It did not start off 2017 on a very firm footing, but there is a silver lining that will pave the path for Starbucks.
The coffee giant, Starbucks (NASDAQ:SBUX), did not start off 2017 on a very firm footing. The first quarter earnings have raised some eyebrows, on the growth trajectory of the company. The company has taken another hit in the form of their CEO replacement, which has put the company’s shares in a lurch.
However, since every cloud has a silver lining, there is a silver lining which is going to pave the path for Starbucks as well. Recovery might be slow, but it will be on track in the next few months.
Here are some of the most important things which are putting the coffee chain in the spotlight:
- Innovation is the key: Even though Starbucks current CEO, Kevin Johnson has stepped down from the CEO position; nevertheless, his intervention in the company’s development will stay intact. In Johnson’s words, he plans to revisit the concept of Starbuck’s Roastery model, so that the focus is largely based on developing methods of innovation.
- Cold is the new hot: What makes a good coffee brand tick? Of course, the cold options available on the menu. Ever since 2015, Starbucks has been experimenting with its cold brewing options, which have not stopped it from putting in the required efforts. Right from the Cold Brew and the Vanilla Sweet Cream Cold Brew to the Spiced Sweet Cream Cold Brew, and Nitro Cold Brew, their variations just seem to be getting better and better. As the months will pass, there will be a lot of additions which will be made to the existing list of offerings, which will make it better and sweeter.
- Store expansions to the rescue: Like every other profitable business, even Starbucks is banking heavily on its store expansions to bring in a lot of positive influence on the company’s sales. Starbucks aims to expand and add close to 12000 new outlets in different locations over the next four years. A huge chunk of this growth will come from China solely. Another innovative idea will see the rise of drive-thru options to the existing outlets, to make the current ventures more successful.
The Profit making machine:
Starbucks is consistently targeting growth at 15% to 20%, till 2021. The sales are expanding slowly. However, it is a little difficult to overlook the fact that 2017’s beginning has been a little rocky for the company. But it’s also difficult to negate the fact that the revenue has improved by 7% and earnings per share have risen by 11%.
Given this short term, result is a reassuring factor for investors’ which highlights the fact that there is nothing to worry about when it comes to driving sales and keeping the share price steady. The company is slowly outgrowing its competitors and is showcasing an enormous growth potential ahead. However, it’s best to wait and watch how the results pan out this year, since a lot will depend on the implementations which are put into place to make things work in the long run.
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