Starbucks Corporation (SBUX, Financial), performing business as Starbucks Coffee, is an American global coffee company and coffeehouse chain. Starbucks is the leading coffeehouse company in the world ahead and the company is living up to its name. Shares of Starbucks have appreciated over 30% in the last 12 months and the company’s shrewd innovative initiatives will drive its business forward. The company’s quarterly result reflect its strong share performance.
The company reported strong financial results for the second quarter, an upsurge in strength and relevancy of the Starbucks brand followed by 7% growth in strong global comp.
In the results of Q2FY15, revenues were up 18% to $4.6 billion, compared to previous year. Operating income escalated 23% to $789 million compared to previous year’s same quarter, excluding non-GAAP items whereas non-GAAP operating margin prolonged 70 basis points to 17.3% in this quarter. Particularly America’s section revenues grew 11% in Q2 driven by comp growth and transaction growth of 7% and 2% respectively.
Americas operating margin escalated 110 basis points to 22.7% over Q2 of 2014. Investments obstructed Q2 operating income by $34 million and operating margin by 100 basis points.
The company’s EMEA sector improved operating income 65% over Q2 of previous year to a Q2 record of $29 million followed by EMEA’s operating margin expanded 470 basis points to a Q2 record of 10.4%.
The company expected a brighter side by claiming that EMEA’s operating margins will grasp the higher end of their 10% to 12% supervision throughout fiscal 2015
GAAP EPS and non-GAAP came in at $0.33 in ahead of pre-split agreement. The company continues to make around building new stores and renovating existing stores.
Shrewd innovations
As observed from the results of Q2FY15, Starbucks Corporation is performing very well with their positive results due to the recent innovations. Innovations include:
- Mobile Order & Pay
- Starbucks card
Mobile Order & Pay was launched in December for 150 stores in Portland, Oregon which gained a lot of success and the company expanded the plan to over 600 stores in the Pacific Northwest. The facility is motivating superior marketing efficiency and attracting new customers to stores. The experience from this idea has “exceeded every goal”.
Moreover, the Starbucks card lingers to raise, an upsurge of 19% card load growth in the quarter to $1.1 billion. Increased Starbucks card sales drives increased “My Starbucks Rewards membership” and in turn amplified traffic and sales in their stores.
Another positive
Teavana is a chief reason for the future growth of the Starbucks Corporation brand. The company has performed very well, obviously the conqueror in retail coffee, has always had a robust tea existence, but the company want to take it to the level, as they did for coffee.
Additional, tea is a considerable more popular item in the CAP area, which is Starbucks’ best growth marketplace. With their bread and butter coffee business, Teavana will bridge the gap of traditional drinks.
Conclusion
Starbucks’ management has taken some smart steps to further grow its business. The company is consistently growing business, improving margins and increasing its brand value. Despite the massive year-over-year rise, the company still has more upside to offer and is a buy at present valuation.
