After delivering robust sales growth in the third quarter, Starbucks Corporation (NASDAQ:SBUX) raised its full year outlook, sending shares soaring more than 6%.
“Starbucks Q3 results represent the best across-the-board third quarter performance in our 42-year history,” CEO Howard Schultz said in a statement. Schultz also praised Starbucks Corporation (NASDAQ:SBUX)’ mobile payment system (pay via smartphones) for speeding up service and keeping customers happy and coming back again and again.
Starbucks Corporation (NASDAQ:SBUX) opened 341 new stores in the quarter, compared to the 231 stores opened in the year ago quarter. Presently, the coffee chain has 19,209 in some 63 countries. In the U.S. alone, Starbucks serves nearly 40 million patrons a week.
Adding to its coffee line-up
CEO Schultz stressed that while the company is offering a plethora of items beyond coffee, Starbucks Corporation (NASDAQ:SBUX) remains a coffee company at heart. It’s simply expanding menu items for a better overall experience.
The coffee king has been adding beverages and food items in an attempt to attract more customers and non-coffee drinkers. A revamped sandwich line rolled out in April, as well as new salads and rice bowls are performing well.
The acquisition of La Boulange for $100 million in 2012, provided new baked goods. To replace run of the mill muffins and bagels, La Boulange provides Starbucks Corporation (NASDAQ:SBUX) with low fat or gluten free products, filled with sustainably grown fruits and vegetables, and topped with a range of artisan glazes.
Dunkin Brands Group Inc (NASDAQ:DNKN) also recently announced the launch of gluten free donuts and muffins, and have been warmly received. Also well received were appetizing earnings from the Canton, Massachussets, headquartered company.
The company posted strong second quarter earnings thanks to higher same store sales and lower costs. Dunkin Brands Group Inc (NASDAQ:DNKN)profits soared to $0.38 a share on revenue of $182.5 million, up from $0.15 on revenue of $172.4 million a year ago. Long anchored in the Northeast, the company has been focusing on expanding its donut and coffee brand westward. Dunkin’ will open several stores throughout California in 2015.
Starbucks Corporation (NASDAQ:SBUX) meanwhile is focused on growing menu items. It just announced it’s teaming with Danone to gain a foothold in the growing yogurt business. New Greek yogurt parfaits, called “Evolution Fresh Inspired by Danone,” will hit cafes next year. By 2015, they will hit grocery stores.
Grocery store sales are indeed important to Starbucks Corporation (NASDAQ:SBUX)’ bottom-line. Last year, groceries accounted for about 10% of Starbucks revenue. In 2013, it has increased by 19%, expanding at a quicker clip than café sales.
Moreover, there’s room for Starbucks Corporation (NASDAQ:SBUX) in the Greek yogurt arena, (currently controlled by General Mills, Inc. (NYSE:GIS) with about 24% of total market share), according to research firm Euromonitor. But analysts say Starbucks’ massive distribution network and thousands of cafe’s will allow it to take a sizable portion of General Mill’s total market share.
The brand owner of Cheerios, Green Giant, and Betty Crocker, reported lackluster fourth quarter earnings when it closed out its fiscal year in late July. Share buybacks have given shares a boost over the last several years, and the hearty 2.95% dividend yield has appealed to shareholders.
But growth investors are likely to be disappointed. Emerging market sales are showing signs of decay, and revenue generated by its U.S. retail division, accounts for 60% of its top line. These divisions eked out a mere 1% gain last year.
Starbucks’ future is percolating
An improving economy, growing consumer confidence, increased international exposure, lower commodity prices, loyal customers, new patrons, and fresh product offerings will keep Starbucks Corporation (NASDAQ:SBUX)’ shares brewing.
And if coffee isn’t your cup of tea, well there’s tea. Starbucks Corporation (NASDAQ:SBUX) acquired Teavana in 2012 and plans to debut tea bars shortly. Starbucks is also testing alcohol sales in select locations.
The company increased its guidance for the third quarter from $0.57 to $0.59. Additionally, management boosted guidance for the full year from $2.19 to $2.22 per share. Shares have nearly doubled over the last 12 months and the company pays a quarterly dividend of $0.21 per share. With all this positive mojo, perhaps its time you took a closer a look at Starbucks Corporation (NASDAQ:SBUX) for yourself.
The article What’s Next for Starbucks? originally appeared on Fool.com and is written by Diane Alter.
Diane Alter has no position in any stocks mentioned. The Motley Fool recommends Starbucks. The Motley Fool owns shares of Starbucks. Diane is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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