Starbucks enters New Era of Reinvention, Growth: Focus on Partners Engagement, Tech & Digital Loyalty

Starbucks expects its global revenue to grow in the range of 10% to 12% annually from fiscal 2023 to fiscal 2025.

This represents an improvement from the company’s previous range of 8% to 10%, driven by priority investments that elevate partner engagement and store efficiency, industry-leading digital programs, an engaged and growing Starbucks® Rewards membership base, game-changing product innovation, and a rapidly expanding global footprint, shared the coffee chain in its statement.

The company expects solid margin expansion in fiscal 2023 with progressively more expansion in fiscal 2024 and fiscal 2025. Non-GAAP EPS growth is expected to be in the range of 15% to 20% annually through fiscal 2025, representing an improvement from the previous range of 10% to 12%.

The coffee chain hosted its biennial Investor Day in Seattle where interim chief executive officer Howard Schultz, chief financial officer Rachel Ruggeri, and Starbucks leaders showcased the company’s Reinvention plan to an in-person audience of more than 150 investors. Presentations highlighted decisive actions and targeted investments in partners, customers, and stores that are expected to accelerate the company’s long-term growth, progressively expand operating margin, and drive high-teens non-GAAP EPS growth annually through fiscal 2025.

“As we execute on our Reinvention plan, we are building on our 51-year history of market leading innovation to position our business and our brand for the next chapter of growth,” said Schultz.

Schultz also introduced incoming ceo Laxman Narasimhan, who shared his enthusiasm for the Reinvention plan.

Narasimhan will officially join Starbucks on October 1, 2022 and will work closely with Schultz before assuming the ceo role and joining the Board in April 2023. Schultz will remain as a member of the Board after the transition.

In connection with its Reinvention plan, Starbucks introduced a framework for accelerated earnings growth over the next three years, underpinned by enhanced comparable store sales growth, increased store count growth, continued margin expansion, and disciplined capital allocation.

“Starbucks is a growth company, and our accelerated expansion is a direct reflection of the expected returns from our Reinvention plan,” said Ruggeri. “By making strategic and highly targeted investments to drive value for partners, Starbucks will also drive value for customers and shareholders, while managing costs, improving margins, and elevating the Starbucks Experience for all stakeholders.”

The company’s global store portfolio is expected to grow by roughly 7% annually on a net basis from fiscal 2023 to fiscal 2025, up from the previous estimate of approximately 6%. This increase is driven largely by accelerated growth across the U.S. portfolio as purpose-built store formats in conjunction with the Reinvention plan is expected to deliver net new store growth of 3% to 4% annually, compared to approximately 3% as previously estimated. Starbucks also expects to continue robust store development in China, with net unit growth of approximately 13% annually. Globally, Starbucks expects to approach 45,000 stores by the end of 2025, and is well on track to reach approximately 55,000 stores by 2030, as projected at its 2020 Investor Day.

Starbucks plans to resume its share buyback program reinstituting a healthy return of shareholder capital, yielding an annual EPS benefit of approximately 1%, net of incremental interest, beginning in fiscal year 2024. Between dividends and share buybacks, the company expects to return approximately $20 billion to its shareholders in the next three years.