Recent Posts

SBUX: A Sizable Beverage Opportunity for Starbucks

Over the last 50 years, Starbucks has built itself up from a single store in Seattle’s Pike Place Market focused on selling high-quality coffee beans, to the most innovative beverage company in the entire restaurant industry (and the second-largest restaurant concept in the U.S., as measured by domestic systemwide sales). But this gigantic success story does not imply that there aren’t any large opportunities remaining for Starbucks. In our view, there remains an opportunity for […]

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7:00 AM

SBUX (Post-Call): A Crisp Quarter, Although Shares Have Been Frothy as of Late

After Tuesday’s market close, Starbucks reported fiscal Q3 (calendar Q2) adjusted EPS of $1.01, easily topping our $0.79 forecast and sell-side consensus (according to Consensus Metrix) of $0.78. The fiscal Q3 tax rate of about 18.2% was more favorable than our 25.5% estimate (and consensus of 25.6%). We calculate that the difference between the 18.2% tax rate and our 25.5% estimate accounted for about nine cents of the 22-cent EPS outperformance relative to our $0.79 […]

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6:54 PM

SBUX: Updating Our Same-Store Sales and EPS Forecasts

Given better-than-expected retail foodservice sales in general during calendar Q2 — Starbucks’ fiscal Q3 — we raise our fiscal Q3E Americas same-store sales forecast to +78% (from +72%). Given the fiscal Q3 2020 figure of -41%, our updated +78% projection implies a two-year number of about +5%. We would also note that embedded within our updated Americas forecast for fiscal Q3E is a U.S. same-store sales projection of +83% (up from +77%). We plan to […]

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4:23 PM

SBUX (Post-Call): Percolating Sales, Earnings, and Loyalty Program Growth

Earlier today, Starbucks reported fiscal Q2 (calendar Q1) adjusted EPS of $0.62, surpassing our $0.53 forecast and sell-side consensus (according to Consensus Metrix) of $0.53. Starbucks bumps up its fiscal 2021 target range for adjusted EPS to $2.90-$3.00 (from $2.70-$2.90). Sources of the fiscal Q2 EPS outperformance include: (1) better-than-expected Product and Distribution Costs/Total Net Revenues (29.9% actual vs. 31.2% estimated), (2) better-than-expected Store Operating Expenses/Company-Operated Store Revenues (49.9% actual vs. 51.8% forecasted), and (3) […]

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4:51 PM

SBUX: How Does Starbucks Trade Heading Into, and After, Earnings?

Starbucks plans to release its fiscal Q2 (calendar Q1) 2021 earnings after the market close on Tuesday, April 27th. How do SBUX shares tend to trade heading into earnings, and the day after an earnings release? To answer those questions, we compiled data for the 24 prior earnings releases from Starbucks, examining the stock’s absolute performance, and performance relative to the S&P 500, for two time periods: (1) the week ahead of the scheduled earnings […]

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4:40 PM

SBUX: Updating Our Same-Store Sales and EPS Estimates

Ahead of Starbucks’ fiscal Q2 earnings release planned for after the market close on Tuesday, April 27th, we raise our fiscal Q2E U.S. same-store sales forecast by +1 percentage point, to +9%. According to Consensus Metrix data, this places us as the “high forecast on the sell-side” in this regard. As of this writing, sell-side consensus for fiscal Q2E U.S. same-store sales is at +6.7%, although remember that Starbucks does not report its same-store sales […]

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4:44 PM

SBUX (Post-Call): Quarter-to-Quarter EPS Volatility a Bit Frothy

After Tuesday’s market close, Starbucks reported adjusted fiscal Q1 (calendar Q4) EPS of $0.61, above its previously-stated $0.50-$0.55 target range. Our forecast was at $0.54, with sell-side consensus (according to Consensus Metrix) of $0.55. We attribute the fiscal Q1 EPS beat primarily to: (1) favorable Product and Distribution Costs/Total Net Revenues (30.4% actual vs. 32.2% estimated) and (2) favorable Store Operating Expenses/Company-Operated Stores’ Revenues (50.1% actual vs. 52.0% forecasted), partially offset primarily by: (1) lower-than-projected […]

