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Global coffee chain Starbucks had results out last week and the numbers were reasonably well-received. Global revenues were $9.4 billion for the three months and profits rose by 22% due to various efficiency improvements. They will pay out a nice quarterly dividend, at an annual yield of 2.34% per annum.
Starbucks reported pleasing results for the September quarter, citing steadfast demand for its summer drinks. The coffee giant's share price surged 9.5% on the news, its largest one-day gain since May 2022.
How many cups of coffee do you drink every day? I get through quite a few. It has no impact on my sleep later, so I go on firing up the Nespresso machine into the early evenings.
Starbucks released results last week which received mixed reviews. Revenues beat by 3.4% and earnings beat by 12% but the share still dropped 5% on the day. The company expects 11% revenue growth over the next year, well ahead of inflation. On the back of that they have increased their dividend by 6.8% and are doing share buybacks at a rate of around $4 billion per year. These are all positive developments.
Last week Thursday, Starbucks reported record revenues for the quarter ending 1 January, but increasing costs took their toll on profits. China, the coffee chain's second-largest market, saw transactions drop 28% as a third of its 6 090 stores were shut down at the peak of the latest Covid lockdowns.
Starbucks is not the most glamorous Vestact-recommended stock, they just sell coffee, after all. But that's an honest business to be in, with good prospects, because caffeinated beverages are more popular now than ever.
Here is some more good news for a Friday. Starbucks has appointed a new chief executive to succeed the interim CEO Howard Schultz. Laxman Narasimhan will assume the new role in October, and Schultz will fully hand over the reins by April next year.
Last week Starbucks reported numbers that weren't as bad as traders feared, beating revenue and profit forecasts. China is the group's second largest market, and with all their Covid restrictions, sales in the region dropped 44%. Very strong sales in the US offset the Chinese washout, with same-store sales up 9%, and foot traffic up 1%.
When a business expands globally, it reaches millions of new clients, but that comes with extra risks. Starbucks is one of the most global brands in the world, but is battling outside of the US.
The Starbucks share price has had a tough time recently. It's trading at $84 a share now, down from around $115 at the start of the year. In the middle of March it reached a low of $78 a share, but then had a nice rebound on the news that Howard Schultz was returning as CEO.
Last week Volvo and Starbucks announced a partnership to install EV charging stations at some Starbucks stores. The partnership will target stores along a 1 350-mile route from Denver to Seattle, with stops available roughly every 100 miles.
Starbucks announced yesterday that their CEO Kevin Johnson will step down after five years, and that the founder and long-time CEO Howard Schultz (see below) would return in an interim CEO role.
Last week, Starbucks reported its earnings for the holiday quarter which showed strong growth in sales and digital platform activity, notwithstanding Covid-induced staff shortages. The Seattle-based chain of coffeehouses has 34 317 stores around the world. Revenues for the quarter came in at $8.05 billion (up 19% year-on-year) and net profit was $815.9 million, both beating expectations.
We have 370 clients who own Starbucks. It's been a very solid performer over the years. It doesn't grab as much attention because Starbucks is not as flashy as some of our other holdings. However the business has been built on exciting innovations over the decades. Selling coffee and snacks is incredibly competitive so they have had to be ahead of the curve to get to where they are today.
Starbucks is considered one of the best large-scale employers around. They pay well above their competitors and provide extra benefits that other employers do not, like free college education. So, it's ironic that they are now considering automated checkout technology designed by Amazon. The first concept store will open this week in New York.