Starbucks shares bounce as espresso chain predicts a robust rebound for the subsequent yr
People wear protective face masks in front of Starbucks in Union Square as the city resumes Phase 4 reopening after restrictions were imposed in New York City on September 29, 2020 to slow the spread of the coronavirus.
Noam Galai | Getty Images
Starbucks announced on Wednesday that it expects to meet its long-term growth targets in 2023 and 2024 with adjusted earnings per share growth of 10% to 12%.
Starbucks shares rose more than 4% in expanded trading on the news. The stock, valued at $ 122 billion, is up 18% so far this year.
CFO Pat Grismer informed investors on Wednesday at his biennial Investor Day that the forecast for sustained long-term sales growth had been raised slightly to 8% to 10%. At its last investor meeting in 2018, the company expected adjusted earnings per share to grow at least 10% per year and long-term consolidated revenue growth of 7% to 9%.
Grismer also reiterated the company’s guidance for fiscal year 2021, which began in October. As the company and the wider economy rebound from the coronavirus pandemic, Starbucks expects adjusted earnings per share of $ 2.70 to $ 2.90. Starbucks is forecasting more than 20% growth through fiscal 2022 as it has weaker earnings growth.
At the investor meeting, executives also shared more details on the company’s strategy for long-term growth, including using artificial intelligence in the thoroughfares and doubling down on new cold drinks. In its home market, Starbucks is accelerating changes to its presence, closing around 800 underperforming locations and building new store formats such as urban cafes with no seating and more thoroughfares in the suburbs.
In the long term, Starbucks is forecasting global growth in new units of 6%, as 55,000 cafes are to be reached worldwide by 2030. In the US, new units are expected to grow by around 3%, slightly below the previous 3% to 4% range. In China, the second largest market, the company predicts new location growth in the lower teens compared to its earlier prospects in the middle teens.
Adding more locations will help the global coffee giant reach new customers as it predicts the global addressable market for coffee will reach $ 450 billion by 2023. It currently has nearly 33,000 retail space.
The forecasts assume that Starbucks will not experience additional business interruptions and stable exchange rates.