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With Starbucks shares near an all-time peak, the bar is high for coffee chain’s investor day


Kevin Johnson, CEO, Starbucks

Scott Mlyn | CNBC

Starbucks misplaced billions of {dollars} in gross sales this 12 months attributable to the coronavirus pandemic, however traders wish to know extra about the world coffee large’s plans for driving progress in the years to come back after the disaster.

On Wednesday afternoon, the firm is slated to current its blueprint to regain clients at its biennial investor assembly.

Starbucks’ gross sales in the United States and China, its two largest markets, have been rebounding quicker than anticipated. In its fiscal fourth quarter, which ended Sept. 27, same-store gross sales in the U.S. fell simply 9% and in China solely 3%. But a brand new wave of restrictions in the U.S. may decelerate Starbucks’ restoration in its house market.

In fiscal 2021, Starbucks is projecting annual world same-store gross sales progress of 18% to 23%, assuming that U.S. eating rooms will likely be absolutely reopened by the finish of the second fiscal quarter, which ends in March.

Shares of Starbucks, which has a $119 billion market worth, have risen 15% year-to-date, as of Tuesday’s market shut of $101.21. The inventory has been pushed increased by constructive information about the Covid-19 vaccine, and final week hit an all-time high of $102.94.

The current upswing has made some analysts cautious about the inventory’s valuation, however Oppenheimer raised its worth goal to $112 forward of investor day, which might be an almost 11% acquire from present ranges.

Here’s what’s going to doubtless be included in Starbucks’ investor presentation:

A brand new long-term outlook

A altering cafe footprint

The pandemic has pushed Starbucks to speed up its deadline to enhance its retailer footprint 4 years sooner than anticipated. Roughly 800 city cafes throughout the U.S. and Canada are anticipated to shut, and the chain plans to construct extra pick-up areas and drive-thru lanes. But traders will wish to know extra about how the transformation will change the common gross sales quantity for a restaurant and its labor prices.

One key query, based on Wells Fargo analyst Jon Tower, is whether or not Starbucks will likely be seeking to improve present drive-thru areas with options like digital menu boards and double lanes. McDonald’s is amongst the fast-food chains which have up to date their drive-thru know-how over the final a number of years, dashing up service occasions and reaping increased buyer satisfaction.

China is anticipated to be the key market for new restaurant additions. Unlike the U.S. and lots of European nations, China has been in a position to keep away from a major surge in new Covid-19 circumstances as temperatures cooled. Starbucks’ same-store gross sales in the nation are anticipated to show constructive in the first quarter.

“We expect management will detail plans for accelerating unit growth in the coming years,” UBS analyst Dennis Geiger stated in a Dec. four notice.

Refranchising may drive extra progress. Cowen estimates that promoting off the Canadian, U.Ok., Japanese, Austrian and Swiss markets to franchisees may imply $four billion in pretax money. Refranchising additionally implies that Starbucks would want to spend only a fraction of what it is presently spending on basic and administrative bills in these markets.

Adapting to new habits

Additions to the menu



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