Yahoo Finance Starbucks (SBUX) Expands Footprint in China, to Open New Stores
Starbucks Corporation SBUX continues to expand its footprint in China. The company is set to open its 6,000th store on the Chinese mainland. With it, Starbucks will have 1000 stores in Shanghai.
Management focuses on increasing global market share by judiciously opening stores in new and existing markets, remodeling existing stores, deploying technology, controlling costs and aggressive product innovation, and brand building.
Leo Tsoi, CEO of Starbucks China said, “As Starbucks celebrates our 6,000th store in China, we are deeply humbled to return where we opened our first store in Shanghai.”
In China, the company is likely to witness net unit growth of roughly 13% annually. By the end of 2025, the company’s global store count is likely to reach 45,000 and by 2030 it is projected to be 55,000. In China, the company expects its store count to increase to 9,000 by 2025 across 300 cities. The company is also planning to operate 2,500 Greener Stores by fiscal 2025.
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Price Performance
In the past three months, shares of Starbucks have gained 11.1% compared with the industry’s increase of 4.9%. Starbucks has been benefiting from operating fundamentals such as a solid global footprint, successful innovations and digital offerings. North America comps continue to impress investors.
For fiscal 2023 to 2025, Starbucks anticipates global and U.S. comparable store sales growth between 7% and 9% year over year. The figure is above the previous range of 4-5%.
This Zacks Rank #3 (Hold) company’s performance in China was severely impacted by the coronavirus pandemic. However, in 2023 and 2024, it is likely to witness robust growth in China. The growth is likely to normalize in the range of 4-6% in fiscal 2025, up from the prior estimate of 2-4%.
For fiscal 2023 to 2025, the company anticipates global revenues to increase in the range of 10-12% annually. The figure is higher than the company’s prior range of 8-10%. Starbucks anticipates robust margin expansion in fiscal 2023, 2024 and 2025. It expects non-GAAP earnings per share to grow between 15% and 20% annually through 2025, up from the prior range of 10-12%.
Key Picks
Some better-ranked stocks in the Zacks Retail-Wholesale sector are Tecnoglass Inc. TGLS, Cracker Barrel Old Country Store, Inc. CBRL and Arcos Dorados Holdings Inc. ARCO.
Tecnoglass currently sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 24.4%, on average. Shares of the company have increased 6.1% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TGLS’s 2022 sales and earnings per share (EPS) suggests growth of 28.2% and 47.7%, respectively, from the year-ago period’s levels.
Cracker Barrel currently carries a Zacks Rank #2 (Buy). It has a long-term earnings growth of 6.9%. Shares of the company have declined 33.6% in the past year.
The Zacks Consensus Estimate for CBRL’s 2022 sales and EPS suggests growth of 16.3% and 15.4%, respectively, from the year-ago period’s levels.
Arcos Dorados carries a Zacks Rank #2. It has a long-term earnings growth of 34.4%. Shares of the company have risen 33.6% in the past year.
The Zacks Consensus Estimate for ARCO’s 2022 sales and EPS suggests growth of 27.1% and 104.2%, respectively, from the year-ago period’s levels.
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