Green Light for Growth

Starbucks readies for more stores, new CPG products

SEATTLE -- A strong quarter report preceded Starbucks' announcement that it will accelerate growth in 2012. It ended its fiscal third quarter July 3 with an 8% increase in global same-store sales--driven by a 6% increase in traffic and a 2% increase in average ticket--and a 12% increase in total net revenues to $2.9 billion.

Howard Schultz, Starbucks' chair, president and CEO, said in the earnings call that along with more stores, the company plans to launch single-serve K-cups (initially available in grocery stores and mass merchandisers) and two new Via instant coffee varieties (Breakfast Blend and House Blend), as well as increase the role of its Tazo tea line, particularly in the CPG arena.

[image-nocss]"Starbucks' record third-quarter results reflect both the underlying strength and continuing momentum we have been experiencing across all of our business segments and around the world," said Schultz. "These results demonstrate the power, and the extraordinary global potential, of our unique new business model.

"Starbucks has never been healthier, more connected to our customers and partners, or better positioned to go after the tremendous business opportunities that lie ahead," he added.

The company plans to wrap up the fiscal year with a few key goals:

  • Fiscal 2011 revenue growth of approximately 10% on a comparable 52-week basis, driven by comparable store sales growth at the high end of its target range of 3% to 7%.
  • Add approximately 600 new stores (excluding the impact from Borders store closures), with approximately 100 in the U.S. and 500 in international markets.

Operating margin for the CPG segment is now expected to finish near the high end of the 25% to 30% range. Fiscal 2012 goals include:

  • Approximately 200 net new stores in the U.S., with approximately half of the additions being licensed stores.
  • Approximately 600 net new stores outside the U.S., with licensed stores comprising approximately two-thirds of the new additions.
  • New store openings in China are expected to be approximately one-quarter of the total international new store additions.
  • Approximately 10% revenue growth, driven by mid-single-digit comparable store sales growth, 800 net new store openings, and strong growth in the CPG business. Fiscal 2012 CPG margin is expected to be approximately 25%.

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