|Bid||86.02 x 1400|
|Ask||86.26 x 1800|
|Day's Range||85.52 - 86.74|
|52 Week Range||57.39 - 99.72|
|Beta (3Y Monthly)||0.50|
|PE Ratio (TTM)||30.76|
|Earnings Date||Oct. 30, 2019|
|Forward Dividend & Yield||1.44 (1.68%)|
|1y Target Est||96.07|
As Hong Kong mopped up after a day of violence protesters focused their ongoing anger on companies linked to the Chinese mainland. Graffiti and posters have increased along marching routes and the morning after another day of clashes crews work quickly to either scrub it clean - or cover it up until they can. The corporate targets are well known in the city. At least least two Bank of China ATMs were set on fire Tuesday (October 2). Some Starbucks outlets were also vandalized. While the brand is an American coffee chain, it's locally operated by Maxim's Caterers. That's become a target after the daughter of the company's founder condemned protesters at the UN human rights council in Geneva. The city's MTR rail system also shut down 50 stations, ostensibly to stop protester movements. That made them a target for demonstrators who blame the company for doing the bidding of the goverment. Hong Kong is an Asian base for many global businesses. But companies are walking a thin line between protesters and China's Communist Party rulers in Beijing. One of earliest and biggest names to struggle with that has been Cathay Pacific. In August, China demanded the airline suspend staff involved in protests. The company's chairman and CEO have since stepped down, and Cathay's share price was pummelled. The Hong Kong Confederation of Trade Unions says at least 20 pilots and cabin crew have been fired.
(Bloomberg Opinion) -- Nestle SA Chief Executive Officer Mark Schneider is in a good spot. He’s on the verge of capping what he set out to do when he became the Swiss food behemoth’s first outside leader for almost 100 years.Nestle is on track to meet its target for operating margin a year early. Its organic sales growth goal for next year looks attainable. And on Thursday the company unveiled plans to return another $20 billion to shareholders by 2022. That is unless it can find better ways to spend some of the money on acquisitions.The latest buyback comes just as the last $20 billion capital return — announced in June 2017 — is being completed.The German-American CEO took over in January 2017 with the aim of making changes. He received a blessing in disguise that June, when activist investor Dan Loeb’s Third Point bought a stake and started agitating for change, giving Schneider the license to move quickly.Under pressure from Loeb, he has changed up of 9% of Nestle’s the portfolio so far, in line with his plan to trade 10% of it by the end of 2020. He has sold off the U.S. confectionery business, the Gerber life assurance unit and most recently the dermatology arm, all for better-than-expected prices.And he has made canny acquisitions, including spending $7 billion for the rights to market Starbucks Corp. products outside of its cafes, which is helping drive growth in Nestle’s coffee unit. Adding Sweet Earth, which makes meat substitutes, also looks smart given the boom in plant-based protein products.Combined, the moves mean Nestle is on track to meet the low end of the target for full-year underlying operating margin of between 17.5% and 18.5% in 2020, a year early. Organic growth in the mid-single digits by 2020 looks possible, too. Nestle forecasts about 3.5% expansion in 2019.But from here, life gets tougher. Obvious disposals have been made, although Schneider could go further in pruning parts of the U.S. frozen food business, which includes Hot Pockets and DiGiorno pizzas, and its joint ventures in chilled dairy, cereals and ice cream.The decision to no longer run the challenged waters arm as a separate business and instead integrate it into Nestle’s three main geographic regions indicates that that business won’t come up for sale in its entirety.Nestle believes its range of waters, which include the Perrier and S.Pellegrino brands, are capable of delivering strong growth, thanks to demand in emerging markets and the trend for health and wellness in developed regions. But staying so committed to the business looks like a rare strategic misstep, given the pressures on the lower end of the market and growing environmental awareness.As for further acquisitions, more bolt-ons that take Nestle into nascent but potentially fast-growing consumer categories along the lines of fake meat, look likely given the creation of a unit to bolster expansion both within the group and outside of it.There is one portfolio change that seems to remain