Starbucks has given high profit forecasts for 2022-2024 and confirmed its growth forecast for 2021. The global coffee chain plans to open more than 20,000 new locations in the next decade, expanding largely in the Chinese market and following changes in consumer preferences.
Starbucks (SBUX) shares, up 14.2% YTD (slightly higher than the S&P 500 index), rose after the close of trading on Wednesday. This was preceded by Starbucks disclosure of its long-term goals and plans at its biannual Investor Day online event.
Starbucks executives said they are seeing improved demand (the latest fourth quarter report also showed this) and a faster sales recovery than previously expected.
The international company has maintained its earnings per share growth forecast for the full fiscal year 2021 (starts in October 2020 and ends in September 2021): in the range of $2.70 to $2.90, compared to $1.17 earnings per share in fiscal 2020. Meanwhile, Starbucks expects earnings per share growth rates of between 10% and 12% in FY 2023 and 2024.
Starbucks CEO Kevin Johnson said: "We have further optimised the company and sharpened our focus on accelerating growth in our two leading markets in the US and China.Coffee remains a very large and attractive market that is growing globally".
The company has revealed its ambitious plans to expand the number of coffee shops by 20,000 to 55,000 outlets by FY 2030, mainly by continuing expansion in China. Currently, the company has around 33,000 coffee shops worldwide.
The company said that it intends to build more outlets to serve customers on machines, close less profitable coffee shops and open coffee shops in a "new format". Starbucks executives said coffee shops in China will open mostly without seating, focusing on sales through digital ordering and delivery. In the US, Starbucks is already closing around 800 low-margin coffee shops to follow these changes. On the menu, Starbucks plans to double the number of new soft drinks, as well as expand the use of oat milk and other plant-based milk in outlets around the world, after testing them well.