It wasn't the numbers that cooked shares of Starbucks after hours last night. Not that Starbucks didn't turn in a "disappointing" (their words) quarter last night. They did. But the stock was hanging in there just fine well into last night's call. China comps were flat(!), The US was weak but not a disaster and the rest of the world comped positively. Margins were a trainwreck. EPS wasn't even close to estimates, but Starbucks pulled guidance over 6mo ago. No one owned Starbucks for last night's EPS.

What killed $SBUX (or at least sent shares from flat to down ~8%) was Starbucks shifting spending plans from machinery to labor. Under prior management, Starbucks was somewhat obsessed with rolling out Machines and Food, committing to spending $450 million on machinery starting in 2022. Say goodbye to the cold brew systems and elaborate food prep systems. Only heavy-traffic drive-thru-based stores were getting the elaborate coffee-making systems.

Niccol, who seemed confident if a little disdainful of prior initiatives he's now having to unwind, is young(er) blood but old school. He's spending on employees. Not throwing money at them but absolutely spending more on labor...

Starbucks set to report tonight and if you aren't nervous you haven't been paying attention. 

Shares of the worlds largest coffee shop are trading at levels first hit in 2019, a depressing run of mediocrity that has included 4 CEOs, a national controversy over the use of store bathrooms and the COVID lockdown. The lockdowns were particularly notable for Starbucks because ~20% of its revenues (and much less of its earnings) are generated in the Chinese market, which was something of a career-long hobbyhorse of longtime leader Howard Schultz. 

The company pulled all guidance last fall, one of the first orders of business under CEO Brian Niccol. Suffice it to say the business outlook hasn't gotten more transparent since October.

Same store sales were likely down in the US last quarter, though likely with improved tickets but weaker traffic. FWIW analysts are looking for EPS of 50c on about $8.8b of revenue. There will be currency noise and, as just mentioned, Starbucks itself isn't giving any guidance and has no particular incentive to stretch numbers or paint a rosy international picture. Niccol arrived with a well-earned reputation and he's...