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Starbucks Corporation (SBUX): The Company Is Still a Winner

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Last week, Starbucks Corporation (NASDAQ:SBUX) handed in an excellent second quarter, emphasizing the strengths that it has as a business, and pointing out the road that it has ahead of it. Wall Street wasn’t blown away, and the stock dropped about 1% over the course of Friday. That’s OK, though, because Starbucks Corporation (NASDAQ:SBUX) met expectations, and proved that its current strategy is going along just fine.

Starbucks Corporation (NASDAQ:SBUX)In fact, it was more than just an average quarter, and comparable sales extended their long run of big gains. Revenue, operating margin, and income were all up as well, and management increased its fiscal-year guidance based on that strength. There are still some challenges ahead, but it looks more and more like those will turn into new sources of revenue as the company continues to grow.

Starbucks’ strategy
Start with 1,500 new stores in the U.S., and you have a good idea of what the plan looks like. Starbucks Corporation (NASDAQ:SBUX) has no intention of slowing down its expansion. More than 300 of those locations will be open this year, and we’re not even talking about China yet. The company had an 8% increase in comparable sales in China, last quarter. That result helped Starbucks Corporation (NASDAQ:SBUX) to global comparable-store sales growth of 6%, which made it the 13th quarter that the company exceeded 5% growth globally.

The question for investors and management is, “How will Starbucks Corporation (NASDAQ:SBUX) keep that level of growth up?” Retail sales, tea, and food all come to mind as potential answers. Recently, the company has brought its bagged retail coffee into its reward system, offering customers who buy Starbucks in the grocery stores a reason to come into the cafes.

Starbucks Corporation (NASDAQ:SBUX) also purchased Teavana at the beginning of the year and has announced plans to expand the business, adding eight stores last quarter with more to come. At the end of the quarter, the company already had more than 325 Teavana locations. That business will open up new consumer markets and give Starbucks Corporation (NASDAQ:SBUX) something to hold onto as it grows in the United States.

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