Seattle’s Best Coffee, a wholly owned subsidiary of Starbucks Corporation (SBUX), and the automated retail solutions provider Coinstar Inc. (CSTR) have inked a deal to put up new Rubi coffee kiosks at grocery, drug and mass merchant retail channels. These kiosks will offer Seattle's Best Coffee beverages.
The agreement will not only allow Seattle’s Best Coffee to have more exposure, but will also provide the coffee maker with a new channel to reach out to customers. About 500 kiosks will be rolled out at different retail outlets by the end of the 2012.
Seattle’s Best provides coffee at a cheaper rate than its parent company, and operates through retail stores and grocery sub-stores in 20 states and provinces and the District of Columbia, and also through sub-stores in many other businesses and college campuses, including Subway sandwich shops.
Starbucks is geared up to accelerate growth worldwide, and announced certain management changes to help achieve its goal. In April 2012, the company reported second quarter 2012 earnings of 40 cents per share, beating the Zacks Consensus Estimate by a penny. Quarterly earnings increased 18% year over year driven by a solid top line, improved efficiencies and cost control.
Total sales for the second quarter increased 15.0% year over year to $3.2 billion, driven by strong global same store sales.
The company raised its fiscal 2012 outlook due to improving business trends and strong first half results. The fiscal 2012 earnings outlook was raised to a range of $1.81–$1.84 from the prior band of $1.78–1.82, representing annualized growth of 19% to 21%.
Currently, we have a long-term Neutral recommendation on Starbucks, which carries a Zacks #3 Rank (short-term Hold rating).
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