Starbucks’ Strong Earnings Provides NBCC With the Perfect Pick-Me-Up

While restaurants such as McDonald’s and Yum Brands brought in customers with discounted meals, Starbucks went in the opposite direction with higher priced drinks — and the gambit paid off. Hey, people clearly want their pumpkin spice lattes, and aren’t going to let a little thing like high prices get in their way.

Despite inflation still being sky high, the Seattle-based coffee chain’s quarterly earnings and revenue beat Wall Street’s estimates. Global comparable sales rose 7% in the fourth quarter ended Oct. 2, above analysts’ forecasting a 4.2% increase, according to Refinitiv.

Meanwhile, U.S. comparable store sales increased 11% in the quarter. Total net sales for the period went up 3.3% to $8.41 billion, versus analysts’ average estimate of $8.31 billion.

According to Starbucks CFO Rachel Ruggeri, that U.S. traffic nearly rebounded to 2019 levels. “Despite elevated pricing actions taken throughout the year, daily store traffic in the U.S. reached approximately 95% pre-pandemic levels in September fueled by the wildly successful fall promotion,” Ruggeri said on the company’s quarterly earnings call.

Starbucks is one of the holdings in the Neuberger Berman Connected Consumer ETF (NBCC), which targets companies that demonstrate significant growth potential from connectivity-based consumerism.

“Retailers need to reimagine their technology or business model to connect with the Gen Y and Gen Z consumers,” said John Aguilar, senior vice president and head of U.S. intermediary marketing at Neuberger Berman. “How are companies reimagining themselves to future-proof their business to connect with that digitally native cohort?”

Launched in April, NBCC spans a broad range of industries globally, and may invest in companies of any market cap. The team will evaluate the web search and spending tendencies of millions of consumers and the daily call transcripts and filings of over 4,000 public companies to identify the best opportunities for mass adoption in the digital age. NBCC is managed by Kevin McCarthy, John San Marco, Kai Cui, Timothy Creedon, and Hari Ramanan.

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