Starbucks: The Niccol Era Has Begun, But Don't Be Giddy Yet

Summary

• Starbucks' Q1 earnings showed a positive start under CEO Brian Niccol, despite continued downward trends in key metrics like comparable sales and operating margins.
• The "Back to Starbucks" strategy is showing early signs of success, evidenced by increased loyalty program membership and reduced discount-driven transactions.
• Rising coffee prices and challenges in the Chinese market are significant headwinds, necessitating potential partnerships or stake sales to revive business.
• Despite an 8% post-earnings stock jump, SBUX remains a "show-me" story, warranting a HOLD rating due to ongoing investments and external pressures.