Starbucks Offering up 2-for-1 Holiday Drink Special

by InvestorPlace Staff | November 16, 2010 12:58 pm

Starbucks (NASDAQ: SBUX[1]) is hoping consumers will take a break from their hectic holiday shopping to enjoy one of their new seasonal beverages that hit stores today.

The Caramel Brulee Latte, Pepermint Mocha, Gingerbread Latte, Eggnog Latte, Peppermint White Hot Chocolate and Peppermint Hot Chocolate all comprise this year’s holiday menu.

The menu additions are coupled with a special offer to customers: buyers of a holiday drink will receive a second for free this Thursday through Saturday in the U.S. and Canada. Starbucks will be setting up temporary stores in major cities like New York, Chicago and Los Angeles, to spread the word about the new menu and promotions.

Starbucks is looking to tap into shoppers’ holiday cheer, as the holiday season is historically strong for the coffee giant.  Last year, the chain’s first fiscal quarter – which falls during the holiday shopping season – was its most successful. Starbucks attributed 27% of its annual revenue to its first quarter in 2009.

Overall, 2010 has been a great year for Starbucks.  Shareholders have watched the company’s stock gain +32.3% year-to-date.  Since September, Starbucks stock has jumped an impressive $7.52.  Additionally, Starbucks has met or exceeded earnings estimates for four consecutive quarters.  This quarter experts are projecting earnings of $0.39, after an actual EPS of $0.37 last quarter.

Starbucks’s excellent performance comes during an interesting year for the coffee world.  In September, InvestorPlace reported that coffee prices[2] had hit a new 13-year high, prompting coffee chains like Starbucks to raise their prices on specialty drinks.  Clearly the price hike did not deter many loyal Starbucks patrons.

2010 also featured the launch of McDonald’s (NYSE: MCD[3]) McCafe line of specialty coffee beverages.  The line has been widely judged as a huge success, and MCD stock has climbed +18.5% since July.  One would think that the success of a competitor would affect Starbucks, but the performance of SBUX stock certainly suggests otherwise.

If Starbucks can thrive despite higher prices and fiercer competition, one can only imagine the success that will befall the coffee chain this holiday season.  Traditionally, hurried shoppers visit Starbucks more during the holiday season than any other time of the year, and with numerous new specialty concoctions available, SBUX stock should only continue its torrid pace.

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