We Now Know When Pumpkin Spice is Coming Back: Starbucks Stock (NASDAQ:SBUX) Dips

Business Insider

7 days ago

Granted, the air outside is anything but chilly right now. However, coffee giant Starbucks (SBUX) knows that the day is coming when frost returns to the air and thoughts start to turn to cinnamon, nutmeg, and of course, pumpkin. The Pumpkin Spice Latte lineup is returning to Starbucks, and it even has an arrival date: August 26. Investors were less than pleased, though, and sent shares down fractionally in Monday afternoon's trading.
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For those who think that Starbucks is, perhaps, pushing things by bringing out Pumpkin Spice at a time before Labor Day, let alone the first frost, take heart: this is actually Starbucks showing some restraint. Last year, reports note, Pumpkin Spice made its appearance four days earlier. Regardless, Pumpkin Spice is generally considered a winner for Starbucks, and Starbucks absolutely needs a winner right now.
In fact, reports note, around 10% of Starbucks' annual sales come from ' seasonal staples ' like Pumpkin Spice Latte. Moreover, after the item came out last year, visits to Starbucks increased 24% over a 'typical day.' This was not a one-off, either; the arrival of Pumpkin Spice triggered a 'sustained visit spike' that carried on for days. Reports also noted that search engine traffic for 'pumpkin spice' is on the rise unusually early this year, as the normal spike that comes around mid-July this year came in mid-June.
A Sock in the Morale
Meanwhile, employee morale at Starbucks is in open decline thanks to the new return-to-office (RTO) mandate the company issued. While it made all the standard noises about collaboration and speed of response, employees appealed to Starbucks, saying 'This is the wrong direction. Please stop.'
How can we tell? A group within Starbucks, known as 'Partners for the Preservation of Starbucks Culture, Mission, and Values,' released a flyer which it put in an elevator at Starbucks' corporate offices. The flier in question boasted a '…list of grievances,' which included not only the RTO, but also the institution of cost-cutting bonuses doled out to leadership. With the RTO mandate increasingly a part of everybody's environment, some employees are wondering if it is less about collaboration and more about cost-cutting, hoping that workers voluntarily leave rather than return to the office.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 13 Buys, nine Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 22.53% rally in its share price over the past year, the average SBUX price target of $96.24 per share implies 2.92% upside potential.