Coffee giant Starbucks Corporation (SBUX) is looking to expand its coffee offerings, re-introduce an old coffee favorite besides launching new Petites pies and tarts.
Expanded Coffee Offerings
Starbucks is offering its customers a wide selection of hot and iced espresso beverages which they can tailor make to suit their taste. The customers can choose from a variety of dairy selections, syrups, toppings, or can simply add extra shots to customize their coffees. Moreover, Starbucks is also offering a 50% discount to customers who buy any coffee before 11 a.m. and return to buy a second coffee after 2 p.m. the same day. However, the discount can only be availed on the coffee bought after 2 p.m. The offer will be valid from March 8 to March 14.
New Pies and Tarts
Starbucks has also expanded the range of its delicacies that go perfectly well with its coffees and also suffice as a short afternoon snack. The company has introduced new pies (apple pie, cherry pie) and tarts (brown sugar walnut and chocolate hazelnut tarts) under the Petites brand. These are available for $1.50 each, two for $2.50, and six for $7.50 plus tax if applicable.
Return of Tribute Blend
On popular demand, Starbucks has re-launched an old favorite coffee, Tribute Blend, which combines four of Starbucks all-time favorite coffees: Aged Sumatra, Sun-dried Ethiopia, Papua New Guinea, and Colombia coffees.
Our Take
We currently have a Neutral recommendation on Starbucks. However, the stock carries a Zacks #2 Rank (a short-term ‘Buy’ rating).
Continuous product innovation has always helped the company maintain decent earnings growth. The expanded product offerings discussed above will widen Starbucks’ portfolio and push its top line forward.
However, intense competition from peers like Dunkin Brands (DNKN), McDonald‘s (MCD), and Green Mountain Coffee Roasters, Inc (GMCR) coupled with high coffee prices on account of bad weather conditions and an abnormal increase in farming costs induces us to maintain a sideline view on the stock.
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