- Announces long-term growth algorithm
delivering double-digit growth in non-GAAP earnings per share
- Announces launch of Starbucks Delivers
to nearly a quarter of U.S. company-operated stores with Uber Eats,
beginning in 2019
- Expands Starbucks Delivers in China –
on the Ele.me on-demand delivery platform – to 2,000 stores across
30 cities in China since launching three months ago
- Debuts first-of-its-kind virtual
Starbucks store in China with Alibaba partnership
- Accelerates cold beverage
innovation strategy, including plans to roll out
Nitro Cold Brew in all U.S. company-operated stores in
FY19
- Highlights efforts to amplify the brand
globally while showcasing new products and market opportunities for
Global Coffee Alliance with Nestlé
- Reaffirms commitment to offering a
total pay benefit package that is unmatched in the industry to
partners (employees) who work 20 hours or more per week
Following a strong fiscal fourth quarter and a
year of streamlining to focus the company for
growth, Starbucks (NASDAQ: SBUX) hosted its biennial
Investor Conference today in New York City. Chief
executive officer Kevin Johnson and other members of Starbucks
leadership team updated investors and analysts on the
company’s strategic priorities as it aims to expand its retail
store portfolio by approximately 6% to 7% net new
units and grow same store sales by 3% to 4%, globally, each
year while continuing to invest in its partners and elevate
the Starbucks Experience.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20181213005871/en/
Starbucks president and chief executive
officer, Kevin Johnson, details the company’s strategic initiatives
on stage at Starbucks 2018 Biennial Investor Conference in New York
City on December 13, 2018. (Photo: Business Wire)
Through the lens of this commitment, Starbucks leaders
highlighted the decisive actions the company has taken to enable
more focus on the core value drivers, outlining its ongoing
growth model and efforts to build and amplify the
brand.
“Coffee is one of the fastest growing beverage categories
globally and our over 350,000 partners around the world who wear
the green apron are now serving 100 million customer occasions
a week,” said Johnson. “We have long been performance driven
while staying true to our mission and values to create positive
change and global social impact. The leadership team and I
believe Starbucks is better positioned than ever for continued
success.”
Reaffirms FY19 Targets and Presents Long-term
Financial Targets
In his first Investor Conference presentation as Starbucks
executive vice president and chief financial officer, Patrick (Pat)
Grismer reiterated the company’s FY19 targets, as
previously disclosed in the Q4 FY18 earnings announcement, while
also articulating a sustainable double-digit non-GAAP EPS growth
model for the future.
“As the undisputed category leader globally, Starbucks is
well positioned to drive meaningful growth at scale, with more
focus and discipline,” said Grismer. “Today we reaffirmed our FY19
guidance and outlined our ongoing growth model. The transformative
Global Coffee Alliance with Nestlé will be accretive to non-GAAP
EPS in FY20 and FY21, helping to deliver expected growth of at
least 13% annually for those two years.”
Longer term, Starbucks expects consolidated revenue growth of 7%
to 9% and non-GAAP earnings per share growth
of at least 10%.
Creating Meaningful Customer Connections
Throughout the Investor
Conference, Starbucks leadership team emphasized
its renewed focus on the customer experience and operational
excellence. In the U.S., Starbucks chief operating officer and
group president Rosalind (Roz) Brewer provided details on
how the company is progressing against each of its operating
initiatives: enhancing the in-store experience, delivering
beverage innovation, and driving digital relationships.
Enhancing the
in-store experience: Starbucks heritage is built on
the third place experience where everyone is welcome and
where customers can enjoy high-quality arabica
coffee while they stay for moments
of connection with each other and
with Starbucks partners. Some of the key initiatives
Starbucks is undertaking to create an even better experience for
customers and partners include:
- Repurposing partners’ time spent on
administrative tasks to enhance customer engagement with the goal
of improving capacity and throughput.
- Deploying technology to automate
inventory planning and
replenishment by improving accuracy
and efficiency of work routines.
- Optimizing the company’s real
estate footprint and store renovation strategy to deliver the next
generation of the third place and drive higher financial
returns.