stubbornly out of Schneider’s plans: selling Nestle’s 32 billion–euro ($35.6 billion) stake in L’Oreal SA, the world’s biggest maker of beauty products.Loeb has been pressing to offload it. Nestle doesn’t need the money, and would prefer to link any change to a big strategic move. But there is merit in considering the disposal. Concern is rising about a slow-down in luxury demand in China, something that has been buoying L’Oreal’s premium cosmetics brands. Meanwhile, the U.S. make-up market looks more challenging after a boom. If conditions deteriorate, Nestle may have missed the best chance to extract maximum value.And it can’t afford any slip ups. The shares have risen 44% since Schneider arrived in January 2017, and trade at a forward price earnings ratio of 22 times. While the premium to Unilever NV is deserved, at this elevated valuation, there is less room for error than when Schneider walked in to shake up what was then a lumbering food giant. To contact the author of this story: Andrea Felsted at email@example.comTo contact the editor responsible for this story: Melissa Pozsgay at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Andrea Felsted is a Bloomberg Opinion columnist covering the consumer and retail industries. She previously worked at the Financial Times.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
Starbucks Corporation (SBUX) plans to release its fourth quarter and fiscal year 2019 financial results after the market close on Wednesday, October 30, 2019 with a conference call to follow at 2:00 p.m. PT. In the fourth quarter of fiscal 2019, Starbucks realigned its operating segment reporting structure to better reflect the cumulative effect of the company’s streamlining efforts. Specifically, the previous China/Asia Pacific (“CAP”) segment and Europe, Middle East, and Africa (“EMEA”) segment have been combined into one International segment.
(Bloomberg) -- Sweeping up broken glass and scrubbing graffiti have become regular chores for workers at the various businesses of Maxim’s, the 63-year-old restaurant and catering empire founded by a Hong Kong billionaire clan.This isn’t just random vandalism. Protesters have relentlessly targeted the company after the daughter of Maxim’s founder, Annie Wu, criticized Hong Kong demonstrators at the United Nations Human Rights Council last month.It was a rare public appearance from a member of a billionaire family that founded a restaurant group with $2.6 billion in annual revenue, and that operates more than 1,300 outlets in Hong Kong and other parts of Asia, including Starbucks. In the mainland, Wu received praise from state media, but in Hong Kong, fallout was swift.Activist Joshua Wong tweeted that Starbucks should drop its deal with Maxim’s, and a petition collected more than 59,000 signatures. Fast-food chain Maxim’s MX, Genki Sushi and Maxim’s Cakes -- all part of the clan’s empire -- were sprayed with graffiti or had windows smashed. At two of the city’s leading universities, students held boycott rallies. Beijing’s allies in Hong Kong, for their part, have tried to counter the campaign, with one pro-Beijing party calling for supporters to spend more at Starbucks and Maxim’s while lawmaker Starry Lee posted photos of herself nibbling on Genki sushi.Maxim’s Caterers Ltd. has sought to distance itself from Wu, the eldest daughter of co-founder James Wu, saying the 71-year-old doesn’t hold a position in the company. She does, however, have a stake of less than 1%, activist investor David Webb said in a Twitter post, citing company documents. Chairman Michael Wu, the grandson of Annie’s uncle, runs the company.As Beijing resorts to corporate arm-twisting to influence the narrative in Hong Kong from the National Basketball Association to Cathay Pacific, protesters have largely taken aim at Chinese state-owned companies they view as complicit, including banks and their ATM machines, and China Mobile Ltd. The case of Maxim’s, one of a few private companies being targeted, shows that protester anger isn’t just reserved for China Inc. Activists called for protests at Apple stores after the company pulled a live-mapping app that tracked deployments of police, though there have been no attacks yet on the fresh target.The months-long protests have already caused the closure of 100 restaurants across Hong Kong, with about 2,000 employees affected as a result, Financial Secretary Paul Chan said in an Oct. 13 blog post. For the survivors, turnover could drop by as much as 30% from August to October, according to Alice Leung, an analyst at KGI in Hong Kong.The impact could be more pronounced for Maxim’s, which analysts say has most of its business in Hong Kong. Maxim’s revenue grew 16% last year to $2.6 billion. The shares of its Hong Kong-listed peers Fairwood Holdings Ltd. and Tsui Wah Holdings Ltd. have dropped by more than a quarter since June.