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Starbucks' (SBUX) Roastery to Debut in Italy Next Year
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The world’s biggest coffee-shop operator Starbucks Corporation (SBUX - Free Report) is set to enter the Italian market. As revealed by the chairman and chief executive officer Howard Schultz, Starbucks will open a 25,500-square-foot retail space in a historic post office building in downtown Milan in late 2018.
The company will launch the Milan Reserve Roastery, the first Starbucks Roastery in the Europe, Middle East and Africa region, and the fifth globally.
Schultz, who will oversee the Roastery stores closely after stepping down as CEO on Apr 3, 2017, has chalked out a new concept. Starbucks plans to invest in the premium Reserve brand that includes the opening of 20–30 Roastery locations around the world.
Starbucks had earlier said that Italian businessman Antonio Percassi will open the first Starbucks cafe in Milan in early 2017, under a licensing arrangement. Per a Starbucks spokeswoman, the Percassi group will own and operate the Milan coffee shops that will open after the Roastery.
Starbucks has also other Reserve Roastery projects underway in Shanghai, Manhattan and Tokyo. Roastery is on its way to Shanghai this year along with plans of foraying into New York and Tokyo in 2018.
We note that management has successfully turned around its Europe, Middle East and Africa (“EMEA”) business by improving customer experience through innovative store designs, enhanced product offerings and increasing margins through process and supply chain efficiencies in recent years. Despite the ongoing economic, geopolitical, retail and Fx headwinds, EMEA delivered solid operating margins in the first quarter of fiscal 2017, which improved 140 basis points year over year.
Coming to the first-quarter earnings report, Starbucks managed to meet the consensus mark while revenues missed the same. Earnings grew 13% on 7% higher revenues year over year, driven by higher store openings and global comps growth. Higher sales were registered in the U.S., China/Asia Pacific as well as Channel Development segments. Operating margin showed a 10-basis point increase in the quarter on improved sales leverage and lower commodity costs.
Starbucks, which operates as a roaster, marketer and retailer of specialty coffee globally, has a VGM score of “B” with an expected EPS growth rate of 17.8% for the next 3–5 years.
Stock Performance
Starbucks – a Zacks Rank #3 (Hold) stock – has been struggling over the last one year on concerns surrounding its growth outlook. The stock lost around 2.5%, wider than the 0.4% decline of the Zacks categorized Retail-Food & Restaurants industry in the lst one year. The company is expected to report EPS of $2.13 in the current year (reflecting 11.3% year-over-year growth) on $22.94 billion revenues (7.6%).
Darden is expected to witness 11.1% growth in current year earnings while Dave & Buster's is likely to grow 35.1%.
Diversified Restaurant has a solid earnings surprise history, having an average positive surprise of 95%.
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Starbucks' (SBUX) Roastery to Debut in Italy Next Year
The world’s biggest coffee-shop operator Starbucks Corporation (SBUX - Free Report) is set to enter the Italian market. As revealed by the chairman and chief executive officer Howard Schultz, Starbucks will open a 25,500-square-foot retail space in a historic post office building in downtown Milan in late 2018.
The company will launch the Milan Reserve Roastery, the first Starbucks Roastery in the Europe, Middle East and Africa region, and the fifth globally.
Schultz, who will oversee the Roastery stores closely after stepping down as CEO on Apr 3, 2017, has chalked out a new concept. Starbucks plans to invest in the premium Reserve brand that includes the opening of 20–30 Roastery locations around the world.
Starbucks had earlier said that Italian businessman Antonio Percassi will open the first Starbucks cafe in Milan in early 2017, under a licensing arrangement. Per a Starbucks spokeswoman, the Percassi group will own and operate the Milan coffee shops that will open after the Roastery.
Starbucks has also other Reserve Roastery projects underway in Shanghai, Manhattan and Tokyo. Roastery is on its way to Shanghai this year along with plans of foraying into New York and Tokyo in 2018.
We note that management has successfully turned around its Europe, Middle East and Africa (“EMEA”) business by improving customer experience through innovative store designs, enhanced product offerings and increasing margins through process and supply chain efficiencies in recent years. Despite the ongoing economic, geopolitical, retail and Fx headwinds, EMEA delivered solid operating margins in the first quarter of fiscal 2017, which improved 140 basis points year over year.
Coming to the first-quarter earnings report, Starbucks managed to meet the consensus mark while revenues missed the same. Earnings grew 13% on 7% higher revenues year over year, driven by higher store openings and global comps growth. Higher sales were registered in the U.S., China/Asia Pacific as well as Channel Development segments. Operating margin showed a 10-basis point increase in the quarter on improved sales leverage and lower commodity costs.
Starbucks, which operates as a roaster, marketer and retailer of specialty coffee globally, has a VGM score of “B” with an expected EPS growth rate of 17.8% for the next 3–5 years.
Stock Performance
Starbucks – a Zacks Rank #3 (Hold) stock – has been struggling over the last one year on concerns surrounding its growth outlook. The stock lost around 2.5%, wider than the 0.4% decline of the Zacks categorized Retail-Food & Restaurants industry in the lst one year. The company is expected to report EPS of $2.13 in the current year (reflecting 11.3% year-over-year growth) on $22.94 billion revenues (7.6%).
Stocks Worth a Look
Better-ranked stocks in the same industry include Darden Restaurants, Inc. (DRI - Free Report) , Dave & Buster's Entertainment, Inc. (PLAY - Free Report) and Diversified Restaurant Holdings, Inc. , all with a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Darden is expected to witness 11.1% growth in current year earnings while Dave & Buster's is likely to grow 35.1%.
Diversified Restaurant has a solid earnings surprise history, having an average positive surprise of 95%.
A Full-Blown Technological Breakthrough in the Making
Zacks’ Aggressive Growth Strategist Brian Bolan explores autonomous cars in our latest Special Report, Driverless Cars: Your Roadmap to Mega-Profits Today. In addition to who will be selling them and how the auto industry will be impacted, Brian reveals 8 stocks with tremendous gain potential to feed off this phenomenon. Click to see the stocks right now >>