Recently, the Jim Cramer Charitable Trust made the decision to purchase 75 shares of Starbucks, bringing the total holdings to 1,150 shares. This change nudges the investment’s weight from about 2.25% to around 2.4%. After Starbucks’ report last week, there’s a bit more confidence in CEO Brian Niccol’s strategy for a turnaround. Interestingly, the stock prices have reverted to the lows seen back in early April, which presents what seems like a good chance to invest further.
Niccol has set out on a significant project to refresh the store ambience, aiming to revive its coffeehouse vibe with a new operational and staffing approach called Green Apron Service. It took some time, but signs of recovery have started to emerge. If you look at same-store sales—a crucial indicator of retail and restaurant performance—they had been on a downward trend for several quarters. However, they remained steady during the recent July to September timeframe. What’s promising is the month-to-month trend that shows revenue began to climb positively in September. Management indicated that this positive momentum has continued into October.
This rebound appears to stem from an uptick in customer transactions rather than just price hikes or increased orders. It’s a good signal that customers are returning to the brand. However, a number of consumer-oriented businesses, including retailers and restaurants, are currently facing scrutiny due to weakening consumer sentiment, with some struggling significantly. For instance, look at Nike, which seems to have its own challenges. Traditionally, trying to buy into such declines—often referred to as “catching a falling knife”—isn’t a sound investment approach. Yet Starbucks and Nike present somewhat distinct opportunities for brand recuperation. If Niccol and Nike CEO Elliott Hill can execute effectively, there’s potential for revenue growth from these iconic brands.
As a note, the Jim Cramer Charitable Trust is currently holding positions in both Starbucks and Nike.
