Cramer's Morning Take: Starbucks 10/23/24

Jim Cramer (0:02)

Jim Cramer here to share with you a sample of my take on the market from today's CNBC Investing Club morning meeting. Jeff, we have a day which is very akin to what I wrote about this weekend in my Sunday Think Peace, which is that you have big down, but then there's no follow through. And I think one of the best examples, let's just go there, is Starbucks.

Jeff Marks (0:26)

Starbucks pre-announced last night, quarter was horrible, but keep in mind, these aren't Brian Nichols' numbers. He was CEO for three weeks of this quarter, hasn't put in his plan yet, so you gotta give him the benefit of the doubt, but it's clear that what they were doing under previous regime did not work, and they pointed that out, that all their investments and promotions did not work, comps traffic was down significantly, comps down 7% versus an estimate of down 3.5, earnings 80 cents versus an estimate of $1.03, so the good news is that they can only really go up from here, and I think that's what the market is saying today, as you can see, now it turns green after being down 3%, 4% pre-market.

Jim Cramer (1:09)

Last night it comes out and trades to $92.93, and I said to myself, well, don't people realize what he did was do a clearing event? He's actually just gave you the numbers that got Luxman, Narasimhan fired, and it's gonna be up from here. I would stress the simplification. One of the things that he worked on the most, Brian, when he was at Chipotle, was he timed all of your lines. And it was a 23 second throughput in a Boston Chipotle that he saluted on the conference floor. This is a man, it's about getting your coffee, getting it fast, and also not making it so that, like Luxman did, millions of options. With more than a million permutations, that's stupid.

Jeff Marks (1:50)

No, absolutely. And look, this turnaround's not gonna happen in a quarter's time, probably not even. It's gonna take a little bit, but there's a really good video that they put out, Brian Nicol put out yesterday's six minute video.

Jim Cramer (2:02)

Who brought that attention?

Jeff Marks (2:03)

Talking about the Back to Starbucks plan, simplification, highlighting the brand, focusing on all customers, not just the reward customers. Near-term focus is on the US, that's the biggest business, it has to return to growth. And some other things, they did raise the dividend four cents. So at the pre-market levels in the low 90s, you were talking about a 2.6% dividend yield, which is pretty solid for a turnaround. Yeah, absolutely. And then once again, just a reminder that everyone knew the numbers were going to be bad. That's why it's getting the benefit of the doubt. They also have a new chief brand officer, they're starting November 4th. So again, he's building his team, and it's going to take time for them to come up with their plan and then to implement it. So in the near-term, you can't really focus on how the company's doing, you really just have to focus on this strategy and if it will work. We'll learn more when they report.

Jim Cramer (2:57)

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SPEAKER_3 (3:14)

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