Delivering beverage innovation: As Starbucks
drives more innovation in its stores while meeting consumer
preferences, the company has seen the proven highly incremental
results from Draft Nitro Cold Brew. Based on this success,
Starbucks announced today it plans to roll out Nitro to
all U.S. company-operated stores by the end of FY19
to meet customer demand for this growing platform.
Driving digital relationships: With
digitally-engaged customers purchasing 2 to 3 times as
many products as those that are not
digitally-engaged, Starbucks continues to see significant
promise in its digital initiatives as an enabler for
customer convenience, awareness and value. To
unlock further growth, the
company announced three key areas of focus expected to
drive 1 to 2 points of comp, including new member acquisition and
related spend lift; further adoption of Mobile Order & Pay and
the habituation it drives; and upcoming enhancements to the popular
Starbucks® Rewards loyalty program enabling customers to redeem for
a variety of options, and to earn rewards even faster.
Accelerating Growth in China Through New Digital
Initiatives
Starbucks group president, International and Channel
Development John Culver provided an update on the strategic
partnership in China with Alibaba Group, which was announced
in August. This collaboration across key businesses within the
Alibaba ecosystem, including Ele.me, Hema, Tmall, Taobao and
Alipay aims to enable an even more seamless Starbucks digital
experience and transform the coffee industry in China.
As part of this partnership, Starbucks is launching its
first-ever, virtual Starbucks® store today in China. The virtual
Starbucks store provides customers a one touch digital Starbucks
Experience, utilizing the Starbucks® app and Alibaba’s
customer-facing mobile apps, including Taobao, Tmall and Alipay.
Starbucks customers now have one seamless and easy-to-use consumer
interface which enables them to earn Stars in the Starbucks Rewards
program for their purchases reaching approximately 670 million
Starbucks and Alibaba mobile active users. This latest digital
innovation revolutionizes the traditional offline-to-online model
by effectively extending the reach of the Starbucks Experience into
the everyday lifestyle of Chinese customers.
Meeting Customers Where They Are with Starbucks
Delivers
As part of the Alibaba partnership and effort to transform the
coffee market in China, Starbucks has been working with Ele.me,
China’s leading on-demand food delivery platform with 3 million
registered delivery riders, to bring a best-in-class delivery
experience to the market. Starbucks has also piloted two ‘Star
Kitchens’ within two FRESHIPPO (previously known as Hema)
supermarkets in Shanghai and Hangzhou, making Starbucks the first
retail brand to establish a dedicated back of house presence in
FRESHIPPO locations to utilize its distinct fulfillment and
delivery capabilities to further reach and better serve customers.
As part of the Investor Conference today, the company announced
Starbucks Delivers has reached 2,000 stores across 30 cities in
China since launching three months ago.
Leveraging learnings from its delivery experience in
China, Starbucks sees further market opportunity with
Starbucks Delivers. The company recently initiated
pilots of Starbucks Delivers in both Tokyo and Miami with
Uber Eats. Today, Starbucks announced plans
to expand Starbucks Delivers to nearly a quarter of its
U.S. company-operated stores in early 2019.
Unlocking New At-Home and Away-From-Home Coffee
Channels
Under the Global Coffee Alliance, Starbucks
and Nestlé are moving with speed to innovate and
develop go-to-market strategies for the global
rollout of Starbucks At-Home Coffee portfolio. Starbucks will be
the only brand outside of Nestlé to have
branded products produced and packaged by Nestlé on both
the Nespresso and Dolce Gusto systems.
Today, Starbucks announced that both companies have
developed a range of Starbucks-branded products for
the Nespresso and Dolce Gusto platforms and Roast & Ground and
Whole Bean coffees. The launch of these products in traditional CPG
and Foodservice channels will take place beginning in the
spring of next year.
With the Nespresso and Dolce Gusto install base estimated at
more than any other single-serve system in the world, this is a
tremendous incremental growth opportunity for the Global Coffee
Alliance, as Starbucks and Nestlé work together to expand to new
markets.
Creating a More Equitable and Inclusive Workforce by
Investing in Partners
Since its earliest days, Starbucks has been built on a shared
understanding that culture and success are driven by its partners
and their achievements. As shareholders, even part-time
partners who work just 20 hours or more a week have had access to
comprehensive health insurance, stock ownership and a 401(k)
retirement benefit as part of their total compensation at
Starbucks.
