COMMENT: Starbucks - unstoppable?
Strong pre-holiday season planning has paid off for Starbucks as it recorded its highest ever same-store-sales in December. The lure of a premium taste sensation and a plush environment in which to enjoy it is proving to be a successful and sustainable combination.
Starbucks is emerging as one of the winners of this year's holiday season due to a combination of unique gift solutions, holiday-themed products and a renewed emphasis on the brand's positioning.
December same-store sales climbed 11% from a year ago, the biggest increase since 1992. In total, the Starbucks Corporation reported record sales levels for December at US$532m, up 26% from a year ago. The company's Yuletide success can largely be attributed to the introduction of seasonal gift products and flavours such as the Starbucks Eggnog Latte, and the promotion of its stores as a place of respite from holiday shopping.
"This holiday season was Starbucks' best in years. Customer response to our holiday beverage, merchandise and food offerings exceeded our expectations," said company chairman Howard Schultz.
Wall Street acknowledged the coffee company's success with reinforced "buy" recommendations after Starbucks raised its Q1 earnings target from 24 cents a share to between 25 and 26 cents a share. Indeed, most analysts expect strong sales throughout January and February. Starbucks gift cards were a popular gift choice over the holiday season and recipients are expected to spend more within the Starbucks stores than the face value of their cards over the coming months.
The deliberately self-indulgent Starbucks experience, providing high-tech, high-comfort store environments in which to enjoy its premium fresh food and drink offerings, is proving a hit. Consumers seem not to flinch at either the calorie content or the price of such luxuriant products as the Chocolate Malt Frappuccino Blended Creme.
On top of this, the recent addition of a nutritional information section on the Starbucks website is likely to keep food and drinks regulators away from its doors. It seems that right now, there is no stopping Starbucks.
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