Starbucks' Stock Shares Heading Up

From The Street:

After a lackluster fiscal 2015 (calendar 2014), shares of Starbucks are racing higher after the company found a way to reaccelerate its growth. If you recall, transaction growth in fiscal 2014 had slowed to a crawl. Growth went from a high of 7% in the third quarter of fiscal 2013 to a low of just 1% by the fourth quarter of 2014. During this time, ticket growth was the only thing that kept same store sales flat to slightly down with the year before. As a result, the stock simply performed in line with the S&P 500 and investors wondered if the company had lost its touch.

But last year, management found a way to get transactions and tickets to grow again. As a result, same store sales took off and the stock followed along for the ride. In fact, in the quarter reported in October, Starbucks hit its highest same store sales number in three years. Global comps were up 8% and U.S. comps were up 9%. Part of the reason the same store sales were so good was the company is getting its food business right. Lunch and mid-day average transactions are up 30% over the last five years.

The company even found a way to get night owls into the store. Afternoon and evening transactions rose 19%. Starbucks now owns the morning, going big on lunch and attacking the midday refreshment and snack side of the business. The evening wine and cheese crowd is next on the agenda. Last quarter, food added 3% to same store sales, which was considerably better than in the past.

New store expansion is coming from overseas. In fiscal 2007, 70% of new store developments were inside the United States. Starbucks expects 70% of its new 1,800 new stores will be outside the U.S.

In addition to opening new stores, the company is aggressively attacking the grocery isle. According to the company, 80% of coffee "occasions" happen outside a coffee shop, so expanding distribution of ground coffee and k-cups remains a big priority. To support those sales, Starbucks has over 500 "signature aisles" in grocery stores and is looking for more. Of course, the company continues its push overseas. It has a $6 billion coffee and energy drink partnership with Chinese coffee company Tingyi and a $4 billion initiative with PepsiCo in Latin America.

Last quarter, some investors thought management gave mixed guidance. The company said sales would be strong, but earnings per share would be below the consensus because of heavy investment in technology. For example, digital initiatives are consuming an estimated $250-$275 million or $0.04-$0.05 per share this quarter.

Starbucks has a unique digital ecosystem. Mobile payments are at 21% of sales. About 35% of sales are prepaid cards. Last year, there were $5 billion loaded on cards and over 10 million active loyalty card members.

For the first quarter, analysts are expecting revenue of $5.39 billion, up 12% and $0.45 in earnings. For the year, revenue should be up 12.9% to $21.6 billion. The year includes an extra week, but that extra revenue will be offset by foreign currency translation. Earnings of $1.89 include some modest share buybacks.

Just about every analyst has a buy or strong buy on the stock and the average target price is $68. As mentioned before, higher technology spending, increased employee-related expenses, higher store opening expenses and foreign currency could take a cut a few cents out of EPS, but given the company's strong momentum, it's hard to bet against Starbucks. The company is on caffeine high.

Starbucks Cookies Look a Little Terrifying

Coffee giant Starbucks has made a range of Christmas polar bear biscuits that look unexpectedly terrifying.

The cute cookies are designed to give the animals a pleasing smile and a bright red scarf around their necks.

But, as one eagle-eyed Imgur user pointed out, the actually look like they have had their throats cut.

Yikes!

Sunday, Sept. 29 is "National Coffee Day"

Ummmmmm. That morning cup of cooffee.

Sunday, Sept. 29 is National Coffee Day, and as with National Doughnut Day, there will be freebies galore. Here are the coffee shops that will give you a complimentary cup of Joe this weekend.

Dunkin' Donuts (DNKN) is doing a whole range of promotions for the day. You can get a free small coffee -- hot or iced -- when you redeem the offer on the Dunkin' Donuts mobile app. It's also discounting the price on its K-Cups and one-pound bags of coffee. Oh, and it got NASDAQ to change its name to NASDDAQ for the day on Friday, when the company came in to ring the opening bell.

APlus at Sunoco (SUN) didn't rename any stock exchanges, but it's going bigger on the free coffee. You'll be able to get a free 16-ounce coffee from any of the gas station's retail locations, and the offer will be available on Friday, Saturday and Sunday. Just get the deal through its Facebook page.

Peet's Coffee (PEET), by contrast, will only offer its free coffee during a small window on Sunday: 10 a.m. to 2 p.m. And you have to purchase a bakery item or a cup of oatmeal to get the freebie. But it's not all bad news: Instead of just getting a cup of regular old coffee, you're getting a maple latte. To get the deal, print out this coupon or show it on your smartphone.

Krispy Kreme (KKD) is getting in on the action, too. Go into any participating Krispy Kreme and you'll get a free 12-ounce coffee. And if you want something a little fancier, many locations are also offering mochas, lattes and iced coffee for just $1. You can also enter a contest that can win you a free large cup of coffee every week for a year, plus a travel mug.

Starbucks (SBUX) is giving out free coffee, though not much of it. It's using the day as an excuse to give out samples of its new "Ethiopia" coffee blend, but we imagine those will be tiny samples that aren't enough to give you a proper caffeine fix.

Starbucks to Start Posting Calories

Interesting as Starbucks will now post calorie info on their products.

http://www.ajc.com/weblogs/biz-beat/2013/jun/18/starbucks-post-calories-coffee-shops/

Starbucks Profit Jumps By 18%

Guess I've been going to Starbucks a little too much.

Starbucks Corp. perked up its net income by 18 percent in its fiscal second quarter, as more customers visited its cafes in most parts of the world. The coffee giant also raised its forecast for the year on the better-than-expected results.

The Seattle-based company's stock nevertheless slid 5 percent in after-market trading as sales showed weakness in parts of Europe.

For the quarter, Starbucks said Thursday that global revenue at cafes open at least a year increased by 7 percent, as a result of more customers and higher spending per visit. The figure is a key metric because it excludes the impact of newly opened or closed stores.

The gains were strongest in China and Asia Pacific, where the figure rose 18 percent. The region is a critical expansion area for Starbucks; by 2014, the company says China will become its second largest market behind the U.S.

Revenue at cafes open at least a year rose 8 percent in the Americas but slipped 1 percent in the region encompassing Europe, Middle East, Russia and Africa.

Chief Financial Officer Troy Alstead said the dip was largely the result of select regions of Europe that were hard hit by economic turmoil. He said the company is "not immune" from high unemployment and fragile consumer confidence in the region.

"It's not unlike what we experiences in the U.S. a few years ago," he noted.

Alstead said Starbucks is taking similar measures in those markets as it did when it was struggling in U.S., such as introducing loyalty programs and improving service to boost sales. The company is also focusing on adapting its offerings to local tastes. In France, for example, a second espresso option was added in response to consumer demand.

In a conference call with investors, CEO Howard Schultz expressed confidence that the measures would prove successful.