Starbucks Corp (NASDAQ:SBUX) Earnings Model
Author: Adam Refai Published: April 18, 2021 1:30pm Category: Earnings Preview (Fiscal 2Q2021)
Notes from the Model Developer: This model is driven by Starbucks’ channel development growth, company and licensed stores added, and overall growth rate. In the China Asia Pacific (CAP), I estimate channel development growth to increase as the COVID lockdown is encouraging more people to buy packaged coffee for at-home consumption. For this metric, international channel development revenue growth to 30% to represent my view on consumer behavior. On the other hand, internationally, with a focus on the CAP region, I also estimate that net new stores will increase because, in China, there has been a rise in popularity in Coffee with Starbucks being a big driver and player in that as well as the procedures for lockdown decreasing. However, people got used to staying at home and so I still the bulk orders from stores will rise. For the rise in net new stores, I increased international net new stores added to 118, 130, and 125, for F2Q21, F3Q21, and F4Q21, respectively, adjusting for seasonality- big spike in F3Q21. This also drove my international comp-store sales to increase to 90%, 8%, 13% for F2Q21, F3Q21, and F4Q21, respectively. In the Americas region, I expect net new stores added to decrease because I don’t believe the current economic environment in the United States is as strong and the bounceback won’t be as soon as Management states. To quantify this, I have decreased net new stores added in the Americas to 10, 15, 18 for F2Q21, F3Q21, and F4Q21, respectively. I also then decreased the Americas comp store sales total to 6% for F2Q21. On the other hand, I decreased net new licensed stores added to 7, 7, 11 for F2Q21, F3Q21, and F4Q21, respectively as I don’t believe malls or Barnes & Nobles carrying Starbucks products will bounce back as generously and swiftly as Starbucks itself- the stores that carry Starbucks are still empty and traffic has decreased significantly. Management will also prioritize operated stores over licensed. Finally, in terms of overall growth, I forecast that Starbucks already has begun bouncing back from COVID shutdowns so I increased the projected growth rate revenue from -30% to -25% as I can see a reasonably brighter future for the company ahead driven by strong management guidance and CAP food traffic at their stores.
| SBUX Earnings Model - Refai.xlsx |
Disclosure: The author of this article/model has no financial investment or other conflict of interest related to the subject company or other companies discussed. Any views made or implied in the content represent the author’s opinions.