Benefits introduced in 2018, including access to backup child
and adult care through Care.com and expanded paid sick leave and
parental leave contribute to a total benefits package valued at
three times that of any other company in the industry. As
a company that pays above minimum wage in each market
and offers industry-leading benefits, Starbucks believes
even more can be done to create an equitable workplace across
the U.S.
Over the last three years, Starbucks has:
- Hired over 21,000 Veterans and
military spouses.
- Hired nearly 45,000 Opportunity Youth,
which are young adults between the ages of 16 to 24 who were
previously neither working nor in school.
- Set up more than 12,000 partners who
are working toward a pathway to a college degree, including
providing access to full college tuition coverage through the
Starbucks College Achievement Plan (SCAP) with Arizona State
University. These partners stay one and a half times longer and are
promoted at nearly three times the rate of their peers.
With a proud history of industry-leading retention, Starbucks
remains focused on providing opportunities and experiences for
Starbucks partners to realize they are a part of something
bigger. An industry-leading total pay approach along with
inclusive and equitable hiring practices are just a couple of the
ways Starbucks continues to create the best jobs in retail where
partners feel uplifted and inspired to come to work every day.
Webcast
The presentations are available by
webcast at http://investor.starbucks.com. A replay of the
webcast will also be available on the website following the
event.
About Starbucks
Since 1971, Starbucks Coffee Company has been committed to
ethically sourcing and roasting high-quality arabica coffee. Today,
with more than 25,000 stores around the globe, Starbucks is the
premier roaster and retailer of specialty coffee in the world.
Through our unwavering commitment to excellence and our guiding
principles, we bring the unique Starbucks Experience to life for
every customer through every cup. To share in the experience,
please visit our stores or online at news.starbucks.com and
Starbucks.com.
Forward-Looking
Statements
Certain statements contained herein are “forward-looking”
statements within the meaning of the applicable securities laws and
regulations. Generally, these statements can be identified by the
use of words such as “anticipate,” “expect,” “believe,” “could,”
“estimate,” “feel,” “forecast,” “intend,” “may,” “plan,”
“potential,” “project,” “should,” “will,” “would,” and similar
expressions intended to identify forward-looking statements,
although not all forward-looking statements contain these
identifying words. These forward-looking statements are based on
information available to Starbucks as of the date hereof and
Starbucks actual results or performance could differ materially
from those stated or implied due to risks and uncertainties
associated with its business. These risks and uncertainties
include, but are not limited to, fluctuations in U.S. and
international economies and currencies, our ability to preserve,
grow and leverage our brands, potential negative effects of
incidents involving food or beverage-borne illnesses, tampering,
adulteration, contamination or mislabeling, potential negative
effects of material breaches of our information technology systems
to the extent we experience a material breach, material failures of
our information technology systems, costs associated with, and the
successful execution of, the company’s initiatives and plans,
including the integration of Starbucks Japan and the East China
business and successful execution of our Global Coffee Alliance
with Nestlé, the acceptance of the company’s products by our
customers, our ability to obtain financing on acceptable terms, the
impact of competition, the prices and availability of coffee, dairy
and other raw materials, the effect of legal proceedings, the
effects of changes in U.S. tax law and related guidance and
regulations that may be implemented, and other risks detailed in
the company filings with the Securities and Exchange Commission,
including the “Risk Factors” section of Starbucks Annual Report on
Form 10-K for the fiscal year ended September 30, 2018. The company
assumes no obligation to update any of these forward-looking
statements.
Non-GAAP Financial
Measures
Non‐GAAP measures included in our press release were not
reconciled to the comparable GAAP financial measures because the
GAAP measures are not accessible on a forward‐looking basis The
Company is unable to reconcile these forward-looking non-GAAP
financial measures to the most directly comparable GAAP measures
without unreasonable efforts because the Company is currently
unable to predict with a reasonable degree of certainty the type
and extent of certain items that would be expected to impact GAAP
measures for these periods but would not impact the non-GAAP
measures. Such items may include acquisition, divestitures,
restructurings and other items. The unavailable information could
have a significant impact on the Company’s GAAP financial
results.
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