Starbucks Corporation (SBUX, Financial) deals in specialty coffee worldwide. It has an array of products to offer –Â Starbucks, Teavana, Tazo, Seattles Best Coffee, Evolution Fresh, La Boulange, Ethos, Starbucks VIA, Frappuccino, Starbucks Doubleshot, Starbucks Refreshers and Starbucks Discoveries Iced Café Favorites.
Strong quarterly results
Q1 Fiscal 2015 Highlights:
- Consolidated net revenues increased 13% to $4.8 billion
- Global comparable store sales increased 5%, with a 2% increase in traffic
- Americas' comp sales increased 5%, with a 2% increase in traffic
- EMEA comp sales increased 4%, driven by a 3% increase in traffic
- CAP comp sales increased 8%, driven entirely by increased traffic
- Consolidated operating income reached a record $915.5 million
- Non-GAAP operating income of $934.8 million grew 18% over Q1 FY14 non-GAAP operating income
- Consolidated operating margin of 19.1%
- Non-GAAP operating margin of 19.5% increased 80 basis points over Q1 FY14 non-GAAP operating margin
- GAAP earnings per share of $1.30
- Non-GAAP EPS of $0.80 per share grew 16% over Q1 FY14 non-GAAP EPS
- Comparable store customer transactions increased by nearly 9 million in the U.S., nearly 12 million globally, year-over-year
- The company opened 512 net new stores in Q1, including its first Starbucks Reserve® Roastery and Tasting Room
- Dollars loaded on Starbucks Cards surged to a record $1.6 billion in the quarter, up 17% over prior year Q1
- 1 in 7 Americans received a Starbucks Gift Card in Q1, up from 1 in 8 in Q1 of fiscal 2014
- The company added 896,000 new My Starbucks Rewards members in December and now has over 9 million members
“Starbucks' record Q1 fiscal 2015 financial and operating performance was exceptional by every metric and standard,” said Howard Schultz, chairman, president and CEO. “Our reimagined in-store holiday experience that included a vastly expanded assortment of Starbucks Cards, new holiday food, beverage and merchandise offerings and the opportunity to win ‘Starbucks for Life’ resonated powerfully with our customers and drove both increased traffic and tremendous excitement in our stores and around the Starbucks brand.”
“Starbucks results in the first quarter of fiscal 2015 were very strong, with notable growth across the globe,” said Scott Maw, Starbucks CFO. “All segments contributed to our record results in the quarter, with improved traffic growth in the U.S., record profitability in EMEA and 8% comps in CAP. Our continued ability to drive growth through innovation, operational excellence and our unique customer connection, along with our sharp focus on financial discipline, give us confidence in reaffirming our growth targets for fiscal 2015.”
Consolidated net revenues were $4.8 billion in Q1 FY15, an increase of 13% over Q1 FY14. The increase was primarily driven by incremental revenues from the acquisition of Starbucks Japan, a 5% increase in global comparable store sales and the opening of 1,641 net new stores over the past 12 months, and partially offset by unfavorable foreign currency exchange.
Consolidated operating income of $915.5 million in Q1 FY15 increased 13% from $813.5 million in Q1 FY14. Consolidated operating margin of 19.1% declined 10 basis points versus Q1 FY14. The decline is due to the impact of our ownership change in Starbucks Japan, which drove 80 basis points of margin decline. The remaining margin expansion of 70 basis points was primarily due to sales leverage, partially offset by the absence in the current quarter of a prior year litigation credit related to the FY13 conclusion of the Kraft arbitration.
The company reaffirms the following full-year targets:
- Revenue growth of 16% - 18%
- Global comparable store sales growth of mid-single digits
- GAAP operating margin is expected to be mildly dilutive versus FY14 due to the impact of our ownership change in Starbucks Japan:
- Americas' margin: modest improvement over FY14
- EMEA margin: in the 10% - 12% range
- China/Asia Pacific margin: in the high teens
- Channel Development margin: modest improvement over FY14
- Non-GAAP operating margin is expected to be flat to slightly up over prior year non-GAAP operating margin
- Consolidated tax rate of approximately 31%
- New store openings of 1,650 net new:
- Americas: approximately 650, half licensed
- EMEA: approximately 150, primarily licensed
- China/Asia Pacific: approximately 850, two-thirds licensed
- Capital expenditures of approximately $1.4 billion driven primarily by store investments, which include new stores, Mobile Order and Pay and the evenings program
The company updates the following targets:
- Full year FY15 GAAP EPS is now expected to be in the range of $3.53 to $3.58
- Q2 GAAP EPS is expected to be in the range of $0.63 to $0.64
- Full Year FY15 non-GAAP EPS is now expected to be in the range of $3.09 to $3.13
- Q2 non-GAAP EPS is expected to be in the range of $0.64 to $0.65
Recent developments
The company launched Mobile Order and Pay in Portland, Oregon in December and announced the rest of the Pacific Northwest as its next market launch on its way towards a national rollout in 2015. Mobile Order and Pay allows customers to place orders in advance of their visit and pick them up at a participating Starbucks store.
To end
The company is growingly rapidly and has its presence felt in over 17,000 locations worldwide. This Seattle-based coffee giant may reap good returns to its investors in the near future. Coffee is a widely used drink across the globe, and the coffee industry has plenty of room to grow. SBUX is in a good position now and is going to revamp investors’ portfolio.
(Source: Company’s Website)
