Starbucks Corporation (SBUX) recently announced that it plans to open its sixth manufacturing unit in Rancho Cucamonga, California toward the end of fiscal 2013. It will will be a juicery costing $70 million and is expected to create 160 manufacturing jobs.
The company acquired super premium juice company Evolution Fresh Inc. in November 2011, in order to expand the company's product portfolio beyond coffee to the health food segment.
Production and distribution of Evolution Fresh juices is expected to increase fourfold when manufacturing shifts from the San Bernardino, CA plant to the new juicery with state of-the-art equipment. The increase in capacity is necessary in order to meet the growing demand for healthy food products. The new facility will manufacture juices using cold-crafted technology, which will help retain the nutritional value of the fruit, thus appealing to the large number of health conscious customers.
In order to cater to the growing number of health-conscious customers, the company announced that its super-premium cold crafted Evolution Fresh juices will be available in new flavors at some select stores on the West Coast. The new flavors are cucumber pineapple ginger, pineapple coconut water, spicy lemonade and new raspberry watermelon.
Starbucks expects higher capital expenditure in fiscal 2012 than fiscal 2011, due to investments in store renovations and manufacturing capacity. The company expects total capital expenditure for fiscal 2012 to be about $900 million. The investment in the new plant in Rancho Cucamonga, California is in line with these plans.
Starbucks carries a Zacks #4 Rank in the near term (Sell rating).
We appreciate Starbucks’ strong market position, new product launches, rapid growth in China as well as a solid turnaround in its U.S. business. However, Starbucks’ results in the third quarter of 2012 have been lower than expected, due to soft consumer traffic trends in the U.S. in June and a weakening global consumer environment. Further, poor sales in Europe due to depressed macroeconomic conditions and the rising cost of commodities, especially coffee, also concerns us.
Based in Seattle, Starbucks Corporation is the leading retailer of specialty coffee worldwide. The company buys and roasts high-quality whole bean coffee, which is sold along with handcrafted coffee and tea beverages and a variety of fresh food items.
STARBUCKS CORP (SBUX): Free Stock Analysis Report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment