Starbucks Opens Store in Puerto Rico, Expands Global Presence

In line with its strategy to bolster global presence, Starbucks Corporation SBUX opened its 25th store in San Juan, Puerto Rico. The cafe is located in the Metropolitan University campus in Cupey, which is part of the Ana G. Méndez University System. This marks the first Starbucks cafe in a higher education institution in Puerto Rico.

Starbucks expects this new location at the Metropolitan University to be a busy place on the campus, while providing job opportunities to local students and contributing to the economy.

This is also the first Starbucks store opening in the island since Hurricane Maria struck in September, causing damage to live and property. The hurricane had compelled Starbucks to shut down its stores in Puerto Rico. Along with the launch of the cafe, the company is slowly reopening the other stores in Puerto Rico.

Starbucks and the company’s local business partner Baristas del Caribe have contributed significantly to the island’s rebuilding efforts. The company is constantly working toward creating local jobs, serving customers and supporting the region’s coffee producers. Also, another Starbucks store is likely to open in Santa Isabel in early 2018.

Global Expansion Plan on Track

In fiscal 2018, Starbucks expects to add 2,300 new locations globally (excluding Teavana closures), reflecting an increase from roughly 2,250 new locations in fiscal 2017.

Expanding beyond the United States has been one of Starbucks’ key growth strategies. Earlier this month, the coffee giant opened its largest Reserve Roastery in Shanghai. The 30,000-square-feet store has more than 100 beverages on the menu and provides an AR (augmented reality) experience for customers. This is the second Starbucks Roastery after the launch of the first one in Seattle in 2014. The company plans to bring the Roastery concept to New York in 2018 and Chicago in 2019.

In November, the company opened its first store in Jamaica, which marked the 76th market for the company. The company plans to launch 14 more stores over a period of five years. These stores will offer a range of Starbucks beverages and food, including its signature handcrafted hot and cold espresso beverages made with 100% arabica coffee.

Meanwhile, Starbucks’ shares have gained 4.5% so far this year compared with 14.6% growth of the industry. Also, the trend in earnings estimate revisions is not satisfactory as it moved 3.4% down for the current quarter and 1.3% for fiscal 2018 over the past 60 days. The company's tepid comps growth in the United States, owing to soft retail and consumer spending environment, weighs on the company’s performance.

 

 

Nevertheless, Starbucks’ focus on increasing its global market share by opening stores in new and existing markets along with remodeling existing stores, deploying technology, controlling costs, aggressive product innovation and brand building can boost its top line.

Zacks Rank & Stocks to Consider

Starbucks carries a Zacks Rank #4 (Sell).

A few better-ranked stocks in the same space are Famous Dave's of America, Inc. DAVE, Arcos Dorados Holdings Inc. ARCO and Good Times Restaurants Inc. GTIM. Famous Dave's of America sports a Zacks Rank #1 (Strong Buy), while the other two companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Famous Dave's of America is expected to see 600% EPS growth this year.

Current-year earnings for Arcos Dorados Holdings are expected to grow 16.2%.

Good Times Restaurants’ fiscal 2018 earnings are projected to grow 30.6%.

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