- A core-satellite portfolio splits investments into stable core holdings and higher-risk satellite picks.
- The core is usually 60% of the portfolio, with satellites at 40%.
- It blends passive index investing with active opportunity bets.
Most companies are pulling guidance. Starbucks just pushed its higher.
The coffee chain raised its outlook for the full year on Tuesday, which is rare in a quarter when the U.S.-Iran war has CEOs slashing forecasts to cover fuel and energy shocks.
Starbucks (SBUX +5.55%) reported $9.53 billion in revenue for the quarter ended March 29, beating Wall Street's $9.16 billion estimate, while adjusted earnings came in at 50 cents a share versus the 43 cents analysts expected.
Net sales rose about 9%, and global same-store sales - which only count cafes open at least a year - grew 6.2% against a Wall Street estimate of 4%.
The U.S. did most of the heavy lifting, with same-store sales climbing 7.1% on a 4.3% jump in transactions. That's two straight quarters of traffic growth in a country where Starbucks had been losing customers.
CEO Brian Niccol said this was the "turn in our turnaround." He's been running a different playbook by cutting back on discounts, fixing cafe operations, adding new menu items, and bringing back the seating Starbucks had ripped out years ago.
"We haven't seen this transaction strength in years," Niccol said on the earnings call.
CFO Cathy Smith said the sales lift came from across the menu, including new artisanal bakery items and protein cold foam.
Starbucks now expects global and U.S. same-store sales to grow at least 5% for the full fiscal year, up from 3%. Adjusted earnings per share is forecast at $2.25 to $2.45, up from $2.15 to $2.40.
Niccol said gas prices haven't changed Starbucks customer behavior so far, and same-store sales growth has continued at a similar pace into April.
Outside the U.S., growth was weaker, with international same-store sales rising 2.6% and China barely moving at 0.5%. Starbucks has been leaning on discounts in China, which lifted traffic 2.1% but pulled the average ticket down 1.6%.
That story is changing this quarter. Boyu Capital just closed on a 60% stake in Starbucks China, which means the chain will no longer report the country's standalone results.
Shares rose about 5% in after-hours trading. The next test is whether Niccol can hold the U.S. transaction line if gas prices keep climbing.
