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    Starbucks Corp (SBUX)

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    Business Description

    Starbucks Corporation is a leading global roaster, marketer, and retailer of specialty coffee, operating in 87 markets worldwide. The company sells high-quality coffees, teas, and other beverages, along with a variety of food items through its company-operated stores. Additionally, Starbucks licenses its trademarks through other channels, such as licensed stores and grocery and foodservice partnerships, primarily through the Global Coffee Alliance with Nestlé .

    1. Beverages - Offers a wide range of high-quality coffees, teas, and other beverages, which are the primary revenue drivers.
    2. Food Items - Provides a variety of food options, complementing its beverage offerings.
    3. Other Products - Includes packaged and single-serve coffees and teas, royalty and licensing revenues, and beverage-related ingredients.
    4. North America Segment - Encompasses operations in the U.S. and Canada, contributing significantly to the company's overall revenue.
    5. International Segment - Covers markets such as China, Japan, and Europe, expanding Starbucks' global presence.
    6. Channel Development Segment - Focuses on packaged coffee and ready-to-drink beverages, extending Starbucks' reach beyond its stores.

    Q4 2024 Summary

    Initial Price$79.05June 27, 2024
    Final Price$97.36September 27, 2024
    Price Change$18.31
    % Change+23.16%

    What went well

    • Leadership committed to returning to Starbucks' core identity, focusing on offering the finest coffee and a welcoming coffee house experience to drive customer loyalty and growth.
    • Investing in partners (baristas) to provide exceptional customer service, making Starbucks the best job in retail with meaningful career growth and industry-leading benefits, leading to improved service and customer satisfaction.
    • Simplifying operations and enhancing marketing strategies, including refining Mobile Order & Pay, addressing staffing and bottlenecks, simplifying the menu, and reintroducing Starbucks to all customers to drive sales growth.

    What went wrong

    • Declining customer visits due to perceptions that Starbucks has drifted from its core and made it harder for customers, leading some to visit less often and impacting financial results.
    • Operational challenges such as staffing issues, bottlenecks, and complexity for baristas, which may adversely affect customer service and satisfaction.
    • An overly complex menu and pricing architecture, as well as issues with Mobile Order & Pay overwhelming the café experience, may hinder customer engagement and growth prospects.

    Q&A Summary

    1. Earnings Call Summary
      Q: What were the main points from the SBUX earnings call Q&A?
      A: Unfortunately, the documents do not provide any information about the SBUX earnings call Q&A session.

    Key Metrics

    View all financials →

    Executive Team

    NamePositionStart DateShort Bio
    Brian NiccolChairman and Chief Executive OfficerSeptember 9, 2024Brian Niccol was appointed as the Chairman and Chief Executive Officer of Starbucks Corporation, effective September 9, 2024. Before joining Starbucks, Niccol served as the CEO and Chairman of Chipotle Mexican Grill, Inc. His career includes leadership roles at Taco Bell and Pizza Hut, and he began his career in brand management at Procter & Gamble .
    Rachel RuggeriExecutive Vice President, Chief Financial Officer2021Rachel Ruggeri joined Starbucks in 2001 and was named Executive Vice President and Chief Financial Officer in 2021. She is responsible for the global finance function. Prior to her promotion, she served as Senior Vice President of Americas and held various leadership roles in finance both within and outside Starbucks .
    Brady BrewerChief Executive Officer, Starbucks InternationalApril 2024Brady Brewer joined Starbucks in 2001 and has served as Chief Executive Officer, Starbucks International since April 2024. He is responsible for teams across various international regions and Global Channel Development. Previously, he was Starbucks Executive Vice President and Chief Marketing Officer .
    Sara KellyExecutive Vice President, Chief Partner Officer2022Sara Kelly joined Starbucks in 2001 and was named Executive Vice President and Chief Partner Officer in 2022. She is responsible for helping partners realize their career potential and building global partner capability. She previously served as Senior Vice President, Talent & Partner Experience .
    Brad LermanExecutive Vice President, Chief Legal OfficerApril 2024Brad Lerman joined Starbucks in April 2023 as Executive Vice President and General Counsel and has served as Chief Legal Officer since April 2024. He leads the company's Legal and Corporate Affairs organization. Before Starbucks, he held senior legal positions at Medtronic plc and Fannie Mae .
    Mellody HobsonLead Independent Director2005Mellody Hobson has been a director at Starbucks since 2005 and has served as the chair of the board since March 2021. She is the Co-Chief Executive Officer, President, and Director of Ariel Investments, LLC, and has served on the boards of JPMorgan Chase & Co. and The Estée Lauder Companies Inc. .
    Daniel ServitjeDirectorJanuary 9, 2024Daniel Servitje is the CEO, President, and Chairman of Grupo Bimbo SAB de CV. He joined the Starbucks board as a director on January 9, 2024, bringing extensive experience in running multinational food companies and growing international consumer brands .
    Neal MohanDirectorJanuary 9, 2024Neal Mohan is the CEO of YouTube and has been serving as a Director at Starbucks since January 9, 2024. He brings valuable insights from his experience leading a major video distribution platform and his previous roles at Google and DoubleClick .
    Mike SievertDirectorJanuary 9, 2024Mike Sievert is the CEO, President, and Director of T-Mobile US, Inc. He has been serving as a Director at Starbucks since January 9, 2024. Sievert has extensive executive leadership experience, providing critical guidance on marketing and positioning .
    Wei ZhangDirectorOctober 1, 2023Wei Zhang is a Director at Starbucks Corporation, having joined the board on October 1, 2023. She is the former Senior Advisor and President of Alibaba Pictures Group, with extensive experience in e-commerce, digitization, media, and entertainment .

