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Announces long-term growth algorithm delivering double-digit growth
in non-GAAP earnings per share
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Announces launch of Starbucks Delivers to nearly a quarter of
U.S.
company-operated stores with Uber Eats, beginning in 2019
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Expands Starbucks Delivers in China – on the
Ele.me
on-demand delivery platform – to 2,000 stores across 30 cities in
China since launching three months ago
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Debuts first-of-its-kind virtual Starbucks store in China with
Alibaba partnership
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Accelerates cold beverage innovation strategy, including plans to
roll out Nitro Cold Brew in all U.S. company-operated stores in FY19
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Highlights efforts to amplify the brand globally while showcasing
new products and market opportunities for Global Coffee Alliance with
Nestlé
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Reaffirms commitment to offering a total pay benefit package that
is unmatched in the industry to partners (employees) who work 20 hours
or more per week
SEATTLE--(BUSINESS WIRE)--
Following a strong fiscal fourth quarter and a year of streamlining to
focus the company for growth, Starbucks (NASDAQ: SBUX) hosted its
biennial Investor Conference today in New York City. Chief executive
officer Kevin Johnson and other members of Starbucks leadership
team updated investors and analysts on the company’s strategic
priorities as it aims to expand its retail store portfolio by
approximately 6% to 7% net new units and grow same store sales by 3% to
4%, globally, each year while continuing to invest in its partners and
elevate the Starbucks Experience.
This press release features multimedia. View the full release here:
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Starbucks president and chief executive officer, Kevin Johnson, details the company’s strategic initiatives on stage at Starbucks 2018 Biennial Investor Conference in New York City on December 13, 2018. (Photo: Business Wire)
Through the lens of this commitment, Starbucks leaders highlighted the
decisive actions the company has taken to enable more focus on the core
value drivers, outlining its ongoing growth model and efforts to build
and amplify the brand.
“Coffee is one of the fastest growing beverage categories globally and
our over 350,000 partners around the world who wear the green apron are
now serving 100 million customer occasions a week,” said Johnson. “We
have long been performance driven while staying true to our mission and
values to create positive change and global social impact. The
leadership team and I believe Starbucks is better positioned than ever
for continued success.”
Reaffirms FY19 Targets and Presents Long-term Financial Targets
In his first Investor Conference presentation as Starbucks executive
vice president and chief financial officer, Patrick (Pat) Grismer
reiterated the company’s FY19 targets, as previously disclosed in the Q4
FY18 earnings announcement, while also articulating a sustainable
double-digit non-GAAP EPS growth model for the future.
“As the undisputed category leader globally, Starbucks is well
positioned to drive meaningful growth at scale, with more focus and
discipline,” said Grismer. “Today we reaffirmed our FY19 guidance and
outlined our ongoing growth model. The transformative Global Coffee
Alliance with Nestlé will be accretive to non-GAAP EPS in FY20 and FY21,
helping to deliver expected growth of at least 13% annually for those
two years.”
Longer term, Starbucks expects consolidated revenue growth of 7% to
9% and non-GAAP earnings per share growth of at least 10%.
Creating Meaningful Customer Connections
Throughout the Investor Conference, Starbucks leadership team emphasized
its renewed focus on the customer experience and operational excellence.
In the U.S., Starbucks chief operating officer and group
president Rosalind (Roz) Brewer provided details on how the company is
progressing against each of its operating initiatives: enhancing the
in-store experience, delivering beverage innovation, and driving digital
relationships.
Enhancing the in-store experience:
Starbucks
heritage is built on the third place experience where
everyone is welcome and where customers can enjoy high-quality arabica
coffee while they stay for moments of connection with each other and
with Starbucks partners. Some of the key initiatives Starbucks is
undertaking to create an even better experience for customers and
partners include:
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Repurposing partners’ time spent on administrative tasks to enhance
customer engagement with the goal of improving capacity and throughput.
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Deploying technology to automate inventory planning and
replenishment by improving accuracy and efficiency of work routines.
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Optimizing the company’s real estate footprint and store renovation
strategy to deliver the next generation of the third place and
drive higher financial returns.
