.

Data-driven research firm M Science has observed decelerated sales trends in the snack and coffee industry on a weekly basis, attributing this to Starbucks’ softer trends. Analyst Matthew Goodman noted that the cooling trends are a result of three consecutive weeks of reduced sales, influenced by recent boycotts and labor strikes, including the Red Cup Day strike that impacted up to 200 U.S. locations.

A stark comparison is evident when you look at Starbucks’ shares, down by 1.6% this year, against a robust 11% rise for the S&P 1500 Composite Restaurants Index, making the current situation all the more unpalatable for Starbucks and its investors.