), in its recently held analyst meeting, discussed its plans to
integrate the card and loyalty programs across new channels and
brands. Moreover, the company re-affirmed its outlook for
Expanding Loyalty Program
Starbucks announced that from May onward, its customers will
earn rewards points under the My Starbucks Rewards loyalty
program on purchase of packaged coffee at its grocery channels.
These can be redeemed later against food or beverages at
Moreover, benefits under the Starbucks loyalty cards and
programswill now be extended to SBUX's emerging brands. For
example, from April onward customers will be able to use
Starbucks cards as well as Starbucks mobile application at all
Teavana stores and earn stars. The company acquired Atlanta-based
Teavana Holdings, Inc., a specialty retailer of tea, for
approximately $620 million in cash in fiscal 2012. Teavana has
now become a wholly owned subsidiary of Starbucks.
Starbucks loyalty cards are gaining popularity and the company
is adding around 80,000 new loyalty members a week. Starbucks
aims to almost double its My Starbucks Rewards membership through
such new loyalty program features. By the end of this fiscal
year, the company expects to have 9 million members versus 4.5
million members at the end of Oct 2012.
Reaffirmation of Outlook
The company re-affirmed its fiscal 2013 revenue and earnings
outlook provided at the first quarter 2013 conference call in
January this year.
Overall, Starbucks has a bright outlook for fiscal 2013. The
company expects continued robust top-line growth and margin
expansion in the upcoming year driven by innovation, expansion of
existing product portfolio and potentially favorable commodity
For fiscal 2013, the company continues to expect revenues to
grow in the range of 10%-13% driven by mid-single-digit
comparable store sales growth, net new store openings and strong
growth in the Channel Development business. Starbucks
expects its recent new platforms like Verismo, light Blonde Roast
coffee, K-Cups, La Boulange bakery products, Evolution Fresh
juices and Refreshers energy drinks, to continue to drive comps
growth for the rest of 2013.
Operating margin is expected to expand approximately 100 bps
year over year, driven by better operating leverage. Earnings are
expected in the range of $2.06 to $2.15, up 15%-20%.
Starbucks has compelling growth drivers like La Boulange
bakery products, Verismo at-home-coffee machine, Evolution Fresh
juices, Teavana tea, and K-Cups portion packs to sustain earnings
momentum in the upcoming quarters.
Coffee Farming Plant
Last week Starbucks announced the purchase of its first coffee
farm, 240-hectare coffee plot in Costa Rica, which it plans to
convert into a global agronomy research and development center.
The farm will be used to grow new blends of coffee and supports
Starbucks' billion-dollar commitment to buy 100% ethically
sourced coffee by 2015.
Other Stocks to Consider
Starbucks carries a Zacks Rank #3 (Hold). Some other stocks in
the retail/restaurant industry that are currently doing well and
are worth considering include
Red Robin Gourmet Burgers Inc.
) - Zacks Rank #1 (Strong Buy),
Burger King Worldwide, Inc.
) - Zacks Rank #2 (Buy) and
Dunkin' Brands Group, Inc.
) - Zacks Rank #2 (Buy).
BURGER KING WWD (BKW): Free Stock Analysis
(DNKN): Get Free Report
RED ROBIN GOURM (RRGB): Free Stock Analysis
(SBUX): Get Free Report
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