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Starbucks (SBUX) Dips 24% in the Past 6 Months: Will It Revive?
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Shares of Starbucks Corporation (SBUX - Free Report) have fallen 24.3% in the past six months, compared with the industry’s decline of 13%. However, the stock might take a U-turn, as the company is well-poised for growth backed by store expansion, robust digitalization and comps improvement. Let’s delve deeper and find out factors likely to drive the stock in the coming days.
Growth Drivers
Starbucks has been focused on increasing global market share by prudently opening stores in new and existing markets, remodeling existing stores, deploying technology, controlling costs and aggressive product innovation and brand building. In fiscal 2021, Starbucks opened 1,173 net new stores worldwide. In first-quarter fiscal 2022, the company opened 484 net new stores worldwide, taking the total store count to 34,317. The company anticipates opening approximately 2,000 net new stores globally in fiscal 2022, up from 1,173 store openings reported in fiscal 2021.
The company is benefiting from its partnership with Alibaba for providing a seamless Starbucks Experience to drive growth in China. Starbucks made progress with respect to personalized digital relationships to expand its reach with members. This includes program enhancements like Stars for Everyone. The company initiated payment partnerships with PayPal and Bakkt, thereby enabling customers to reload their Starbucks card through a range of cryptocurrencies (including Bitcoin and Ethereum) as well as providing the option of converting digital currencies to physical currency.
The Zacks Rank #3 (Hold) company is gaining from robust U.S. comps, which increased for the fourth straight quarter. U.S. and North America comps climbed 18% in the fiscal first quarter, owing to an increase of 12% in comparable transactions and an improvement of 6% in average ticket. Global comparable store sales increased 13% year over year. The upside was primarily driven by a 10% rise in comparable transactions and a 6% increase in average tickets. For fiscal 2022, the company anticipates global comparable sales to reach high-single digits.
Image Source: Zacks Investment Research
During first-quarter fiscal 2022, operations in Starbucks China were affected by pandemic-induced restrictions. However, it is very optimistic about long-term growth opportunities. In China, the company continues to increase its store count. It surpassed 5,500 stores in the first quarter of 2022. In the quarter under discussion, the company’s 90-day active Starbucks Rewards members in China touched nearly 18 million, up 2.6 million compared to the prior year. Emphasis on member engagement and exclusive offerings favored the company. Also, the frequency of purchases by Gold members remained at the pre-pandemic levels.
Key Picks
Some better-ranked stocks in the Zacks Retail-Wholesale sector include BBQ Holdings, Inc. , Arcos Dorados Holdings Inc. (ARCO - Free Report) and Tapestry, Inc. (TPR - Free Report) .
BBQ Holdings sports a Zacks Rank #1 (Strong Buy). BBQ has a long-term earnings growth of 14%. Shares of the company have surged 30.4% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BBQ Holdings' 2022 sales and EPS suggests growth of 40.9% and 66.2%, respectively, from the year-ago period's levels.
Arcos Dorados carries a Zacks Rank #2 (Buy). ARCO has a long-term earnings growth of 31.3%. Shares of the company have appreciated 57% in the past year.
The Zacks Consensus Estimate for Arcos Dorados' 2022 sales and EPS suggests growth of 10.3% and 62.5%, respectively, from the year-ago period's levels.
Tapestry carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 28.2%, on average. Shares of the company have declined 21.1% in the past year.
The Zacks Consensus Estimate for Tapestry's 2022 sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the year-ago period's levels.
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Starbucks (SBUX) Dips 24% in the Past 6 Months: Will It Revive?
Shares of Starbucks Corporation (SBUX - Free Report) have fallen 24.3% in the past six months, compared with the industry’s decline of 13%. However, the stock might take a U-turn, as the company is well-poised for growth backed by store expansion, robust digitalization and comps improvement. Let’s delve deeper and find out factors likely to drive the stock in the coming days.
Growth Drivers
Starbucks has been focused on increasing global market share by prudently opening stores in new and existing markets, remodeling existing stores, deploying technology, controlling costs and aggressive product innovation and brand building. In fiscal 2021, Starbucks opened 1,173 net new stores worldwide. In first-quarter fiscal 2022, the company opened 484 net new stores worldwide, taking the total store count to 34,317. The company anticipates opening approximately 2,000 net new stores globally in fiscal 2022, up from 1,173 store openings reported in fiscal 2021.
The company is benefiting from its partnership with Alibaba for providing a seamless Starbucks Experience to drive growth in China. Starbucks made progress with respect to personalized digital relationships to expand its reach with members. This includes program enhancements like Stars for Everyone. The company initiated payment partnerships with PayPal and Bakkt, thereby enabling customers to reload their Starbucks card through a range of cryptocurrencies (including Bitcoin and Ethereum) as well as providing the option of converting digital currencies to physical currency.
The Zacks Rank #3 (Hold) company is gaining from robust U.S. comps, which increased for the fourth straight quarter. U.S. and North America comps climbed 18% in the fiscal first quarter, owing to an increase of 12% in comparable transactions and an improvement of 6% in average ticket. Global comparable store sales increased 13% year over year. The upside was primarily driven by a 10% rise in comparable transactions and a 6% increase in average tickets. For fiscal 2022, the company anticipates global comparable sales to reach high-single digits.
Image Source: Zacks Investment Research
During first-quarter fiscal 2022, operations in Starbucks China were affected by pandemic-induced restrictions. However, it is very optimistic about long-term growth opportunities. In China, the company continues to increase its store count. It surpassed 5,500 stores in the first quarter of 2022. In the quarter under discussion, the company’s 90-day active Starbucks Rewards members in China touched nearly 18 million, up 2.6 million compared to the prior year. Emphasis on member engagement and exclusive offerings favored the company. Also, the frequency of purchases by Gold members remained at the pre-pandemic levels.
Key Picks
Some better-ranked stocks in the Zacks Retail-Wholesale sector include BBQ Holdings, Inc. , Arcos Dorados Holdings Inc. (ARCO - Free Report) and Tapestry, Inc. (TPR - Free Report) .
BBQ Holdings sports a Zacks Rank #1 (Strong Buy). BBQ has a long-term earnings growth of 14%. Shares of the company have surged 30.4% in the past year. You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for BBQ Holdings' 2022 sales and EPS suggests growth of 40.9% and 66.2%, respectively, from the year-ago period's levels.
Arcos Dorados carries a Zacks Rank #2 (Buy). ARCO has a long-term earnings growth of 31.3%. Shares of the company have appreciated 57% in the past year.
The Zacks Consensus Estimate for Arcos Dorados' 2022 sales and EPS suggests growth of 10.3% and 62.5%, respectively, from the year-ago period's levels.
Tapestry carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 28.2%, on average. Shares of the company have declined 21.1% in the past year.
The Zacks Consensus Estimate for Tapestry's 2022 sales and EPS suggests growth of 17.5% and 22.9%, respectively, from the year-ago period's levels.