    Questions to Ask Management

    1. You emphasized the need to ensure high-quality, handcrafted beverages are prepared quickly and handed directly to customers by baristas; how do you plan to address staffing issues and bottlenecks to improve operational efficiency during peak hours?
    2. With the acknowledgment that Mobile Order & Pay has been overwhelming the café experience, what specific strategies are you implementing to refine this service without compromising customer convenience?
    3. You mentioned the necessity to fix your pricing architecture and simplify an overly complex menu; how will these changes impact your product offerings and the overall customer perception of value?
    4. Given the challenges in returning Starbucks China to growth and improving international business performance, what are your plans to address these international market issues, and what timelines are you anticipating for improvement?
    5. You stated that focusing on Starbucks Rewards customers has led to neglecting communication with all customers; how will your marketing approach change to re-engage with the broader customer base, and what metrics will you use to measure success?

    Share Repurchase Program

    Program DetailsProgram 1
    Approval DateMarch 15, 2022
    End Date/DurationN/A
    Total additional amountUp to 40 million shares
    Remaining authorization amount29.8 million shares as of September 29, 2024
    DetailsProgram was temporarily suspended on April 4, 2022, and resumed in the first quarter of fiscal 2023

    Past Guidance

    Q4 2024 Earnings Call

    • Issued Period: Q4 2024
    • Guided Period: N/A
    • Guidance: The documents do not provide specific guidance metrics from the Q4 2024 earnings call for Starbucks. However, the company is focused on returning to growth in the U.S. and internationally, with emphasis on improving store operations, enhancing customer experience, and driving product innovation .

    Q3 2024 Earnings Call

    • Issued Period: Q3 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Full Year 2024 Guidance: Reaffirmed all metrics of their full year 2024 guidance .
      2. Comparable Store Sales: Expected to be flat to low single digit for the year, with a specific range of a low single digit decline to flat .
      3. G&A Expenses: Expected to remain closer to 6% of revenue in the second half of the fiscal year, down from more than 7% in the first half .
      4. Efficiency Efforts: Aiming for $4 billion in efficiencies over the next four years, up from an initial goal of $3 billion .

    Q2 2024 Earnings Call

    • Issued Period: Q2 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Global Revenue Growth: Revised to low single digits from 7% to 10% .
      2. Global and U.S. Comparable Store Sales: Expected to be a low single-digit decline to flat .
      3. China Comparable Store Sales: Expected to see a single-digit decline .
      4. Global Net New Store Growth: Approximately 6% .
      5. U.S. Store Count Growth: Expected to grow by approximately 4% .
      6. China Store Growth: Anticipated to be approximately 12% .
      7. Operating Margin Growth: Expected to be approximately flat .
      8. EPS and Non-GAAP EPS Growth: Expected to be flat to low single digits .
      9. Full Year Effective Tax Rate: Expected to be in the mid-20% range .
      10. Capital Expenditures (CapEx): Expected to be approximately $3 billion .

    Q1 2024 Earnings Call

    • Issued Period: Q1 2024
    • Guided Period: FY 2024
    • Guidance:
      1. Global Revenue Growth: Expected in the range of 7% to 10% .
      2. Global and U.S. Comparable Store Sales Growth: Expected in the range of 4% to 6% .
      3. China Comparable Store Sales Growth: Expected to be in the low single digits .
      4. Global Store Growth: Expected to be approximately 7% .
      5. Operating Margin Expansion: Expected on a full-year basis .
      6. EPS and Non-GAAP EPS Growth: Expected in the range of 15% to 20% .
      7. Effective GAAP and Non-GAAP Tax Rates: Expected in the mid-20% range .
      8. Channel Development Segment Operating Margin: Expected to expand to the high 40% to low 50% range .

    Competitors

    Competitors mentioned in the company's latest 10K filing.

    • Specialty coffee retailers and shops: Primary competitors for coffee beverage sales, chosen by customers based on product quality, brand reputation, service, convenience, and price .
    • Large competitors in the quick-service restaurant sector: Compete directly with Starbucks in the coffee beverage market .
    • Well-established and start-up companies in international markets: Compete with Starbucks for coffee beverage sales .
    • Restaurants and other specialty retailers: Compete with Starbucks for prime retail locations and qualified personnel .
    • Specialty coffees and teas sold through grocery stores, warehouse clubs, specialty retailers, convenience stores, and foodservice accounts: Compete with Starbucks' Channel Development segment .
    • Packaged coffee and tea and single-serve and ready-to-drink coffee beverage markets: Increased competition globally, including from new and large entrants .