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3:23 PM

SBUX Company Targets Outsized EPS Growth in Fiscal 2021 & Fiscal 2022

Earlier today, Starbucks hosted its biennial Analyst Meeting — this time doing so virtually. The company highlights its Growth at Scale agenda, pointing out that it plans to be a positive force in the lives of all of its stakeholders. Some highlights from today’s meeting: * Starbucks reiterates its fiscal 2021 non-GAAP EPS target range of $2.70-$2.90. It also unveils a target for fiscal 2022 non-GAAP EPS growth of greater than +20%. If one presumes […]

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12:00 AM

SBUX (Post-Call) Starbucks’ Brand Power Asserting Itself

After today’s market close, Starbucks reported adjusted fiscal Q4 EPS of $0.51, ahead of our $0.33 estimate and sell-side consensus (according to Consensus Metrix) of $0.31. Factors in the EPS beat included: (1) a favorable tax rate (approximately 14.3% actual, vs. our 26.0% forecast), (2) better-than-expected Store Operating Expenses/Company-Operated Retail Sales (51.9% actual vs. our 54.7% forecast), and (3) better-than-anticipated G&A/Revenues (6.0% actual vs. our 6.9% forecast), partially offset by other factors (such as D&A/Revenues […]

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12:00 AM

SBUX Updating Estimates Ahead of 10.29 Earnings Release (and Tidbits)

Starbucks plans to report its fiscal fourth-quarter earnings after the market close on Thursday, October 29th. Ahead of that release, we move up our fiscal Q4E U.S. samestore sales forecast by +2 percentage points, to -11%. This reflects the previouslyannounced -14% number from July and -11% figure from August. Implicitly, our updated full-Q4E projection presumes about a -8% to -9% estimate for September. FYI, according to Consensus Metrix, sell-side consensus for full-fiscal Q4E is at […]

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12:00 AM

SBUX Introducing Some EPS Estimates

With this report, we introduce our quarterly EPS estimates for Starbucks’ (SBUX; Buy, $78.95) fiscal 2021E. Also, our full-fiscal 2021E EPS estimate also goes up by +5 cents, to $2.55, reflecting the 53rd fiscal week in fiscal 2021E. Starbucks’ fiscal year ends on the Sunday closest to September 30th. In 2020 this means September 27th; in 2021 this means October 3rd. Our newly-introduced quarterly EPS estimates for fiscal 2021E are as follows: Fiscal Q1E: $0.57 […]

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12:00 AM

SBUX (Post-Call) June and July Sales Trends Better than Expected

After today’s market close, Starbucks (SBUX; Buy, $74.64) reported fiscal Q3 (calendar Q2) adjusted EPS of -$0.46 — better than our -$0.63 forecast and sell-side consensus (according to Consensus Metrix) of -$0.62. In its June 10th business update, Starbucks indicated it was then targeting fiscal Q3 adjusted EPS of -$0.55 to -$0.70. Fiscal Q3 EPS coming in better than the high end of the target range relates to better-than-expected June same-store sales (for example, June […]

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12:00 AM

SBUX Adjusting Estimates Following Business Update

Earlier today, Starbucks (SBUX; Buy, $82.37) provided a business update as part of an 8-K filing. Given the information in that 8-K, we lower our fiscal Q3E (calendar Q2E) EPS estimate by -53 cents to -$0.63, and we reduce our fiscal Q4E (calendar Q3E) EPS forecast by -12 cents to $0.27. These updates lower our full-fiscal 2020E EPS projection by -65 cents, to $0.75. In addition, given this lower anticipated base of earnings coming off […]

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12:00 AM

SBUX (Post-Call) The Road to Recovery Begins with Resilience

After today’s (Tuesday’s) market close, Starbucks reported fiscal Q2 (calendar Q1) adjusted EPS of $0.32, matching the $0.32 figure that the company pre-announced on April 8th. We were at $0.32 entering today, with sell-side consensus (according to Consensus Metrix) at $0.31. The adjusted fiscal Q2 tax rate came to about 18%; we had been forecasting 22.9% entering today (with consensus at 23.1%). We calculate that adjusted EPS for fiscal Q2 would have been about -2 […]

