Please ensure Javascript is enabled for purposes of website accessibility

5 Numbers That Show Starbucks Is Back

By Demitri Kalogeropoulos - Apr 30, 2021 at 9:03AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The coffee giant recovered most of its momentum in early 2021.

It took about a year, but Starbucks (SBUX 0.33%) is growing again. The coffee giant this week announced double-digit percentage sales growth to mark a likely end to its pandemic slump.

The good news is the strength of that rebound has management feeling more optimistic about the rest of fiscal 2021, especially with respect to revenue, earnings, and cash flow.

Let's look at five standout numbers from the report.

1. The U.S. market grew 9%

Starbucks returned to growth in China earlier in the fiscal year, but the U.S. division has been lagging due to the later start the pandemic got in North America. That slump is over now. Comparable-store sales rose 9%, compared to the prior quarter's 5% drop. The metric was near the high end of management's late-January forecast and implies improving trends ahead. "Our results demonstrated impressive momentum in the business," CEO Kevin Johnson said in a press release.

A young woman holding a to-go coffee cup.

Image source: Getty Images.

2. China had a 124% sales spike

The China business added nearly $500 million to its sales footprint, translating into a 124% revenue spike. Sure, most of that spike is due to the comparison with last year, which included maximum retailing shutdown pressures in the face of COVID-19 social distancing.

But the rebound confirms the importance of this market while telegraphing similar growth spikes in places like the U.S. and Europe over the next few quarters. "We have positioned Starbucks," Johnson said, "for the inevitable great human reconnection that we see unfolding in the U.S. and will propagate in every market around the world."

3. Operating margin rose to 14.8% of sales

Starbucks' profitability is almost fully recovered, with adjusted operating margin having jumped to 14.8% of sales from 8.1% a year ago. The chain's digital business was a big factor in this rebound as it supported surging average spending per visit and a shift toward premium products like cold brews, refreshers, and breakfast sandwiches.

SBUX Operating Income (TTM) Chart

SBUX Operating Income (TTM) data by YCharts

4. Cash flow was $2.7 billion

Cash flow trends best illustrate how much stronger Starbucks' position is today compared to a year ago. Over the last six months, it generated $2.7 billion of operating cash compared to just a $474 million boost in the year-ago period.

That success gives management plenty of resources it can direct toward its ambitious global growth plan in 2021 and beyond. That strategy relies on drive-through, digital ordering, and a flood of new drink and food platform releases to push customer traffic back into positive territory even as average spending per visit remains elevated. Starbucks also plans to invest $1.9 billion into store remodels this year.

5. The 2021 outlook calls for 16% operating margin

Executives simply affirmed a few key growth metrics, including expectations for U.S. comps ranging from 17% to 22% and China comps between 27% and 32%. Investors are still waiting to see full rebounds in areas like customer traffic, which fell 4% globally this past quarter.

But Starbucks is gaining optimism about its earnings power, with margin now expected to land at between 15% and 16% of sales compared to the prior forecast of between 14% and 15%. That increase will translate into slightly higher earnings.

Its updated target for $29 billion of global revenue in 2021 marks a sharp turnaround from the pandemic-influenced $23.5 billion the chain generated last year. But it would also set a new annual sales record for the business heading into an even stronger period for consumer mobility in 2020.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Starbucks Corporation Stock Quote
Starbucks Corporation
$79.52 (0.33%) $0.26

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 07/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.