INVITE | The New Starbucks
Howard goes out with a Bang - At his "last" Investor day, he (the company) boosted the outlook for profit and sales for FY23-FY25.
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The company now sees annual growth in adjusted EPS of 15-20% for fiscal 2023-fiscal 2025 and annual global comparable sales growth of 7-9% over that span, feeding global revenue growth of 10-12%. The company expects annual U.S. comp sales of 7-9% from 2023-2025, up from a previous 4-5% forecast. China comp sales, meanwhile, should grow 4-6% annually over that time frame, with net stores growing 13%. The company expects "progressive" expansion in operating margin in the long term, with yearly growth. The company will make $1B in investments in fiscal 2023, boosting capital expenditures to $2.5B-$3B for the coming three years. As for capital returns, the company's resumption of repurchases will yield an annual EPS benefit of about 1% starting in fiscal 2024, Starbucks says. Between dividends and buybacks, it expects to return about $20B in capital to shareholders in the next three years. The company sees a dividend yield of about 2% for the three years.
Will the acceleration in Long-Term growth set up the new CEO to fail? We will try to answer that question on Monday, September 19, at 9:30 AM.
MCD
MCD has reached a 15-year virtual power purchase agreement with EDF Renewables North America to address its restaurant electricity carbon footprint. McDonald's (MCD) has committed to purchasing clean energy from EDF's 255 MWac / 332 MWdc Apollo Solar project as part of its sustainability goals. In Texas, Apollo Solar is expected to begin delivery of low-carbon electricity in June 2024. Approximately 300 jobs are expected to be created during the 2023-2024 construction phase, with over $30M generated in new tax revenue over the working life for taxing entities. Once complete, the project is expected to generate 619,000 MWh of low-carbon energy annually, enough to meet the consumption of over 1,200 McDonald's (MCD) restaurants across the U.S.
The PLAY International Expansion
After announcing its international expansion plans, Dave & Buster's inks its first multi-country, multi-unit deal, which does not change our view.
PLAY announces our Partnership with Abdul Mohsen Al Hokair Holding Group to develop Dave & Buster's Brand across key West Asian Markets. The Brand will begin its expansion with sites in the Kingdom of Saudi Arabia, followed by the United Arab Emirates and Egypt. "Dave & Buster's is a preeminent entertainment brand, and this franchise partnership marks a strategic milestone for our organization as we continue expanding our entertainment and hospitality portfolio across the region," said Mishal Alhokair, Deputy CEO of Abdul Mohsen Al Hokair Holding Group.
To drive international expansion, Dave & Buster's has developed key strategic initiatives that uniquely support global market penetration:
- Customizable footprint to drive box economics in each market as required
- Menu localization with high regional resonance
- The proprietary, dynamic pricing model
- Global marketing programs that are demographically agnostic and locally executable
- Differentiated and unique amusement strategies and packages
- Localized entertainment and 3rd day part programming
