There's no lactose intolerance here.
Starbucks (Nasdaq: SBUX ) has once again reported double-digit growth in same-store sales, clocking in at 11%. Although some alarming headlines circulated yesterday about the possibility of a price hike due to the high price of dairy, rumors to that effect seem highly overrated and, of course, Starbucks is as popular as ever.
We learned last week that Starbucks, which has been hotter than a latte without one of those handy cardboard sleeves, has one slightly sour note facing its business: costly milk. Yesterday, Reuters caught up with CEO Orin Smith, who admitted that a price hike could be on the menu if the situation continued over the long term.
However, in last night's same-store sales report, Starbucks said that its business plan already allowed for the added expense, and it does not intend to hike prices on its popular beverages. So, chalk that up to "Sure, it could happen someday," just as investors expected.
What might have been more interesting from an investment standpoint was Smith's "early anecdotal evidence" that Black Apron has so far been well received. Black Apron Exclusives are Starbucks' super-premium new beans, selling on a limited basis for a rumored $35 per pound. (Indeed, Fools have engaged in animated conversation about it on the Starbucks discussion board.) When many wonder about Starbucks' increasingly mass-market stance, these coffee varieties should prove an interesting experiment on the high end of the market.
For now, though, there's no reason to panic about the price of a frap. Even if Starbucks were to hike prices on its beverages by a few cents, I'd argue that it's a rare customer who would complain too much. Starbucks may be weaseling its way into our everyday lives, but it's still got that luxury feel, unlike a 7-Eleven (NYSE: SE ) or McDonald's (NYSE: MCD ) coffee break.
Meanwhile, April same-store sales represent the sixth consecutive month of double-digit sales gains. Consolidated net revenues jumped 29% to $395 million. April cruel? Not for Starbucks.
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Alyce Lomax does not own shares of any companies mentioned.
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