“Given the magnitude and that most of its costs are fixed, the impact on profits will be significant,” she said. “Maxim’s Group has exposure in fast food, Chinese restaurants and western dining in Hong Kong.”Annie Wu didn’t respond to an interview request sent through the Hong Kong Federation of Women, which she was representing at the U.N.“Regarding the current social events, we genuinely hope all parties will resolve their differences and our community may resume normal operations again soon,” Maxim’s said in a statement, declining to provide further comment.Maxim’s might seem like an unlikely target for Hong Kong protests, given its long history in the city. But ever since China’s economic opening under Deng Xiaoping, the Wu clan has deepened ties with China, with Annie leading the way as a member of the Communist Party’s political advisory body.The establishment dates to 1956 when, brothers S.T. and James Wu were indignant about poor service from staff at western restaurants in Hong Kong. Among the slights, detailed in the company’s history pamphlet for its 60th anniversary, was regularly being given a table near the bathroom.“Just because we’re Chinese, we’re not fit to dine at a western restaurant?” the brothers asked in the official document.So they opened their own French restaurant and nightclub with salmon flown from Norway and strawberries from Japan. They hosted rock bands and Hollywood stars. In the 1980s, their proficiency with western culinary techniques was key to establishing partnerships in China. Former leader Deng even asked whether they could make French bread, according to the company.As big hotel groups started offering more grandiose designs and larger live bands, the brothers changed course. They carved a niche with smaller restaurants, opening 20 cafes in two years. By the 1980s they had the backing of Jardine Matheson, one of the city’s biggest conglomerates (its Dairy Farm has a 50% stake).In the 2000s, the business opened its first Starbucks store in Exchange Square in Hong Kong. In 2011, Maxim’s acquired full ownership of Starbucks in Hong Kong and Macau.The Wu clan now has a fortune worth at least $1 billion, derived mostly from their stake in the company, according to the Bloomberg Billionaires Index.Annie Wu’s business success is due partly to China. She first visited the mainland in 1978 with a visit to Sichuan province.She was a founder of the joint venture Beijing Air Catering Ltd. after Deng demanded flight catering services be introduced to the mainland by May 1980. The service didn’t exist in Beijing at the time, which meant international flights had to stop in Tokyo to get meals onto airplanes.“For years, I had been like a lone traveler, leading a rootless wandering life and looking for long-lost treasures,” Wu told China Daily in a Sept. 7 interview. “I found my roots.”She also rose politically, serving as a member of the Standing Committee of the Chinese People’s Political Consultative Conference National Committee, a top advisory body. It was at the UN council alongside fellow heiress Pansy Ho of Macau casino wealth, that Wu most publicly criticized the protesters.She then turned to Chinese state media to chide protesters as representing a small minority and blamed international media for bias against the “silent majority.”“A lot of those peaceful protests have become violent like riots,” Wu said. She called for punishments for faculty and students who boycott.After her showing, Beijing expressed its gratitude. The Central Political and Legal Affairs Commission, a Communist party organ, posted on its social media account that netizens had sent 650 Maxim’s mooncakes -- delicacies enjoyed around the lunar festival -- - to Hong Kong police.(Updates with Wu quote on China in 21st paragraph.)\--With assistance from Pei Yi Mak.To contact the reporters on this story: Blake Schmidt in Hong Kong at email@example.com;Venus Feng in Hong Kong at firstname.lastname@example.orgTo contact the editors responsible for this story: Pierre Paulden at email@example.com, Jeff SutherlandFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Shares of Chipotle have skyrocketed over 90% in 2019. Now with Chipotle set to release its Q3 2019 financial results on Tuesday, October 22, let's dive into some estimates and fundamentals to see if investors should consider buying CMG stock right now...
