Starbucks (NASDAQ:SBUX) is finding growth harder to come by.
Last year, Starbucks controlled 26.5% of the U.S. coffee and snack shop market. However, the coffee giant has seen global same-store sales decline over the past two quarters.
Starbucks cafes have long been a “third place” for customers to work and socialize outside of their home or office. But experts say the company is now less experiential than it used to be. This has led to increased competition, with value players like McDonald’s (NYSE:MCD) and quick-service restaurants vying for a more price-conscious customer.
The coffee retailer’s stock soundly outperformed the market for most of its lifetime, but it has struggled to meet the moment since the pandemic started. It has cycled through three CEOs over the past few years, including the return of leader Howard Schultz. But so far, it remains in limbo, with middling results and no clear path forward.
This can mean one of two things for investors. Starbucks stock is in the dumps right now, down 21% this year while the S&P 500 is up 12%, and some industry watchers say it could be an excellent time to buy a winning stock on the dip. Alternatively, Starbucks could be at a dangerous inflection point that won’t necessarily end well. How should investors play this?
The skinny is that sales were about flat in the 2024 fiscal third quarter (ended June 30), earnings per share were 6% lower than last year, and operating margin was thinner.
Nearing noon EDT Thursday, shares in SBUX gained 60 cents to $75.89.
