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Friday, September 01, 2006

Starbucks Same Store Sales Silliness

By William Trent, CFA of Stock Market Beat

This is getting to be a monthly phenomenon - Starbucks reacting in apparently random fashion to the release of its same store sales results.

Yesterday was no different. The stock rose during regular trading and popped nearly one percent after hours on the release of their data, prompting to proclain “Starbucks Sales Improve.”

August same-store sales rose 5%, in the middle of its targeted range of 3% to 7%.

The results represent an improvement over July, which saw 4% same-store sales growth. The July results were largely viewed as a disappointment and a sign the chain’s growth may be decelerating.

So 4 percent marks deceleration and a disappointment, while 5 percent is improving? Well, we guess so… but both are within the 3-7% range the company has issued as their official expectations. Sounds more like noise to us.

We know about July and August, so how about June? According to MarketWatch, at that time “Starbucks Stock Falls on Missed June Sales Results,” because:

The company said same-store sales rose 6% for the month, but analysts polled by Thomson First Call had been looking for a 7% rise.

So four percent or six percent growth causes the stock to fall, while five percent is apparently the sweet spot? Not so fast. The stock rose 3% when it reported 6% comps growth back in April.

Which all goes to show you - find a good stock and find the right price to buy it. Then you can comfortably ride out the noise.

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