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12:00 AM

SBUX Updating Our Fiscal Q3E Same-Store and EPS Estimates

With this report, we lower our full-fiscal 2020E EPS estimate for Starbucks (SBUX; Buy, $71.57) by -4 cents, to $1.91. (Our full-fiscal 2021E EPS estimate remains at $2.90.) The four-cent reduction in our fiscal 2020E EPS forecast reflects (1) Starbucks estimating that its adjusted EPS for fiscal Q2 (January-March) will be about $0.32 — we move up our fiscal Q2E projection by +1 cent to $0.32, and (2) lowering our fiscal Q3E EPS estimate by […]

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12:00 AM

SBUX Updating Our Same-Store Sales and EPS Estimates for FY2020E & FY2021E

We lower our U.S. (and Americas, of which the U.S. makes up the vast majority) samestore sales estimates for Starbucks (SBUX; Buy) as follows: Fiscal Q1A 2020: already reported at +6% Fiscal Q2E 2020: down by -10 percentage points to -5% Fiscal Q3E 2020: down by -32 percentage points to -30% Fiscal Q4E 2020: down by -12 percentage points to -10% Fiscal full-year 2020E: down by -14 percentage points to -10% Fiscal full-year 2021E: up […]

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12:00 AM

SBUX Lowering Estimates as China SameStore Sales Down by -78% in February

Earlier today, Starbucks (SBUX; Buy, $76.19) filed an 8-K which quantified some of the potential impacts on its business from coronavirus in China (a company-owned market for Starbucks). As a result, we lower our full-fiscal 2020E EPS estimate by -23 cents, to $2.80. And, given this lower base of anticipated earnings coming off of 2020, partially offset by 2021 potentially lapping some easy comparisons, we take down our full fiscal 2021E EPS forecast by -17 […]

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12:00 AM

SBUX (Post-Call) Fiscal Q1 Healthy, But Coronavirus Afflicting Fiscal Q2

After today’s (Tuesday’s) market close, Starbucks (SBUX; Buy) reported fiscal Q1 2020 (= calendar Q4 2019) adjusted EPS of $0.79, surpassing our $0.75 forecast and sell-side consensus (according to Consensus Metrix) of 0.76. U.S. same-store sales growth of +6% exceeded our +5% projection and sell-side consensus of +5%. Worldwide same-store sales advanced by +5%, matching our estimate and consensus. Starbucks notes that at present, though, over half of its stores in China — a key […]

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12:00 AM

SBUX Correlating U.S. Same-Store Sales and Growth in Starbucks Rewards

In theory, accelerating Starbucks Rewards (U.S. loyalty program) active membership should lead to better Starbucks U.S. same-store sales. But does it, or not? In our correlation of these two metrics over the last 16 quarters, we find that there is indeed a positive correlation. In general, this may bode well for Starbucks U.S. same-store sales in fiscal Q1 2020 (calendar Q4 2019), as in fiscal Q4 2019 (calendar Q3 2019), active Starbucks Rewards (U.S.) members […]

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12:00 AM

SBUX (Post-Call) +6% U.S. Comps & No Spicy Chicken Sandwich Inconceivable

After today’s market close, Starbucks (SBUX; Buy) reported fiscal Q4 adjusted EPS of $0.70, matching our $0.70 forecast and sell-side consensus (according to Consensus Metrix) of $0.70. Americas (and U.S.) same-store sales rose by +6% during fiscal Q4, ahead of our +5% projection and sell-side consensus of +4.5%. Traffic and ticket contributed about three percentage points each. Worldwide same-store sales increased by +5%, matching our +5% estimate, and surpassing consensus of +4%. For fiscal 2020, […]

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12:00 AM

SBUX Lowering Estimates as Starbucks Talks Tax Rate Share Repurchases China

Earlier today at a competitor conference, Starbucks (SBUX; Buy) made comments regarding the outlook for its tax rate, share-repurchase activity, and its China-related growth that cause us to update our model. Bottom line, we trim our fiscal 2020E EPS estimate by $0.14, to $3.00. This reflects an updated tax-rate projection of 25.0% (as compared to our prior projection of 21.6%). Our year-over-year EPS growth rate forecast is now +6.4%, with Starbucks indicating that it anticipates […]

