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Howard Schultz Highlights Starbucks' Investor Day

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Howard Schultz Highlights Starbucks' Investor Day

Starbucks Corporation (NASDAQ: SBUX) has been in the spotlight ever since it announced the decision by its celebrated CEO Howard Schultz to relinquish office in favor of chief operations officer Kevin Johnson, effective April 3, 2017. Schultz will transition to the executive chairman role.

Starbucks is holding its biennial investor conference on Wednesday, with the event having commenced at 8 a.m. ET.

5-Year Strategic Plan

In a press release issued ahead of the conference, the company said it would present its five-year strategic plan, which targets at 10 percent revenue growth, 15–20 percent earnings per share growth and mid-single-digit comp growth each year.

Among the other key points were:

  • Plans to open about 12,000 new stores globally by 2021.
  • Following up on its success with the Seattle Starbucks Reserve Roastery, the company said it would accelerate the presentation of the Roastery experience around the world by opening its next Roasteries in Shanghai in 2017, Tokyo and New York in 2018; a fifth location in Europe will be announced early next year.
  • The Starbucks Reserve stores, a new retail format integrating the Roastery experience with the culinary experience of its new Italian food partner Princi, are seen as a significant growth opportunity.
  • Plans to open first of the Starbucks Reserve stores in Seattle and Chicago in the second half of 2017, with plans to open more globally over time.
  • Stand-alone Princi stores to be opened in New York and Chicago in late 2017 and in early 2018.
  • Premiumization strategy should drive innovative new customer experiences.
  • Remains on track to open more than 5,000 stores in China by 2021 and expects the Chinese market to eclipse that in the United States over time.
  • Seeks to expand leadership position in at-home coffee and read-to-drink.

From Schultz Himself

In his address, Schultz reaffirmed that he would continue to be engaged in the company. He highlighted on the strong core business, robust innovation pipeline, importance of the China business and the unparalleled management team to be led by Johnson.

Schultz touted the Starbucks Reserve and premium Starbucks experience as the company's crown jewels. The outgoing CEO also clarified that despite the slowdown in comps, there have been no evidences of cannibalization.

Meanwhile, Johnson said cold drinks could take 50 percent of the mix of beverage sales by 2010, and lunch could drive about 20 percent of sales. Highlighting the technological prowess, Johnson said 40 percent of stores can take mobile order and payment. Johnson clarified that the Teavana acquisition added $1 billion in sales.

Ahead of the event, Cowen analyst Andrew Charles said the focus of investors would be on insights into the company's ability to sustain the 5 percent Americas comp growth over the medium term. Charles opined that the stock could move on potential announcement concerning share repurchases.

At time of writing, shares of Starbucks were up 0.71 percent at $57.85.

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