Starbucks Corp. (SBUX, Financial) deals in specialty coffee worldwide. It has an array of products to offer – Starbucks, Teavana, Tazo, Seattle's Best Coffee, Evolution Fresh, La Boulange, Ethos, Starbucks VIA, Frappuccino, Starbucks Doubleshot, Starbucks Refreshers and Starbucks Discoveries Iced Café Favorites.
It entered 2016 with another record-breaking quarter and a continuation of the accelerating momentum gained in 2015. The industry-leading operating and financial performance and consistently strong comp growth are key drivers of growth for this company.
The company is growingly rapidly and has its presence felt in over 22,088 locations worldwide. The first quarter represented another solid quarter of strong revenue growth and record operating and financial performance all around the world. This Seattle-based coffee giant may reap good returns for its investors in the near future. Coffee is a widely used drink across the globe, and the coffee industry has plenty of room to grow. Starbucks is in a good position now and is going to revamp investors’ portfolios.
Strong first quarter
- Global comparable store sales increased by 8%, including a 4% increase in traffic.
- Americas comp store sales increased 9%, including a 4% increase in traffic.
- China/Asia Pacific comp store sales increased by 5%, driven by a 4% increase in traffic.
- EMEA comp store sales increased 1%, driven by a 1% increase in traffic.
- Consolidated net revenues grew 12% over Q1 FY15, to a record $5.4 billion.
- Consolidated GAAP operating income increased 16% over Q1 FY15, to a record $1.1 billion.
- Non-GAAP operating income increased by 15% over Q1 FY15 non-GAAP to a record $1.1 billion.
- Consolidated GAAP operating margin increased 60 basis points over Q1 FY15 to a Q1 record 19.7%.
- Non-GAAP operating margin expanded 40 basis points over Q1 FY15 non-GAAP to a Q1 record 19.9%.
- GAAP EPS of 46 cents versus Q1 FY15 GAAP EPS of 65 cents.
- Non-GAAP EPS increased 15% over Q1 FY15 non-GAAP to a record 46 cents.
- Opened 528 net new stores in the quarter globally, including a record 281 stores in China/Asia Pacific and a record 79 stores in EMEA.
- Channel Development revenues increased 16%; operating margin expanded 210 basis points and operating income increased 23% over Q1 FY15.
- Company served over 23 million more customer occasions from its global comp store base – 18 million in the U.S. – in Q1 over the prior year.
- Record $1.9 billion loaded on Starbucks Cards in the U.S. and Canada; one in six American adults received a Starbucks Card over the holiday, up from one in seven in Q1 FY15.
- Membership in the company's My Starbucks Rewards loyalty program increased 23%; the company now has more than 11 million active members in the U.S.
(Source: Company’s website)
Share repurchases
The company repurchased 4.5 million shares of common stock in Q1 FY16; 48 million shares remain available for purchase under current authorizations.
Dividends
The board of directors declared a cash dividend of 20 cents per share, payable on Feb. 19 to shareholders of record as of Feb. 4.
Strong attributes of the first quarter
- Commitment to deliver best in class financial and operating results.
- Building new stores.
- Renovating existing stores.
- Deploying new technology.
- Delivering an elevated Starbucks Experience to the customers.
- Increased returns to shareholders.
On a concluding note
The company’s diverse food program is transforming Starbucks into a destination for meals, snacks and sweet treats. Starbucks is constantly expanding internationally and is on a growing spree. It is going to expand profusely in Brazil, Japan, India and China. There is more room for growth when it comes to this company. Disposable income is higher across the world and the trend of soda-related caffeinated drinks has reduced. People may now prefer a Starbucks drink more.
Disclosure: I do not hold any position in the company.
