Starbucks' Piping-Hot Comps Growth

Coffee king Starbucks reported outstanding November same-store sales (or "comps") growth yesterday, continuing a year-long trend. While some retailers have suffered this year, Starbucks has turned in month after month of great sales results. The company has managed to couple aggressive new store openings with consistent comps growth, and has plans to keep up the same for the current fiscal year.

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By LouAnn Lofton (TMF Lou2)
December 1, 2000

Starbucks' (Nasdaq: SBUX) year-long tear of unbelievable same-store sales (or "comps") results continued in November, with the coffee retailer and roaster racking up an 11% comps increase over last November.

So far this year I've been left dumbfounded nearly each and every time the company announces its comps. Seven of the 11 months reported this calendar year have seen double-digit growth. The remaining four months had comps growth of 8% or 9%. For Starbucks' fiscal year, which ended October 1, the company reported 9%. To really marvel at these numbers, check out this chart of the monthly comps growth so far this year.

Month     Comps
---------------
January     +8% 
February   +10% 
March      +10% 
April      +12% 
May         +9% 
June        +9% 
July        +8% 
August     +10% 
September  +10% 
October    +12% 
November   +11%

Those comps go down smoother than my new favorite drink, the Gingerbread Latte. A key measure for a retailer's success is same-store sales growth. You can grow sales by continually building new stores, but without more customers shopping at your older stores, such growth eventually weighs the company down. The cost of building out the new locations and the sales drag from the slow old stores will take its toll on profits, not to mention added debt if the company has to finance its new store growth that way. Starbucks has been both adding new locations and keeping up strong comps growth all year.

Even in the face of slowing consumer spending and the implosion of other retailers' comps, Starbucks stands out. While people may slow their spending on clothes or other stuff, they still need their caffeine fix. As a result, so far this year, Starbucks has bucked the fate of some of its retailing cousins.

Starbucks added 1,035 new stores during fiscal 2000 bringing its total up to around 3,500. The company plans to add at least another 1,100 Starbucks during the current fiscal year, while growing total revenues 25-30% and keeping comp sales growth in the middle single digit range.

Starbucks has figured out a formula that allows it to do what so many others can't -- expand aggressively while also increasing traffic in its older locations. It probably has at least a little something to do with those caffeine monkeys on the backs of coffee drinkers the world over. Regardless, the company plans to do it all over again for the current fiscal year.

Your Turn:
How has Starbucks continued this year to turn in such great comps? Talk about it with other Fools on the Starbucks board.

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