A round of applause for Starbucks
The coffee giant reported close to a perfect quarter.
How can it all come together so spectacularly in one quarter? That's what I found myself asking when I listened to the Starbucks (SBUX) quarter -- same-store sales were up 8% globally, and the Americas delivered astounding comps of 9%. Who can be that good? This isn't some 800-store chain. This is an established chain with 19,000 locations that is actually accelerating its revenue and increasing its gross margin.
That's phenomenal. It is a monument to execution. It's a tribute to the amazing work that CEO Howard Schultz and his team have delivered -- work that has gone beyond our wildest imaginations. The changes at Starbucks were certainly not expected to generate continual 9% growth. In fact, they called that highly unrealistic.Consider this:
1. Starbucks has now reported its 14th consecutive quarter of comps growing in excess of 5%;
2. operating margin was up 150 basis points;
3. operating income was up 25%;
4. revenue increased 13%; and
5. the company saw an actual increase in Europe, the first in six quarters.
All of this is astounding, but here's what's really incredible. The changes at this company are setting the stage for a much bigger Starbucks with a much more ambitious agenda, established in three ways -- through three acquisitions that have already been distinguished as brilliant.
First, there's the food coming from the national roll-out of Boulange, the bread-and-pastry initiative that is now in 1,000 stores and will be in 2,500 at year-end.
Second, there's the non-coffee-beverage business, as spearheaded by the Evolution acquisition.
Third, the new Teavana that will produce 1,000 tea stores, triple the current amount, as Starbucks taps into the $40 billion tea market.
Don't, by the way, think for a moment that Starbucks will be contained by the Starbucks stores. Expect to see the Evolution drinks at your supermarket, at least at Whole Foods (WFM). Plus, in a little noticed tie-in announced Tuesday, Starbucks is branding a special Danone greek yogurt that will sell at Starbucks and at the supermarket.
Will success spoil Starbucks? Does it risk becoming another Panera (PNRA)? That particular company executed badly this quarter, in part because it took too long to order and get food -- something that I saw at my own Panera just last night.
Howard put social and mobile genius Adam Brotman on the call Thursday night, and I think the reason has to do with the company adopting best practices involving mobile -- 10% of orders are done by phone. That helps the throughput that is plaguing Panera.
Starbucks is hitting on nine cylinders. I say that because it will have to return to eight soon. It was a stunning quarter, but not all that is replicable, because everything went right. Things will slow.
Still, though, it was as close to perfection as I have ever seen a quarter be. That's pretty amazing when you consider that this stock traded at $43 this time a year ago, when Europe plagued the company and China slowdown worries were the mainstay of the conversation.
It was truly a quarter for which management should be congratulated.
Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and has no positions in stocks mentioned.
More from TheStreet.com
Don't all extremely wealthy , wild n craxy Asian guys drive a BMW # 1 ???
Next week cramer will write articles on: matel toys, flowers.com, myspace update, alcoa, goodyear.
How’d goodyear get in that mix? Is it time to sell THEIR stock too?
isn't this just showing the ends of a bad recession and a return to the old bad habits for many people?
"""That's phenomenal. It is a monument to execution. It's a tribute to the amazing work that CEO Howard Schultz and his team have delivered -- work that has gone beyond our wildest imaginations."""
Barry, Leave it to you to look for the few negatives in the economy.Who needs a market up 90%
with Obama?You`re like the guy that gets to a party at 11:00 and watch the guys walking out
with gals that are 10`s and you go in and the only gals left are 400lbs with zits.You missed
4LOVEOFMONEY:I just had breakfast and you mention the Nazi Mirage Guy.He`s probably
still worshiping Hitler at this hour.
Latin speaking gay man from Africa , Wheelchair bound , feeble , broke old farts , demented death wishers, and of course -- our very own "Regal" man. The class cretin !
All here to stroke Dear Leader , spread his lies , I mean "word"!!
Consumer confidence is up !!!
But - uh didn't 345,000 people on go Unemployment last week- a huge increase ?
uhhh , ahhh, ummm,
DLH2448:Sorry you missed the bull.It must suck to be bitter and miss all that
money.I guess it`s time to count the steers and queers in Texas.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
The solid report comes a month after the retailer closed all of its Canadian operations.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.