Retail
Starbucks Includes Accelerated Share Buyback in Annual Shareholder Meeting
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Starbucks Corp. (NASDAQ: SBUX) released a lot of news at its 2019 annual shareholder meeting. While much of it is socially oriented, there is also quite a bit for investors to chew on. The company has released long-term guidance, announced a share buyback and released more growth targets.
After reaching double-digit revenue growth to $24.7 billion, the company has reaffirmed its ongoing algorithm for 7% to 9% revenue growth, and it is targeting at least 10% in adjusted earnings per share.
The company also announced a $100 million cornerstone investment in Valor Siren Ventures to accelerate innovation, now that it has 30,000 stores. Valor Equity Partners will identify and invest in companies that are developing technologies, products and solutions relating to food or retail. The new fund also will seek to raise an additional $300 million in the coming months with other strategic partners and institutional investors.
Starbucks indicated that it has returned $14 billion toward the already announced $25 billion commitment to shareholders via dividends and share buybacks over a three-year period through fiscal 2020. The company is entering into a $2 billion accelerated share repurchase program that is expected to be completed by June 2019. As far as what an additional $2 billion translates to, Starbucks has an $88 billion market cap.
The newer concepts for Starbucks stores include convenience, comfort and connection. Starbucks is planning to modernize its customer experience on all key touchpoints, which will begin this summer in New York City.
Kevin Johnson, president and chief executive officer, presented data to shareholders along with other top executives. Johnson said:
Starbucks is a different kind of company – and we have been since our founding. Our long-term plan for growth with focus and discipline is built on the acknowledgement that the pursuit of profit is not in conflict with the pursuit of doing good. We are a part of millions of people’s everyday lives around the world, and I believe we are uniquely positioned to be one of the most enduring brands of all time.
On top of other socially focused initiatives, Starbucks indicated that it has maintained equity in pay for race and gender in the United States for the second consecutive year and that it has verified gender equity in pay in China and Canada. It is targeting a further reduction of straws, will continue to focus on greener cups and is targeting digitally traceable coffee that shows the journey from bean to cup.
Shares of Starbucks traded up 1.3% at $72.30 shortly after the opening bell on Wednesday. They have a 52-week range of $47.37 to $72.40 (that high was hit today) and a consensus target price of $69.40.
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