Our worst performer was Starbucks (SBUX, Financial), the global coffee chain. Its stock reduced the Fund’s return by 39 basis points, as it declined 15.6% from $57.89 to $48.85. The company pre-announced weaker-than-expected sales for the quarter and lowered earnings guidance for the year. Growing competition caused revenue growth to slow in the U.S., while the company’s business in China was hurt by an interruption in delivery services. Management has numerous initiatives in place to turn around performance, such as adding loyalty members, introducing new food and beverage items and closing underperforming stores. We’re optimistic that management will be able to reaccelerate growth, and with shares trading at their cheapest valuation in eight years, we think the risk-reward for this blue-chip company is attractive.
From Jerome Dodson (Trades, Portfolio)'s Parnassus Fund's second quarter 2018 shareholder commentary.
