Starbucks: Takeaways From The 2017 Annual Meeting

Starbucks (SBUX) has had a very impressive run since its IPO in 1992. The stock has returned 18,325% during that time period, which has pummelled the S&P 500 (along with every other index).

SBUX Total Shareholder Return Since IPO

Starbucks is also a strong dividend stock. The company hiked its dividend by an eye-popping 25% in November, which was the sixth consecutive year of annual dividend increases since the company initiated the payout in 2010. This means Starbucks is more than halfway to being a Dividend Achiever, which are stocks with 10+ years of consecutive dividend increases.

Most investors are familiar with the old adage ‘past performance is no guarantee of future results’. This definitely applies to Starbucks (as well as all other stocks). Just because the company’s performance since its IPO has been nothing short of spectacular does not mean strong returns must continue in the future.

Fortunately, Starbucks’ future looks bright. The company outlined its strategic plan to continue growth at its 25th annual shareholder meeting, which was held on March 22 in Seattle, Washington.

This article will discuss Starbucks’ growth prospects as outlined in their annual meeting in detail.

The Strategic Agenda

In a press release accompanying the annual meeting, Starbucks made the following announcements:

Changes to their management and corporate governance teams, including a new Chief Executive Officer (originally announced on December 1st) and three new additions to the board of directors

The intention of significant expansions by fiscal year 2021, which includes more than 240,000 new jobs globally (68,000 in the U.S.) and more than 12,000 new locations globally (3,400 in the U.S.)

An update on Starbucks Roasteries

Renewed their guidance to focus on technology

An update on international expansions

This article will discuss each of these bullets in detail below.

Corporate Governance Changes

Starbucks is currently executing on a number of corporate government changes.

Investors are likely familiar with Starbucks’ management change at the CEO level. Howard Schultz, the company’s long-time leader, has left his role as CEO effective April 3, 2017. Schultz originally acquired Starbucks in 1987 when there were only 3 locations. He will continue to be involved with Starbucks as the company’s Executive Chairman and will be leading the company’s new Roastery efforts (more on that later).

Replacing Schultz is Kevin Johnson, who originally joined Starbucks as a member of its board of directors in 2009 before taking on an expanded role as President and Chief Operating Officer in 2015. Johnson brings experience in the technology sector including 16 years at Microsoft (MSFT) and 5 years as the chief of Juniper Networks (JNPR). With Starbucks being a leader in terms of serving their customers via technology, I view Johnson’s background as a significant plus for this company.

You can read a brief interview with Starbucks’ new CEO here.