Starbucks Earnings – Q1 2015

Starbucks released their Q1 2015 financial results on Thursday January 22, 2015 after the markets closed.

On January 22, 2015 the stock closed at $82.74 or + 1.78%. After the earnings results came out, the stock started to climb after-hours. On January 23, 2015 the stock closed at $88.22 or + 6.62%.

The company reported results in line with expectations, which already seemed quite ambitious. The gains were likely supported by reaffirmed guidance for Q2 2015 and FY 2015, as well as Starbucks’ progress towards its 5-year strategic growth plan.

Make sure you read my post on why Starbucks stock will go higher.

Starbucks Q1 2015 Earnings – Highlights

Record Revenue = $4.8 B (EPS $1.30 incl. Starbucks Japan acquisition, non-GAAP EPS $0.80)
Consolidated Operating Income = $915.5 million
Global comparable store sales growth = + 5 % (+ 2 % increase in traffic)
Dollars loaded on Starbucks cards = $1.6 B
Net new stores opened = 512
Repurchase of nearly 3 million shares of common stock (13 million shares available for repurchase under current authorization)
Cash dividend declared = $0.32 / share payable on Feb 20, 2015 to shareholders of record as of Feb 5, 2015

Company Leadership Change – New COO

In January, Starbucks announced that COO Troy Alstead would be taking a sabbatical beginning March 1, 2015 to spend more time with family. Kevin Johnson has been named President and COO effective March 1, 2015. With Kevin’s strong background in technology, his appointment may signal that the company will be placing a lot of focus on growth using technology over the coming years. If that’s the case, the leadership change supports the company’s 5-year strategic growth plan. I see this as a good change, Kevin has served on Starbucks’ board since 2009.

Acquisition of Starbucks Japan

The company has been working towards completing its acquisition of Starbucks Japan and achieving 100% total ownership. The transaction is expected to be fully complete by the 1st half of 2015.

You can read more about the history of Starbucks Japan here. Starbucks Japan has operated as a joint venture between Starbucks and its partner Sazaby League since 1995. There are about 1,050 Starbucks locations in Japan with some of the highest profit margins in Starbucks’ store network.

Reaffirmed for Fiscal Year 2015

Revenue Growth = 16 – 18 % (GAAP EPS $3.53 to $3.58 / Non-GAAP EPS $3.09 to $3.13)
Global comparable store sales growth = mid-single digits

Targets for Q2 2015 Earnings

GAAP EPS = $0.63 to $0.64
Non-GAAP EPS = $0.64 to $0.65

Starbucks 5-year Strategic Growth Plan

On December 4, 2014 Starbucks detailed a 5-year plan to accelerate revenue and profitable growth. Starbucks plans to achieve $30 billion in revenue for FY 2019 (+ $16 billion from FY 2014).

You can find all of the presentations from the 2014 Biennial Investor Day conference here. The strategic overview presentation contains the 7 steps within the 5-year growth plan.

Starbucks 5yr growth plan

Starbucks is moving in the right direction. With a promising growth strategy, all they have to do now is execute against the plan.

I look forward to continued success from this company. Hopefully by the time I write about Q2 results the stock will be testing $100 🙂

Are you invested in Starbucks and convinced about its future potential?