Delivering beverage innovation:
As Starbucks
drives more innovation in its stores while meeting consumer preferences,
the company has seen the proven highly incremental results from
Draft Nitro Cold Brew. Based on this success, Starbucks announced today
it plans to roll out Nitro to all U.S. company-operated stores by the
end of FY19 to meet customer demand for this growing platform.
Driving digital relationships: With digitally-engaged
customers purchasing 2 to 3 times as many products as those that are not
digitally-engaged, Starbucks continues to see significant
promise in its digital initiatives as an enabler for customer
convenience, awareness and value. To unlock further growth, the
company announced three key areas of focus expected to drive 1 to 2
points of comp, including new member acquisition and related spend lift;
further adoption of Mobile Order & Pay and the habituation it drives;
and upcoming enhancements to the popular Starbucks® Rewards loyalty
program enabling customers to redeem for a variety of options, and to
earn rewards even faster.
Accelerating Growth in China Through New Digital Initiatives
Starbucks group president, International and Channel Development John
Culver provided an update on the strategic partnership in China with
Alibaba Group, which was announced in August. This collaboration across
key businesses within the Alibaba ecosystem, including Ele.me,
Hema, Tmall, Taobao and Alipay aims to enable an even more seamless
Starbucks digital experience and transform the coffee industry in China.
As part of this partnership, Starbucks is launching its first-ever,
virtual Starbucks® store today in China. The virtual Starbucks store
provides customers a one touch digital Starbucks Experience,
utilizing the Starbucks® app and Alibaba’s customer-facing mobile apps,
including Taobao, Tmall and Alipay. Starbucks customers now have one
seamless and easy-to-use consumer interface which enables them to earn
Stars in the Starbucks Rewards program for their purchases reaching
approximately 670 million Starbucks and Alibaba mobile active
users. This latest digital innovation revolutionizes the traditional
offline-to-online model by effectively extending the reach of the
Starbucks Experience into the everyday lifestyle of Chinese customers.
Meeting Customers Where They Are with Starbucks Delivers
As part of the Alibaba partnership and effort to transform the coffee
market in China, Starbucks has been working with Ele.me, China’s leading
on-demand food delivery platform with 3 million registered delivery
riders, to bring a best-in-class delivery experience to the market.
Starbucks has also piloted two ‘Star Kitchens’ within two FRESHIPPO
(previously known as Hema) supermarkets in Shanghai and Hangzhou, making
Starbucks the first retail brand to establish a dedicated back of house
presence in FRESHIPPO locations to utilize its distinct fulfillment and
delivery capabilities to further reach and better serve customers. As
part of the Investor Conference today, the company announced Starbucks
Delivers has reached 2,000 stores across 30 cities in China since
launching three months ago.
Leveraging learnings from its delivery experience in
China, Starbucks sees further market opportunity with Starbucks
Delivers. The company recently initiated pilots of Starbucks Delivers
in both Tokyo and Miami with Uber Eats. Today, Starbucks announced plans
to expand Starbucks Delivers to nearly a quarter of its U.S.
company-operated stores in early 2019.
Unlocking New At-Home and Away-From-Home Coffee Channels
Under the Global Coffee Alliance, Starbucks and Nestlé are moving with
speed to innovate and develop go-to-market strategies for the global
rollout of Starbucks At-Home Coffee portfolio. Starbucks will be
the only brand outside of Nestlé to have branded products produced and
packaged by Nestlé on both the Nespresso and Dolce Gusto systems.
Today, Starbucks announced that both companies have developed a range
of Starbucks-branded products for the Nespresso and Dolce Gusto
platforms and Roast & Ground and Whole Bean coffees. The launch of these
products in traditional CPG and Foodservice channels will take place
beginning in the spring of next year.
With the Nespresso and Dolce Gusto install base estimated at more than
any other single-serve system in the world, this is a tremendous
incremental growth opportunity for the Global Coffee Alliance, as
Starbucks and Nestlé work together to expand to new markets.
Creating a More Equitable and Inclusive Workforce by Investing in
Partners
Since its earliest days, Starbucks has been built on a shared
understanding that culture and success are driven by its partners and
their achievements. As shareholders, even part-time partners who work
just 20 hours or more a week have had access to comprehensive health
insurance, stock ownership and a 401(k) retirement benefit as part of
their total compensation at Starbucks.
