Starbucks Enhances Loyalty Program - Analyst Blog
March 26 2013 - 12:55PM
Zacks
Starbucks Corporation (SBUX), in its recently
held analyst meeting, discussed its plans to integrate the card and
loyalty programs across new channels and brands. Moreover, the
company re-affirmed its outlook for 2013.
Expanding Loyalty Program
Starbucks announced that from May onward, its customers will
earn rewards points under the My Starbucks Rewards loyalty program
on purchase of packaged coffee at its grocery channels. These can
be redeemed later against food or beverages at Starbucks
stores.
Moreover, benefits under the Starbucks loyalty cards and
programswill now be extended to SBUX’s emerging brands. For
example, from April onward customers will be able to use Starbucks
cards as well as Starbucks mobile application at all Teavana stores
and earn stars. The company acquired Atlanta-based Teavana
Holdings, Inc., a specialty retailer of tea, for approximately $620
million in cash in fiscal 2012. Teavana has now become a wholly
owned subsidiary of Starbucks.
Starbucks loyalty cards are gaining popularity and the company
is adding around 80,000 new loyalty members a week. Starbucks aims
to almost double its My Starbucks Rewards membership through such
new loyalty program features. By the end of this fiscal year, the
company expects to have 9 million members versus 4.5 million
members at the end of Oct 2012.
Reaffirmation of Outlook
The company re-affirmed its fiscal 2013 revenue and earnings
outlook provided at the first quarter 2013 conference call in
January this year.
Overall, Starbucks has a bright outlook for fiscal 2013. The
company expects continued robust top-line growth and margin
expansion in the upcoming year driven by innovation, expansion of
existing product portfolio and potentially favorable commodity
costs.
For fiscal 2013, the company continues to expect revenues to
grow in the range of 10%–13% driven by mid-single-digit comparable
store sales growth, net new store openings and strong growth in the
Channel Development business. Starbucks expects its recent
new platforms like Verismo, light Blonde Roast coffee, K-Cups, La
Boulange bakery products, Evolution Fresh juices and Refreshers
energy drinks, to continue to drive comps growth for the rest of
2013.
Operating margin is expected to expand approximately 100 bps
year over year, driven by better operating leverage. Earnings are
expected in the range of $2.06 to $2.15, up 15%–20%.
Starbucks has compelling growth drivers like La Boulange bakery
products, Verismo at-home-coffee machine, Evolution Fresh juices,
Teavana tea, and K-Cups portion packs to sustain earnings momentum
in the upcoming quarters.
Coffee Farming Plant
Last week Starbucks announced the purchase of its first coffee
farm, 240-hectare coffee plot in Costa Rica, which it plans to
convert into a global agronomy research and development center. The
farm will be used to grow new blends of coffee and supports
Starbucks’ billion-dollar commitment to buy 100% ethically sourced
coffee by 2015.
Other Stocks to Consider
Starbucks carries a Zacks Rank #3 (Hold). Some other stocks in
the retail/restaurant industry that are currently doing well and
are worth considering include Red Robin Gourmet Burgers
Inc. (RRGB) – Zacks Rank #1 (Strong Buy), Burger
King Worldwide, Inc. (BKW) – Zacks Rank #2 (Buy) and
Dunkin' Brands Group, Inc. (DNKN) – Zacks Rank #2
(Buy).
BURGER KING WWD (BKW): Free Stock Analysis Report
DUNKIN BRANDS (DNKN): Free Stock Analysis Report
RED ROBIN GOURM (RRGB): Free Stock Analysis Report
STARBUCKS CORP (SBUX): Free Stock Analysis Report
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