Starbucks sees strong rebound in 2021
Starbucks Corp. offered an optimistic forecast at its biennial investor day.
The coffee giant reaffirmed its forecast of adjusted earnings per share of $2.70 to $2.90 for fiscal 2021. By fiscal 2022, which will start in October 2021, Starbucks predicts growth of more than 20%.
“Looking ahead, coffee remains a very large and attractive market that is growing globally,” said Starbucks CEO Kevin Johnson. “We are focused on growing category share and believe Starbucks is better positioned than ever for continued success.”
With nearly 33,000 stores around the world, Starbucks expects to reach a store count of about 55,000 units worldwide by 2030. The company is planning to grow its global store portfolio by approximately 6% annually starting in fiscal year 2022, with the U.S. expected to deliver net new store growth of approximately 3%, compared to a previously announced range of 3% to 4%. Starbucks also reaffirmed plans to build new store formats in the U.S., including drive-thru formats.
In Starbucks’ second biggest growth market of China, the company expects to open approximately 600 new stores across the mainland in the next year. It is on track to reach 6,000 stores in 230 cities in China by the end of fiscal year 2022.
At the enterprise level and on an annual basis starting in FY23, Starbucks now expects ongoing revenue growth in the range of 8% to 10% and ongoing non-GAAP operating income margin in the range of 18% to 19%, both of which are one percentage point higher than previously outlined in 2018.
Starbucks also announced deeper investments in eco-friendly operations, regenerative agricultural practices, and environmentally friendly menus. This includes an intent to support for Net Zero Initiative, a partnership with the U.S. dairy industry to achieve net-zero greenhouse gas emissions improvements in water quality on farms.
The retailer will also roll out oatmilk nationwide in the U.S., joining plant-based options including soymilk, almondmilk, and coconutmilk. In addition, Starbucks pledged to make a $50 million Investment in The Global Farmer Fund, providing access to capital so coffee farmers can use these funds to strengthen their farms and farming practices to be more productive and sustainable.
Other sustainability initiatives include creating a diversified renewable energy portfolio, aiming to offset 50% of company-operated roasting and beverage production sites and electricity consumption in the U.S. by 2022 through Starbucks’ first supply chain virtual power purchase agreement with a solar farm in Virginia.
“We are well positioned to invest in the right areas to strengthen our competitive advantage and drive consistent, sustainable growth for decades to come,” said Johnson. “With Starbucks partners at our core, we believe our purpose extends far beyond the pursuit of profit, with an aspiration to positively impact the planet we all share and the people who connect with Starbucks.”
In other developments, executives at the meeting reiterated that customers can expect a more personalized digital experience made possible by the use of an artificial intelligence initiative called Deep Brew.