Starbucks likely to open at record as company eyes 55,000 stores by 2030

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Shares of Starbucks (SBUX) surged to an all-time high on Thursday after the company revealed aggressive growth plans for the next decade, including expanding its store footprint by more than 66% globally.

During its virtual biennial investor day on Wednesday, CFO Pat Grismer reaffirmed Starbucks fiscal 2021 non-GAAP earnings per share (EPS) range of $2.70 to $2.90 on a 53-week basis, representing a “very dramatic” rebound from fiscal 2020. Grismer added that for fiscal 2022 Starbucks anticipates “a year of outsized EPS growth” with non-GAAP EPS growth of at least 20%, while for fiscal 2023, EPS growth is expected in the 10 and 12% range.

“[Setting] aside the impacts of COVID-19, we’ve established a track record of executing our growth at scale agenda with more consistent overall results, demonstrating sales growth and margin improvement. And we’re now in a position to guide to a more explicit range of non-GAAP EPS growth with confidence,” Grismer noted.

Grismer also expects the global comp sales to grow in a range of 4 to 5% in fiscal 2023 and 2024, up 1% from the prior growth model. In the U.S., comp sales are expected in a range of 4 to 5% growth, up 1%, while China is expected in a range of 2 to 4%, also up 1% from the prior growth model.

Shares of Starbucks, which hit a low of $50.02 in mid-March during the depths of the COVID crisis, rose nearly 4% to trade at a new all-time high of $104.63 on Thursday.

Looking ahead, Grismer said Starbucks has “a long runway of growth remaining.” The coffee giant plans to grow from 33,000 stores across more than 80 markets to 55,000 stores across 100 markets by 2030, “a level that is currently unmatched by any other single food and beverage retail concept, fueled by unparalleled brand appeal globally and strong unit-level economics,” Grismer added.

The new stores will consist of Drive-Thru, Starbucks Pickup and curbside pickup — formats and features that boded well during the pandemic as consumers opted for safe and convenient experiences. In China, the company’s second-largest market, Starbucks plans to add 600 new stores next year, with 10% of those being Starbucks NOW stores. By the end of fiscal 2022, Starbucks will operate 6,000 stores across 230 cities in China.

‘Changes are here to stay’

In the opening remarks, Starbucks CEO Kevin Johnson said the company is “stronger and more resilient than ever” as it navigated the COVID-19 pandemic by remaining committed to its “growth at scale” agenda and harnessing a “growth mindset” by rapidly adapting to changes. Over the last two years, Johnson said Starbucks has focused on its biggest markets — the U.S. and China— as well as its global coffee alliance with Nestle, investing in its digital platform and delivery capabilities, and driving innovation and adapting to changing consumer behaviors.

According to Johnson, the lasting effects on consumer behavior from the pandemic include the need for connection with others, convenient on-demand experiences with curated options, consistent and familiar experiences, sustainable products for health and the planet, and brands with “strong values.”

“We believe many of these changes are here to stay and we will continue to adapt our business accordingly to ensure we are meeting our customers how and where they want to engage with Starbucks. Through the relationships we have with our customers around the world, we are focusing on five shifts in consumer behavior to guide us as we adapt in ways that we expect will extend our market leadership position globally,” Johnson said.

Starbucks President and Chief Executive Officer Kevin Johnson is pictured at the Annual Meeting of Shareholders in Seattle, Washington on March 20, 2019. (Photo by Jason Redmond / AFP)        (Photo credit should read JASON REDMOND/AFP via Getty Images)
Starbucks President and Chief Executive Officer Kevin Johnson is pictured at the Annual Meeting of Shareholders in Seattle, Washington on March 20, 2019. (Photo by Jason Redmond / AFP) (Photo credit should read JASON REDMOND/AFP via Getty Images)

What’s more, Johnson noted that the already massive coffee market remains a “very attractive category” that’s poised to grow. He cited a forecast from Euromonitor that showed the $360 billion coffee market in 2019 is expected to grow to roughly $450 billion in 2023.

“Now, the global pandemic certainly created disruption in 2020, but based on our view of the overall market recovery and our outlook, we agree with the expectation that the coffee market will reach this level over the next three years. We also believe businesses like ours that adapt rapidly to changing consumer preferences and behaviors will grow much faster than the market,” Johnson added.

One of the changing consumer preferences is the shift to plant-based, non-dairy milk. Starbucks, which first introduced soy milk to its menus in 1997, added coconut milk in 2015 and almond milk in 2016. After testing oat milk regionally, Starbucks will roll it out the popular option nationwide in the spring of 2021. Starbucks will also feature oat milk in one of its newest beverages in the spring called the Shaken Iced Espresso, a drink made from espresso, brown sugar, oat milk shaken and served over ice.

“It speaks to how we’re meeting the generational shift in customers’ tastes while addressing the needs of the health-conscious,” COO Roz Brewer said at the event. According to Brewer, a vast swath of customers, mostly Millennials and Gen-Z, are more likely to drink cold coffee, which has driven more than $1 billion in sales over the past three years.

Deep Brew

Elsewhere, digital will continue to play a critical role for Starbucks. It’s decade-old Starbucks Rewards app now boasts 19.3 million active members in the U.S., with the app’s members accounting for nearly 50% of Starbucks’ revenue. According to Brewer, close to one in every four transactions comes from Starbucks mobile order and pay. The company has “high ambitions for growth” to bring more customers into its Rewards program and digital ecosystem, the executive added.

Beyond the popular app, Starbucks will soon start using its proprietary AI, known as Deep Brew, at its drive-thru to offer product suggestions specific to a store, weather, time of day, and available inventory.

“In the future, customers will receive even more suggestions, like how to make their drinks perfect for them and recommendations that help us manage inventory and improve speed of service leaving more time for our baristas to do what they do best, connect with customers,” Brewer said, later adding, “This is where art and science come together so perfectly.”

Julia La Roche is a correspondent for Yahoo Finance. Follow her on Twitter.

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