Coffee giant Starbucks (SBUX) has been in the midst of a turnaround project for the last year now, ever since Brian Niccol took the job right around the same time. The project has been extensive, with major remodeling taking place and some friction coming up along the way with baristas who are not seeing the impact of the changes themselves. Shareholders, meanwhile, seem skeptical, as Starbucks shares were up fractionally in Tuesday afternoon’s trading.
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Pacing has been “aggressive” so far, and thus, it likely should not surprise most that there has been friction along the way. But Starbucks is ramping things up, with an improved rewards program, new interior designs, and new food and beverage items as well. There may even be more locations opening up as a result of the redesign, which could be helpful given reports of the loss of mobile-only locations.
Niccol spoke to Fox Business recently, noting, “I think we’re really close on the fundamentals. Then what you can do is, once you have the fundamentals in place, you can innovate from a place of strength. And you’re going to see us innovate in the menu. You’re going to [see] us innovate in our rewards program. You’re going to see us innovate digitally. And I’m excited about what all these things provide as far as another layer of growth.”
A Year of Niccol
With Brian Niccol’s tenure at Starbucks about to turn one year old, a look back at what happened in that year is likely worthwhile. With six quarters of declining sales, mounting customer complaints about wait times, an app that was not everything it could be, and even periodic stock-outs, Niccol had a lot to turn around.
The good news is that progress has been made. The decline in sales figures is turning around. Starbucks celebrated an absolutely killer week just last week. But one week does not a quarter make, and investors seem skeptical that this early momentum can last. Still, there is certainly enough to suggest that investors keep watching rather than bail out.
Is Starbucks Stock a Good Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on SBUX stock based on 14 Buys, nine Holds and two Sells assigned in the past three months, as indicated by the graphic below. After a 9.82% loss in its share price over the past year, the average SBUX price target of $100.57 per share implies 19.51% upside potential.
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