Starbucks shares soar as espresso chain predicts a powerful rebound for subsequent 12 months
People wear protective face masks in front of Starbucks in Union Square as the city resumes Phase 4 reopening after restrictions were imposed in New York City on September 29, 2020 to slow the spread of the coronavirus.
Noam Galai | Getty Images
As the world prepares to distribute coronavirus vaccines, Starbucks predicts a sharp increase in the demand for coffee through 2022.
CFO Pat Grismer reiterated the company's guidance for fiscal 2021 that the company's biennial investor day is forecast to post adjusted earnings per share of $ 2.70 to $ 2.90. The coffee chain is forecasting growth of more than 20% through fiscal 2022, which will begin in October, as it has weaker earnings growth.
In 2023 and 2024, Starbucks expects to meet its long-term growth targets with adjusted earnings per share growth of 10% to 12%.
Starbucks shares rose more than 4% in expanded trading on the news. With a market value of $ 122 billion, the stock is up 18% so far this year.
Grismer told investors that Starbucks is slightly increasing its forecast for sustained long-term revenue growth to 8% to 10%. At its last investor meeting in 2018, the company expected adjusted earnings per share to grow at least 10% per year and long-term consolidated revenue growth of 7% to 9%.
Executives also shared more details on the company's strategy for long-term growth, including using artificial intelligence in the thoroughfares and doubling down on new cold drinks. In its home market, Starbucks is accelerating changes to its presence, closing around 800 poorly performing locations and building new store formats such as urban cafes with no seating and more thoroughfares in the suburbs.
In the long term, Starbucks is forecasting global growth in new units of 6%, as 55,000 cafes are to be reached worldwide by 2030. In the US, new unit growth is expected to be around 3%, slightly below the previous range of 3% to 4%. In China, the second largest market, the company predicts new location growth in the lower teens compared to its earlier prospects in the middle teens.
Adding more locations will help the global coffee giant reach new customers as it predicts the global addressable market for coffee will reach $ 450 billion by 2023. It currently has nearly 33,000 retail space.
The forecasts assume that Starbucks will not experience additional business interruptions and stable exchange rates.