Starbucks Corp. (NASDAQ: SBUX) has been releasing data at today’s investor conference, and the slow growth in the U.S. may be greatly overshadowed by the company’s aggressive expansion plans for China.  For now, the focus from investors with shares at a multi-year high is whether its valuation can be justified given the company’s opportunities for growth in the nearly $145 billion world coffee market.  The message is simple: a renewed focus on innovation and expansion.

CEO Howard Schultz wanted to outlined plans to create long-term shareholder value.  We have already noticed a dividend hike on top of it initiating a dividend in 2010.  The next growth phase is said to be coming from extending the Starbucks Experience to customers beyond the third place to every part of their day.  The goal is to accomplish this through multiple brands and through multiple channels.

As far as China and elsewhere, that is where thee real and obvious growth opportunities lie.  John Culver, president of Starbucks Coffee International, notes that Starbucks plans to accelerate growth in Canada and Japan.  New or emerging markets such as China, Brazil, India and Russia are also opportunities.  The company has been  “particularly pleased with the response we’re seeing from our Chinese customers, and expect to operate at least 1,500 Starbucks stores in Mainland China by 2015.”  In short, that is over just four years.

Cliff Burrows, president of Starbucks Coffee U.S., is argues that its a myth that the U.S. market is  saturated. He notes continued opportunity for profitable growth in the U.S. retail business, from existing stores, increasing capacity, expanding hours and daily focus, store segmentation, and via new concepts and formats in strategic locations.  That pertains to the Starbucks bar theme and more.  Other initiatives that will help growth are My Starbucks Rewards and Starbucks Digital Network, higher capacity during peak hours, and to seek new locations in targeted neighborhoods one store at a time.

CFO Troy Alstead noted that Starbucks has reached a critical juncture, moving from a high unit growth specialty retailer to a global consumer company with diversified growth platforms across multiple channels.

The consumer packaged goods segment is another avenue of growth as what the company calls  a high profit and growing business that has global scale.  That direct model will go to Starbucks retail theaters to the grocery aisle.

Starbucks is also building stand-alone brands and it noted that Seattle’s Best Coffee is growing distribution.  Brand growth will also come from new products like its Levels System.

So far the market is taking the comments at face value.  For an exact comparison of value, Starbucks trades at about 21.3-times expected September 2011 fiscal estimates and trades at about 18.5-times expected fiscal September 2012 earnings estimates.  Starbucks Corp. (SBUX) is up 4.4% at $31.95 and shares hit a new multi-year high of $32.02 today.  That marks the highest share price since April-2007, but that is still south of the split-adjusted $39.88 highs from May-2006.

JON C. OGG

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