Starbucks Q1 - Double beat

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.

You may be surprised to hear that Starbucks is one of our best performing stocks over the last year. It's up 48% since May 2022 versus the S&P which is up 3% over that same period. That's a better return than both Apple and Microsoft, highlighting why it's important to have a diversified portfolio representing different growth themes.

Starbucks is an amazing brand, has a huge loyalty program and continues to expand around the world. Their recent labour issues in the US also seem to be subsiding. One of their first stores which voted to unionise, did an about-turn and dropped that rubbish idea.

The new CEO Laxman Narasimhan certainly has a big job ahead of him. His comments to date have focused on simplifying the business and getting back to basics. Making good coffee is not rocket science. I like the idea of keeping it simple.