Starbucks Is Ready To Brew Up More Growth With U.S. Expansion Plans

If you aren’t getting your daily dose of caffeine, things are about to change. Starbucks Corporation (NASDAQ:SBUX), the ubiquitous coffee store chain, thinks there is still plenty of opportunity left to grow in the U.S. The company which currently has more than 11,000 stores in the country will add another 1,500 by the end of 2015. ^[1] Overall, it will add 3,000 new stores in the Americas region in the next five years. ^[2]

Coffee And More

Not all of the new stores are expected to be traditional Starbucks coffee stores, and we could see a fair number of Teavana and Evolution juice bars as part of the new additions. At the time of the acquisition of Teavana, management announced its plans to do to tea what they have done to coffee, so this certainly looks like one of the brands that the company is betting heavily on. Starbucks hasn’t given out details on the break-up, so it remains to be seen the proportion of Evolution and Teavana stores that will open up.

Starbucks will also be looking to boost the sales of its existing stores through La Boulange bakery offerings and Evolution bottled juices. La Boulange is a San Francisco-based bakery chain that Starbucks acquired for $100 million earlier in the year while Evolution is a juice company purchased for $30 million in November last year.

Beyond the Americas, China will be one of growth areas as the company looks to increase its store count to 1,500 by the end of 2015. China will also surpass Canada as the second most important market for the company in the next two years. Starbucks’ global store count will shoot up to more than 20,000 in the next two years from 18,000 currently.

See full analysis for Starbucks Corporation

And as we talked about in our previous article, Starbucks’ channel development segment represents a tremendous growth opportunity. Revenues for the channel development business were $1.3 billion in fiscal 2012, and management expects the division to double its international footprint by 2015. The company already has more than 100,000 distribution points across 20 countries. Starbucks will be banking on single cup servings such as the VIA, K-cups and the recently launched Verismo brewer to fuel sales growth of this segment.

We have a $58 price estimate for Starbucks, which is about 15% higher than the current market price.

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1. SBUX 10-k [↩]
2. UPDATE 3-Starbucks back on expansion path in Americas, China, December 5, 2012, reuters.com [↩]