By Michael Comeau
McDonald's (MCD) isn't the only food & beverage powerhouse riding out the stealth depression in style -- coffee chain Starbucks (SBUX) delivered better-than-expected fourth-quarter results after the closing bell yesterday, along with solid 2012 guidance.
Starbucks reported fourth-quarter earnings of $0.37 a share, edging out the Wall Street consensus of $0.36 cents a share. Revenues rose 15% to $3 billion, beating expectations by about 3%.
Same-store-sales rose a whopping 9%, driven by an increase in store traffic, as well as an increase in the average order price driven by successful fall promotions. One key product was Starbucks' Pumpkin Spice Latte, sales of which rose an incredible 44%. Regions-wise, Asia Pacific was a standout.
Starbucks also saw a 70-basis-point improvement in operating margins, which hit an impressive 14.8% in the fourth quarter.
The company is also returning more cash to shareholders by boosting its quarterly dividend to $0.17 a share, a 31% increase. In addition, the Board authorized the repurchase of up to an additional 20 million shares of stock.
For 2012, Starbucks expects to earn $1.75 to $1.82 a share, the midpoint of which is slightly below consensus of $1.82 a share. Revenues are expected to come in at about $12.87 billion, which is slightly ahead of Wall Street's average forecast.
In the new year, Starbucks plans on opening approximately 800 net new stores globally, and to remodel about 1,700 stores in an effort do drive traffic and improve in-store efficiency.
My Take
Like Apple (AAPL), Nike (NKE) and the aforementioned McDonald's, Starbucks is one of a select few American consumer-products icons that is firing on all cylinders across the globe during a period of maximum economic uncertainty.
Starbucks is doing gangbusters business in China, and it has a great long-term opportunity in the K-Cups business. In fact, I think the company is actually underestimating the potential size of the K-Cups market. Critics, who are usually attacking Starbucks competitor Green Mountain Coffee Roasters (GMCR), regularly call K-Cups overpriced but the convenience factor trumps everything else, in my view.
Now, Starbucks doesn't look particularly cheap, but it's delivering very consistent growth, a trait that is clearly in short supply in this market climate. Plus, if Starbucks can do this well in a lousy economy, how well will it do when the domestic employment picture improves in a meaningful way?
Consider Starbucks a go-to growth stock heading into 2012.
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