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Ackman's Starbucks Rises Despite 3rd-Quarter Sales Plunge

Shares of Starbucks Corp. (NASDAQ:SBUX), a major coffee chain, rose over 6% in aftermarket trading on Tuesday on the heels of the company reporting better-than-expected losses per share despite a double-digit sales decline during the third quarter.

For the quarter ending June 28, the Seattle-based company reported a net loss of 58 cents per share, compared with net earnings of $1.12 in the prior-year quarter. Despite this, an adjusted net loss of 46 cents per share outperformed the consensus estimate: analysts expected adjusted net losses of 59 cents per share.


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Same-store sales evaporate on decreased foot traffic

For the quarter, global comparable store sales plunged 40% on the back of comparable transactions declining 53% in the Americas and 44% in international markets.

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Starbucks said in a June 10 business update that U.S. comparable sales improved from a decline of 63% year over year in April to a decline of 43% year over year in May as U.S.-based stores started reopening during the second week of May.

Market research company sees restaurant industry sales plateauing amid coronavirus pandemic

NPD Group, a private market research company, reported on Monday that surging coronavirus cases across the U.S. have stalled recovery among restaurant chains, with consumer transactions declining between 11% and 14% versus a year ago each week since the second week of June, including a 12% decline for the week ending July 19.

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Shares rise in aftermarket trading on better-than-expected net loss

Starbucks shares surged over 6% in aftermarket trading, trading near $78 despite closing at $74.64, down 2.38% from the previous close of $76.46.

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Bill Ackman (Trades, Portfolio)'s Pershing Square owns over 10 million shares of Starbucks as of the March-quarter filing date. The fund also has holdings in other restaurant companies like Restaurant Brands International Inc. (NYSE:QSR) and Chipotle Mexican Grill Inc. (NYSE:CMG).

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Other gurus with holdings in Starbucks include Ken Fisher (Trades, Portfolio), Pioneer Investments (Trades, Portfolio) and Jeremy Grantham (Trades, Portfolio).

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Disclosure: The author has no positions in the stocks mentioned. The mention of holdings in this article reflect data from the March filing and do not include any trades or portfolio hedges made during April-July. Per Securities and Exchange Commission regulations, the deadline for quarterly portfolios is 45 days after the quarter ends.

Read more here:

  • McDonald's Tumbles on 2nd-Quarter Sales Decline
  • The 4 Most-Voted Stocks in the Buying Basket as of July
  • Johnson & Johnson Dips on 2nd-Quarter Sales Decline



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This article first appeared on GuruFocus.