Benefits introduced in 2018, including access to backup child and adult
care through Care.com
and expanded paid sick leave and parental leave contribute to a total
benefits package valued at three times that of any other company in the
industry. As a company that pays above minimum wage in each market
and offers industry-leading benefits, Starbucks believes even more can
be done to create an equitable workplace across the U.S.
Over the last three years, Starbucks has:
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Hired over 21,000 Veterans and military spouses.
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Hired nearly 45,000 Opportunity Youth, which are young adults between
the ages of 16 to 24 who were previously neither working nor in school.
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Set up more than 12,000 partners who are working toward a pathway to a
college degree, including providing access to full college tuition
coverage through the Starbucks College Achievement Plan (SCAP) with
Arizona State University. These partners stay one and a half times
longer and are promoted at nearly three times the rate of their peers.
With a proud history of industry-leading retention, Starbucks remains
focused on providing opportunities and experiences for Starbucks
partners to realize they are a part of something bigger. An
industry-leading total pay approach along with inclusive and equitable
hiring practices are just a couple of the ways Starbucks continues to
create the best jobs in retail where partners feel uplifted and inspired
to come to work every day.
Webcast
The presentations are available by webcast at http://investor.starbucks.com.
A replay of the webcast will also be available on the website following
the event.
About Starbucks
Since 1971, Starbucks Coffee Company has been committed to ethically
sourcing and roasting high-quality arabica coffee. Today, with
more than 25,000 stores around the globe, Starbucks is the premier
roaster and retailer of specialty coffee in the world. Through our
unwavering commitment to excellence and our guiding principles, we bring
the unique Starbucks Experience to life for every customer
through every cup. To share in the experience, please visit our stores
or online at news.starbucks.com and Starbucks.com.
Forward-Looking Statements
Certain statements contained herein are “forward-looking” statements
within the meaning of the applicable securities laws and regulations.
Generally, these statements can be identified by the use of words such
as “anticipate,” “expect,” “believe,” “could,” “estimate,” “feel,”
“forecast,” “intend,” “may,” “plan,” “potential,” “project,” “should,”
“will,” “would,” and similar expressions intended to identify
forward-looking statements, although not all forward-looking statements
contain these identifying words. These forward-looking statements are
based on information available to Starbucks as of the date hereof and
Starbucks actual results or performance could differ materially from
those stated or implied due to risks and uncertainties associated with
its business. These risks and uncertainties include, but are not limited
to, fluctuations in U.S. and international economies and currencies, our
ability to preserve, grow and leverage our brands, potential negative
effects of incidents involving food or beverage-borne illnesses,
tampering, adulteration, contamination or mislabeling, potential
negative effects of material breaches of our information technology
systems to the extent we experience a material breach, material failures
of our information technology systems, costs associated with, and the
successful execution of, the company’s initiatives and plans, including
the integration of Starbucks Japan and the East China business and
successful execution of our Global Coffee Alliance with Nestlé, the
acceptance of the company’s products by our customers, our ability to
obtain financing on acceptable terms, the impact of competition, the
prices and availability of coffee, dairy and other raw materials, the
effect of legal proceedings, the effects of changes in U.S. tax law and
related guidance and regulations that may be implemented, and other
risks detailed in the company filings with the Securities and Exchange
Commission, including the “Risk Factors” section of Starbucks Annual
Report on Form 10-K for the fiscal year ended September 30, 2018. The
company assumes no obligation to update any of these forward-looking
statements.
Non-GAAP Financial Measures
Non‐GAAP measures included in our press release were not reconciled to
the comparable GAAP financial measures because the GAAP measures are not
accessible on a forward‐looking basis The Company is unable to reconcile
these forward-looking non-GAAP financial measures to the most directly
comparable GAAP measures without unreasonable efforts because the
Company is currently unable to predict with a reasonable degree of
certainty the type and extent of certain items that would be expected to
impact GAAP measures for these periods but would not impact the non-GAAP
measures. Such items may include acquisition, divestitures,
restructurings and other items. The unavailable information could have a
significant impact on the Company’s GAAP financial results.
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Starbucks Coffee Company
press@starbucks.com,
206-318-7100
Source: Starbucks Coffee Company