Starbucks: China falls off a cliff
Starbucks reported strong US results that were marred by a marked drop-off in China. We remain hold-rated on the stock amid China and valuation concerns.
AU and US data to set tone for week ahead | Apple
The New Zealand market (NZX 50 Index, +0.3%) closed last week on a mildly positive note. Two tourism plays, SkyCity Entertainment (+3.3%) and Tourism Holdings (+2.0%), advanced on the day. SkyCity held its 2022 annual meeting on Friday where it reported quarter 1 Earnings Before Interest, Tax, Depreciation, and amortisation for the 2023 Financial Year approximately +10% above pre COVID-19 levels on a like-for-like basis. However, the casino operator omitted to provide full-year guidance and couldn’t say if it would be reflective of its quarter 1 performance.
RBNZ Follows Through | Starbucks
US markets (S&P 500 Index -0.3%) swung from a small positive position in the last hour of trading to close in the red on Wednesday. On the economic data front, the ADP Employment Change showed 208K jobs added to the US economy in September, slightly above market forecasts of 200K. Investors are now looking ahead to Friday’s release (UTC -4) of the Non Farm Payrolls (NFP) report.
Starbucks: Hot Coffee
We initiate coverage of Starbucks with a hold rating. The Seattle-born Starbucks is a globally known coffee chain with +33,000 stores worldwide. Starbucks has come under pressure from i) unionisation efforts ii) China’s extended COVID shut-down iii) shifting consumer tastes. Same-store sales in China declined ~43% in Q3 ‘22, whilst intl. same-store sales decreased 18%.
