Research Update: Starbucks Corp. Rating Lowered To 'BBB+' On New Shift In Financial Policy, Increased Share Buyback; Outlook Stable

Coffee retailer Starbucks Corp. announced it would raise total shareholder capital payments to $25 billion in the face of a same-store sales growth rebound that is taking longer than planned. Starbucks plans to fund the higher return of capital with additional debt and operating capital flows that we believe is indicative of a less conservative financial policy. We are lowering the corporate credit rating on the company to 'BBB+' from 'A-' because of higher debt and credit measures that will be measurably worse than our previous expectations. The stable outlook reflects our view that leverage will remain in the mid-2x area over the next two years if the company balances debt-funded share repurchases with the timing of success in its

...+ Coffee retailer Starbucks Corp. announced it would raise total shareholder capital payments to $25 billion in the face of a same-store sales growth rebound that is taking longer than planned. + Starbucks plans to fund the higher return of capital with additional debt and operating capital flows that we believe is indicative of a less conservative financial policy. + We are lowering the corporate credit rating on the company to '###+' from 'A-' because of higher debt and credit measures that will be measurably worse than our previous expectations. + The stable outlook reflects our view that leverage will remain in the mid-2x area over the next two years if the company balances debt-funded share repurchases with the timing of success in its various store initiatives....

Research Update