Starbucks Makes Management Changes
by Zacks Equity ResearchMay 18, 2012 | Comments : 0 Recommended this article: (0)
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Lucy Lee Helm, a partner at Starbucks for more than 12 years, was named executive vice president, general counsel and secretary. Arthur Rubinfeld was named chief creative officer and president, Global Development and Evolution Fresh Retail. He was the one who designed the company’s first Evolution Fresh juice store in Bellevue, Washington which opened in March 2012. Annie Young-Scrivner will take over as executive vice president and president, Starbucks Canada from September 2012. Other than these changes, the company appointed Colin Moore as the senior vice president, Enterprise Optimization and Craig Russell as the senior vice president, Global Coffee.
Last month, Starbucks announced reported earnings of 40 cents per share for fiscal second quarter 2012, beating the Zacks Consensus Estimate by a penny. Quarterly earnings increased 18% year over year driven by a solid top line, improved efficiencies and cost control. Total sales for the second quarter increased 15.0% year over year to $3.2 billion, driven by strong global same store sales and substantial top-line growth in the Channel Development segment.
The company also raised its fiscal 2012 outlook due to improving business trends and strong first half results. The fiscal 2012 earnings outlook was raised to a range of $1.81–$1.84 from the prior band of $1.78–1.82, representing annualized growth of 19% to 21%. Earnings are expected to be stronger in the latter half of the year as management expects commodity cost pressures to ease in the period. The top line is expected to grow in the low teens in fiscal 2012 driven by mid-single-digit comparable store sales growth, net new store openings and strong growth in the Channel Development business. The company plans to open 1000 new stores in fiscal 2012.
We currently have a Neutral recommendation on Starbucks. The stock looks more appealing near term with a Zacks #2 Rank (a short-term ‘Buy’ rating).
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