Starbucks Earnings Call Insights: Remodel Strategy and the Consumer Environment

Starbucks Corporation (NASDAQ:SBUX) recently reported its first quarter earnings and discussed the following topics in its earnings conference call.

Remodel Strategy

John Ivankoe – JPMorgan: If we could review what your remodel strategy is for fiscal ’13, how significant that could be and what you’ve been seeing in a control sample in terms of what the performance of those stores are versus the stores that you haven’t done, is the first question? And secondly, and I think it’s short. When might you have an opportunity to put Evolution products or Teavana products as part of the handcrafted beverage line within Starbucks? I think that that might be a very big opportunity for innovation to have around your product line, if you could discuss when that could possibly be?

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Troy Alstead – CFO and Chief Administrative Officer: I am going to ask Cliff Burrows to speak first on the remodel strategy and then he will start the discussion about Evolution and Teavana in the Starbucks stores and Jeff Hansberry here will be part of that discussion as well. Cliff?

Cliff Burrows – President, Americas: With regard to refurbishments this year, and I’ll talk specifically to the largest market of the U.S. We’ll do the same number of refurbishments, plus or minus as we did last year, as I shared in December when we met in New York. Where we have done major refurbishments we have seen significant improvement in the capacity we’ve built in that store, and the additional opportunities to introduce clover for example have all seen a significant lows. Our strategy around minor refurbishments carries on as it always has been and that’s about putting the store back in a good state, so really no changes there. If I hold it – to Jeff around developments of handcrafted beverages.

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