Starbucks Company update

Starbucks held an investor presentation last night and revealed a few important business developments. Here are the highlights.

They hiked the quarterly dividend by 20%, and plan to return about $25 billion in cash to shareholders in the form of share buybacks and dividends from now until 2020. This represents a $10 billion increase from the cash return target announced in November 2017. In part, this is possible because of the sale of its packaged beans business to Nestle.

CEO Kevin Johnson sounds a bit grumpy: "While certain demand headwinds are transitory, and some of our cost increases are appropriate investments for the future, our recent performance does not reflect the potential of our exceptional brand and is not acceptable".

They are stepping up the "optimisation" of their US store portfolio which means closing about 150 underperforming company-operated stores in its most densely penetrated markets. That's a slightly higher rate of closures than in the past.

Starbucks is actively pushing its digital relationships with customers. The company has added 5 million new digitally registered customers since April 2018 and 2 more million active Starbucks Rewards members year-over-year to 15 million, up 13% from the previous year. They are testing a new mobile pickup store format in New York City.

They anticipate entering 100 new cities in China. They already have a huge coffee shop business in China. So it might be affected somehow by the Trump trade war with China that is currently "brewing". The focus in China is on the premium Reserve format, as pictured here.



Starbucks cut its financial year 2018 adjusted earnings per share forecast to $2.39-$2.43 from $2.48-$2.53. So the stock slipped by 1.3% to $56.69 per share in light after-hours trade.

Don't forget to drink some coffee today, preferably from your local Starbucks. On we go!