Market Overview

Starbucks CEO Sees Zero Signs Of Pending Recession

Starbucks CEO Sees Zero Signs Of Pending Recession

Starbucks Corporation (NASDAQ: SBUX) CEO Kevin Johnson told CNBC Monday he sees zero signs of an economic slowdown.

What Happened

Starbucks' most recent quarter was highlighted by a more than 8% year-over-year increase in revenue to $6.8 billion, while U.S. same-store sales rose 7%.

This is one small sign the "consumer seems to be doing well" and Starbucks is "firing on all cylinders," Johnson said during a "Mad Money" interview.

"We have not seen signs in the U.S. of anything related to a slowdown, but we do know these things go in cycles," he said.

Why It's Important

Operating within a strong economic environment is certainly a tailwind to business, but the coffee market is very competitive.

Starbucks needs to innovate to remain relevant, and the brand is now more in tune with customers than ever before, Johnson told Cramer.

Consumers appreciate the loyalty program, which represents 42% of total sales and boasts more than 17 million active users, he said. 

Starbucks also needs to remain relevant in its menu offerings, and Johnson said its most recent success is cold brew coffee, which is blasted with nitrogen.

A little more than half of the beverages on Starbucks' menu are cold, the CEO said. 

What's Next

Johnson was among the close to 200 CEOs who signed the Business Roundtable's pledge to rethink the "purpose of a corporation" to focus more on stakeholders and less on shareholders.

This creates a new vision for Starbucks moving forward, he said: a "purpose that goes far beyond the pursuit of profit."

"We're going to invest and take care of our — whether it's health care [or] college achievement," the executive said. "We just exceeded the goal of hiring 25,000 veterans or military spouses. We've exceeded that goal three years early, and we are now on a run rate of hiring 5,000 veterans a year."

Related Links:

JPMorgan Says Starbucks Valuation Has Become 'Beyond A Stretch'

Starbucks Posts Q3 Beat: 2 Wall Street Takes

Posted-In: CNBC Jim Cramer Kevin Johnson Mad MoneyRestaurants Media General Best of Benzinga


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