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12:00 AM

SBUX (Post-Call) S’More Traffic Gains Than Expected…Refreshing

After Thursday’s market close, Starbucks (SBUX; Buy) reported adjusted fiscal Q3 EPS of $0.78, surpassing our $0.73 forecast and sell-side consensus (according to Consensus Metrix) of $0.72. We attribute the earnings outperformance largely to better-than-expected same-store sales gains in the U.S. and in international markets. In the key U.S. market, same-store sales rose by +7%, ahead of our +5% projection. For the Americans (driven by the U.S.), same-store sales advanced by +7%, topping our +5% […]

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12:00 AM

SBUX Updating Our Rating on Starbucks Ahead of 7.25 Earnings Release

Ahead of Starbucks’ (SBUX) fiscal Q3 earnings release scheduled for after the market close on Thursday, July 25th, we upgrade SBUX to Buy (from Neutral). Some of the concerns we had 3-6 months ago have been alleviated to a meaningful degree, including (1) the possibility that a serious run for office by former CEO Howard Schultz could have an adverse effect on the business; Mr. Schultz has put his campaign on hold which significantly alleviates […]

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12:00 AM

SBUX We’ll Hoist a Venti S’mores Frappuccino to This Improved Outlook

After Thursday’s market close, Starbucks (SBUX; Neutral) reported adjusted fiscal Q2 EPS of $0.60, surpassing our $0.57 forecast and the sell-side consensus (according to Consensus Metrix) of $0.56. The company also raises its target range for full-fiscal 2019 EPS to $2.75-$2.79 (from $2.68-$2.73 previously, an increase of $0.07 at the low end of the range and an increase of $0.06 at the high end of the range). Management attributes the improved outlook as follows: (1) […]

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12:00 AM

Luckin Coffee A Look at Unit Economics

Earlier today, Luckin Coffee filed for an IPO, seeking to trade on the Nasdaq with the ticker symbol “LK.” Given the data provided in the filing with the SEC, we take a closer look at Luckin Coffee’s unit economics in this report. Incidentally, that SEC filing is available at: https://www.sec.gov/Archives/edgar/data/1767582/000104746919002450/ a2238391zf-1.htm One key takeaway: with Starbucks (SBUX; Neutral) China’s average unit volumes at roughly $800,000, this suggests that — assuming little-to-no same-store sales growth — […]

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12:00 AM

Tidbits re Burger-Sector Same-Store Sales Trends, and SBUX

We briefly note the following tidbits regarding U.S. quick-service burger-sector samestore sales trends and Starbucks (SBUX; Neutral): * U.S. QUICK-SERVICE BURGER SECTOR SALES TRENDS. With March 2019 now in the rear-view mirror, we are pleasantly surprised that this month appears to have turned out very well for burger-sector same-store sales. In fact, based on our proprietary, data-driven checks, the mid-single digit number put up by U.S. quickservice burger chains for March 2019 looks like the […]

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12:00 AM

Tidbits re Burger King (owned by QSR), Applebee’s (owned by DIN), and SBUX

We briefly note the following tidbits regarding Burger King (owned by Restaurant Brands International [QSR; Not Rated]), Applebee’s (owned by Dine Brands [DIN; Buy]), and Starbucks (SBUX; Neutral): * BURGER KING. Chew Boom reports that “Burger King looks to deliver a coffee-house experience with the launch of the new BK Café, featuring freshly brewed premium coffee, specialty iced coffees and frappes. The BK Café drinks menu includes:” (bold in original) Read the Full Report

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12:00 AM

SBUX Details of the Upcoming Starbucks Rewards Loyalty Program Changes

On its January 24th conference call, Starbucks (SBUX; Neutral) management commented that “Starbucks Rewards continues to be a powerful enabler of loyalty and we are thoughtfully evolving the program to provide greater choice and flexibility for Rewards members. We will enhance the program this spring to enable loyalty customers to earn and redeem more quickly and redeem those awards across a broader range of items in our stores.” In this report, we report on what […]

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12:00 AM

Tidbits re Subway, Chick-fil-A, SBUX, More SBUX, & Pizza Hut (owned by YUM)

