Starbucks Corporation SBUX announced the retirement of its chief financial officer, Scott Maw, effective Nov 30, 2018. Notably, Maw has been associated with the company for seven years before taking on the role of CFO in February 2014.
The move came as a surprise for the market. In fact, shares of the company declined by 2.6% yesterday, reflecting the apprehensive stance of investors. Retirement of Maw marks the second high profile departure in the company’s hierarchy in a month. Earlier this month, Howard Schultz stepped down from the position of executive chairman and was succeeded by former J.C. Penney chief executive Myron E. "Mike" Ullman.
In the first-half of Maw’s tenure, the company reported robust sales growth. However, sales growth has decelerated of late. The company’s Americas segment (accounting for 70% of the total revenues) posted 3% comps growth in fiscal 2017, down considerably from 6% in the year-ago period.
Starbucks’ Stock Performance
Starbucks’ shares lost nearly 17% in the past year, against its industry’s growth of 0.7%. Meanwhile, the company’s new CEO Kevin Johnson faces a range of challenges, starting from subdued growth in the dominant U.S. market and intense competition from rivals to a huge expansion project in China.
That said the company’s fundamentals remain strong as is evident from the 3-5 year expected EPS growth rate of 14%. In the last reported second-quarter fiscal 2018, Starbucks’ adjusted earnings per share of 53 cents showed an improvement of 17.8% year over year. The results benefited from improved performance in the Americas (mainly in the United States), the ongoing positive momentum in China (following the takeover of East China) and strongest comps growth in Japan in five quarters.
Importantly, Starbucks and Swiss-based food giant Nestle SA recently teamed up to revitalize their coffee domains. Starbucks and Nestle announced a global marketing deal that gives the latter "perpetual rights" to market Starbucks’ products globally. This alliance will expand the global reach of Starbucks brands in the consumer packaged goods and foodservice categories to nearly 190 countries from the present count of 28.
Additionally, factors like better job prospects and increasing consumer confidence are likely to play an important role in boosting the restaurant industry, to which this Zacks Rank #3 (Hold) stock belongs.
Some better-ranked stocks from the restaurant space include Wingstop WING, Dine Brands DIN and Domino’s DPZ. While Wingstop sports a Zacks Rank #1 (Strong Buy), Domino’s and Dine Brands carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Wingstop, Dine Brands and Domino’s earnings for 2018 are expected to grow 13.5%, 23.1% and 55.2%, respectively.
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