Starbucks Corp.’s (NASDAQ: SBUX) shares gained over 5% on Thursday benefiting from the upbeat guidance provided by the company a day ago. The stock has gained 24% over the past three months and 20% since the beginning of this year.
Strong outlook
Starbucks expects to see a continued recovery from the impacts of the pandemic during fiscal year 2021 and expects GAAP EPS to range from $2.34-2.54 and adjusted EPS to range from $2.70-2.90 for the year. In fiscal year 2022, adjusted EPS is expected to grow at least 20%, including the negative impact of lapping a 53-week year. For fiscal year 2023 and 2024, adjusted EPS is estimated to grow 10-12%.
The company expects comparable store sales to grow 4-5%, both in the US and globally, starting from FY2023, driven by investments in retail store partners and digital capabilities. In China, which is its second biggest growth market, Starbucks expects comparable store sales to increase 2-4% beginning in FY2023, driven by investments in digital capabilities and new store openings.
Starbucks’ global store portfolio is expected to grow by around 6% starting in FY2022, driven by returns on new-unit investments. In the US, new stores are expected to grow around 3% beginning in FY2022. At present, there are around 33,000 company operated and licensed stores worldwide. This is projected to reach approx. 55,000 stores by 2030.
In China, Starbucks expects to open approx. 600 new stores in the next year, of which 10% will be Starbucks NOW stores. The company is on track to take this number to 6,000 stores across 230 cities by the end of FY2022.
Starbucks stated that its cold beverages platform had witnessed a growth of around 45% over the past four years. As part of growing its non-dairy offerings, the company plans to roll out oatmilk in all its US stores in the spring of 2021. Based on data from Euromonitor, the coffee addressable market is estimated to increase 5-6% to $450 billion of revenue globally in 2023.
Starbucks expects revenues to grow 8-10% and adjusted operating income margin to range from 18-19% annually starting from FY2023.
Weak FY2020
In FY2020, consolidated net revenues fell 11.3% due to lost sales caused by the COVID-19 pandemic. Global comparable store sales decreased 14%, driven by a 22% drop in comparable transactions. Comp sales in the Americas and US dropped 12% while international comps fell 19%. Adjusted EPS decreased 58% year-over-year to $1.17.
Click here to read the full transcript of Starbucks Q4 2020 earnings conference call