Starbucks’ year-to-date performance
As of August 20, 2014, Starbucks’ (SBUX) year-to-date (or YTD) return was ~0.24%, compared to a YTD return of ~5.66% on the S&P 500 Index and ~8.9% for the PowerShares Dynamic Food & Beverage ETF (PBJ). The PBJ is an exchange-traded fund (or ETF) that consists of other well-known restaurants in the industry. Starbucks has a market cap of $58.6 billion—compared to its competitors. McDonald’s (MCD) had a market cap of $92.7 billion and Dunkin’ Donuts (DNKN) had a market cap of only $4.6 billion.
Although the YTD return is slightly positive, as a company, Starbucks has performed well over the past six years. An investment of $100 on September 28, 2008, in Starbucks would grow to $545.34 on September 29, 2013—compared to $161.17 in the S&P 500 and $236 in the S&P Consumer Discretionary. An investor can invest in the Consumer Discretionary Select Sector SPDR Fund (XLY) to get exposure to consumer discretionary stocks.
Management has been focused on expanding stores as well as the products. It has also ventured into new offerings in tea beverages. Starbucks has been successful in pursuing its digital strategy. There are an average of six million mobile transactions each week. This amounts to 15% of U.S. company operated revenues.
Starbucks has a global presence with a turnaround in the Europe, Middle East, and Africa (or EMEA) region delivering 13% revenue growth in the quarter. China/Asia Pacific also grew 23% in revenues to $288 million. It delivered the 15th consecutive quarter with a growth in excess of 20%.
The company has been constantly introducing innovative strategies to expand revenues. For example, the breakfast sandwich platform delivered 40% growth in the quarter in the U.S. Management understands that food pairing with coffee would increase ticket and traffic. This was evident in the quarter results.
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