Starbucks said it expects its fast-growing China business could one day eclipse its U.S. market.
The company said Wednesday it plans to open 12,000 additional stores globally in the next five years, taking the chain to a total of about 37,000 outlets. Half of the new units will be in the U.S. and China.
"Our core business has never been stronger in the U.S. and around the world," Starbucks Chairman and CEO Howard Schultz told analysts at the coffee retailer's investor day event in New York.
The CEO also emphasized something he's said before: "These are the early days of the growth and development of the company. If Starbucks was a 20-chapter book, I still think we're in chapter 4 or 5."
"Demand is there, and our ability to deploy capital and get the return on invested capital is very strong," Starbucks President and COO Kevin Johnson told attendees. Johnson will become CEO of Starbucks in April, succeeding Schultz, who will continue as the Seattle-based company's chairman.
Executives during presentations Wednesday highlighted how the company is focusing on both its flagship Starbucks stores and the higher-end Reserve Roastery and Tasting Room outlets for future growth. The company also has targeted the Reserve Roastery stores, which will sell premium coffee at around $10 a cup, to represent about one-fifth of total outlets by 2021.
Also, Starbucks plans to open new stand-alone outlets under Princi, a high-end Italian bakery the company invested in over the summer. The bakery will serve pizza and have locations in major markets such as New York, Seattle and Chicago by 2018. Moreover, Princi food is expected to be offered at all of the company's new Roastery locations.
Starbucks presented a five-year strategic plan to grow earnings per share between 15 and 20 percent and targeted "mid-single digit" comparable-store sales growth. The company sees retail revenue growing during this period at an annual growth rate of 10 percent.
"I know some of you are concerned about the slowdown in U.S. comps, which candidly I don't share," Schultz told analysts.
Schultz said the retailer continues to open 500 to 600 stores annually and the new store performance on a sequential basis has been "better than the year before. There's no better evidence of the health, the strength, the equity of the brand and the relevance of the Starbucks business."
On the international front, Schultz said China is one market that remains particularly attractive for the retailer.
"Not only will China one day be bigger than the U.S., but our business in China will demonstrate that we will be one of the...most significant winners in terms of a Western consumer brand," he said.