We briefly note the following tidbits regarding privately-held Subway, privately-held Chick-Fil-A, Starbucks (SBUX; Neutral), and Pizza Hut (owned by Yum Brands [YUM; Buy]): * SUBWAY AND CHICK-FIL-A. We have obtained a copy of the Technomic Top 500 Chain Restaurant Advance Report — the preliminary report of the annual Technomic Top 500 — and there were many intriguing findings within. We look forward to the final numbers. Keeping in mind the caveat that these are not […]

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12:00 AM

Tidbits re SBUX, Applebee’s (owned by DIN), DNKN, and CMG

We briefly note the following tidbits regarding Starbucks (SBUX; Neutral), Applebee’s (owned by Dine Brands [DIN; Buy]), Dunkin’ (owned by Dunkin’ Brands Group [DNKN; Neutral]), and Chipotle Mexican Grill (CMG; Not Rated): * STARBUCKS. Multiple media reports indicate that on this evening’s episode of the CBS program 60 Minutes, Starbucks founder, chairman emeritus, and longtime CEO Howard Schultz will state that he is strongly considering running for U.S. president as an independent candidate. For example, […]

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12:00 AM

SBUX (Post-Call) Fiscal Q1 U.S. Same-Store Sales +$% an Encouraging Sign

After today’s market close, Starbucks (SBUX; Neutral) reported adjusted fiscal Q1 2019 (calendar Q4 2018) EPS of $0.75, exceeding our $0.66 forecast and sell-side consensus (as measured by Consensus Metrix) of $0.65. Starbucks notes that this $0.75 figure “included a $0.07 benefit from discrete income tax items,” suggesting the EPS beat excluding these tax items was $0.02 versus our forecast and $0.03 versus consensus. Closely-watched U.S. same-store sales rose by +4% (including flat same-store traffic), […]

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12:00 AM

SBUX Updating Our Fiscal Q1E Forecasts Ahead of 1.24 Earnings Release

Ahead of Starbucks’ (SBUX; Neutral) planned fiscal Q1 2019 (calendar Q4 2018) earnings release planned for after the market close this Thursday (January 24th), we raise our fiscal Q1 same-store sales forecast for the Americas (and the U.S.) by one percentage point, to +4%, placing us above sell-side consensus (as measured by Consensus Metrix) of +3%. The raised forecast has the effect of increasing our Q1E EPS projection by one cent, to $0.66, also placing […]

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12:00 AM

Tidbits re MCD, SBUX, and Taco Bell (owned by YUM)

We briefly note the following tidbits regarding McDonald’s (MCD; Buy), Starbucks (SBUX; Neutral), and Taco Bell (owned by Yum Brands [YUM; Buy]): * McDONALD’S. The National Owners Association (NOA) — the first-ever independent franchisee association for McDonald’s U.S. — sent out an e-mail at roughly 4 AM on Sunday, January 6th with the Subject line “Urgent NOA Update.” The contents of the e-mail are in the following figures: Read the Full Report

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12:00 AM

SBUX Analyst Day Highlights Growth at Scale

Earlier today, Starbucks (SBUX; Neutral) hosted its every-two-years Analyst Meeting, this time around in New York City. In our view, the strategic path that Starbucks laid out — under the “Growth at Scale” theme — looks reasonable to us. Also, on the positive side, the transition from Starbucks being “founder-led” to “founder-inspired” — always a tricky thing to navigate for pretty much any company of size — seems to have gone relatively well, all things […]

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12:00 AM

SBUX (Post-Call) Fiscal Q4 Results are a Welcome Jolt of Caffeine

After Thursday’s market close, Starbucks (SBUX; Neutral) reported adjusted fiscal Q4 EPS of $0.62, ahead of our $0.59 forecast and sell-side consensus (as measured by Consensus Metrix) of $0.60. We attribute the EPS upside to better-than-expected Americas (and U.S.) same-store sales growth of +4%, which outpaced our +3% estimate and sell-side consensus of +3%. We would also note that fiscal Q4 same-store sales in the CAP (China & Asia/Pacific) region rose by +1%, better than […]

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12:00 AM
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