A year ago, the outlook for Starbucks seemed as stale as a day-old latte. Not anymore.
The giant coffee chain’s stock essentially had been dead money for three years running, trading around $52 a share just as it had in mid-2015, as investors saw little to cheer about.
Thursday, the stock has now soared 93% in the last 12 months, making it the biggest gainer in the Standard & Poor’s 500 index in that period. With a closing price of $99.11 a share on Friday, the chain now has a market value of $121 billion. But two items stand out in Starbucks’ rebound, analysts said: The systems with which it cultivates customer loyalty — its smartphone app and rewards program — and its push into China.
Starbucks declined to comment for this story but pointed to public remarks by its executives, including that more than one-third of all transactions at U.S. Starbucks stores now are done with the mobile app. The company also says its “digitally engaged customers” buy two to three times as many products as those who don’t use the app.
As Starbucks ramped up in China, many investors fretted about competition there from the likes of Luckin Coffee Inc., a fast-growing Chinese rival that went public this year. Their concern grew when Starbucks said a year ago that same-store sales in China had slipped 1% in the latest quarter.But same-store sales in China have since rebounded with the help of a sharp rise in Starbucks Rewards members there, who now total 9.
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