(Bloomberg Opinion) -- How worried should we be about Starbucks’s recent announcement that it plans to begin testing a new type of store that only takes orders via mobile app — no cashiers?At first glance the image seems vaguely dystopian: person after person filing through, inevitably wearing AirPods, to pick up caffeine-and-sugar infusions they ordered by pressing a few buttons on their smartphones as they were leaving home — all without a moment of human interaction.(1)But that’s more or less what’s happening right now at regular Starbucks stores: the company already accepts mobile orders, and has more than 16 million mobile users. The drawback is that those users crowd the stores and cause bottlenecks at peak times; in some outlets, the glut of mobile orders has gotten so bad that it’s discouraging walk-in customers. Thus, the mobile-only store model is presumably a response to problems already created by mobile ordering.Experiments of this kind are increasingly common. Amazon Go stores are cashier-less. Some grocery stores let you scan items as you pick them up and economize on checkout time. And mobile ordering is becoming widespread for foods ranging from salad to lobster. So we might not be too far away from the day when mobile ordering and cashier-less purchasing are the norm, rather than the exception.Will we be better off for it?In Starbucks’s case, at least, mobile-only stores might actually work out well for customers. Those who want to order via mobile will be able to go to specialized stores optimized for handling them. And that will reduce congestion at other stores, meaning that people there won’t have to spend as much time waiting for their drinks.As with many forms of product differentiation, the change might even increase demand for Starbucks coffee. Anyone who previously found Starbucks too time-consuming to stop in during their morning commutes will have a new, faster option. And people who had been driven off by the throngs of mobile-order customers might be able to come back.It’s less clear, however, how mobile-only stores will affect Starbucks employees.Some activists are trying to push for laws that would put limits on the shift to cashier-less shopping, requiring that stores must have humans on hand to ring up customer orders. That’s an onerous proposal — analogous to saying that every ATM should also have a bank teller on hand.(2)But still, you can see why there’s concern. Presumably, cashier-less stores will need fewer employees, even if they do pull in a large number of new customers. And reducing congestion in regular Starbucks stores might reduce staffing needs there as well.Then there's the drudgery factor: Working in a mobile-only store will surely be a lot more monotonous, more like being employed on a factory assembly line than in a typical coffee shop, where give-and-take between workers and customers can be part of the appeal. There will be less human interaction – and what interactions there are might well be with upset customers.It’s also likely that the workers at mobile-only stores won’t make nearly as much in tips. First off, customers might not feel an obligation to employees they don’t interact with personally. Moreover, tipping using an app isn’t observable to others, and there’s solid evidence that people take prosocial actions more frequently when others are watching. In other words, people tend to tip more when they know they're being observed.That said, the Starbucks app’s default tipping options are on the order of 10% to 20% -- higher than many people give with the typical change-in-jar approach. So if Starbucks pushes app tipping hard with notifications and alerts, there might not be too much of a shortfall. Better would be to still have a physical tip jar in mobile stores — or even to place a star on the order display board next to the name of anyone who tips.So there’s a chance that mobile-only Starbucks might be beneficial overall, rather than dystopian. Or at least not as dystopian as the pumpkin-spice latte.(1) I mean, isn’t that basically one of the opening scenes of the movie "Equilibrium"?(2) And what about completely automated coffee shops like those now operating in San Francisco?To contact the author of this story: Scott Duke Kominers at firstname.lastname@example.orgTo contact the editor responsible for this story: James Greiff at email@example.comThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Scott Duke Kominers is the MBA Class of 1960 Associate Professor of Business Administration at Harvard Business School, and a faculty affiliate of the Harvard Department of Economics. Previously, he was a junior fellow at the Harvard Society of Fellows and the inaugural research scholar at the Becker Friedman Institute for Research in Economics at the University of Chicago.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
With Q3 2019 earnings season set to heat up when the big banks start to report on Tuesday, October 15, it's time to see what investors should expect from Coca-Cola...
Starbucks' (SBUX) solid global footprint, successful innovations, best-in-class loyalty program and digital offerings are encouraging.
“I don't equivocate on this: Firms that are not paying attention to this are committing corporate suicide,” says Hobson, referring to diversity. “It may not be fast, but at some point, it will come if you don't pay attention to this.”
(Bloomberg) -- Starbucks Corp. is giving farmers a cushion against the blow of tumbling coffee prices, a move that could also protect supplies of the high-quality beans the company needs.The world’s largest coffee chain operator paid over 8,000 farmers in Mexico, El Salvador, Nicaragua and Guatemala a premium totaling $20 million, according to Michelle Burns, senior vice president of global coffee and tea at Starbucks. That’s on top of the regular amounts it pays over futures prices for specialty arabica beans, she said.With prices falling below production costs in many countries, shielding those who produce the beans the company purchases is especially important for Starbucks. Growers from Colombia to Mexico are struggling to compete with ever-rising output from top producer Brazil, where a weaker currency has meant many farmers there are still making money.“When we looked at what the cost of production was across the range of countries, it was clear that the Latin American countries had a serious situation in hand,” Burns said in an interview. “When a premium specialty arabica coffee of the highest quality -- the arena that we play in -- has been impacted, with historically low coffee prices at around $1, there are many countries where that’s not sustainable living.”As Brazilian output kept expanding, futures fell this year to their lowest in more than a decade on the ICE Futures U.S. exchange and are hovering around $1 a pound. The cost of production in Central America is at least 30% higher than in Brazil, according to Carlos Mera, an analyst at Rabobank International Ltd., a lender to the agriculture industry.The global coffee crisis has already brought producers together, with countries calling on roasters to pay a fair prices. Colombia even considered dissociating its coffee sales from futures traded in New York. Prices are unlikely to significantly recover without intervention given the potential for increased low-cost production in Brazil, Jeffrey Sachs, professor of economics at Columbia University, said in a report this month.With a global oversupply hanging over the market, Starbucks said it remains committed to taking further action for the 2019-20 season that started Oct. 1. The company also helps farmers through its nine support centers and a plan to give out 100 million trees by 2025 so growers can replace their aging and diseased plants. So far, almost 32 million trees have been distributed.Market Correction“The desire would be that the market has some correction. That would be the ideal state,” Burns said. “If the coffee crisis on pricing continues, we will look at both what we do on the financial side as well as our continued work with what we do with trees.”Even when the company doesn’t buy directly from farmers, it asks traders to disclose how much the grower was paid. That helps it determine whether additional payments are needed. Starbucks wants to ensure that farmers cover their costs and make at least a small profit, according to Burns. The firm’s purchases account for 3% of global coffee production and 40% of high-quality specialty arabica beans.The coffee industry has seen significant consolidation with closely held investment firm JAB Holding Co. spending more than $30 billion buying companies including Peet’s Coffee, Keurig Green Mountain and Caribou Coffee. Nestle SA and Italy’s Lavazza have also jumped on the bandwagon. With increased competition, industry executives say there’s been a focus on cutting costs and buying cheaper beans.Flavor ProfilesGlobal production is increasingly concentrating in Brazil and Vietnam, the world’s largest grower of the more bitter robusta variety. That’s sparked concerns that the market will lose the wide variety of tastes currently available to roasters.“We’ve built this company around a diversity of flavor profiles from many growing regions around the world,” Burns said. “We know for certain we want farmers to stay, we want the diversity of the origins we have the privilege to buy from.”\--With assistance from Leslie Patton.To contact the reporter on this story: Isis Almeida in Chicago at firstname.lastname@example.orgTo contact the editors responsible for this story: Tina Davis at email@example.com, Pratish Narayanan, Joe RyanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The Zacks Analyst Blog Highlights: AbbVie, Starbucks, Phillips 66, Anheuser-Busch InBev and Square