Strateji, İş Geliştirme, M&A, Yönetim
Growth by itself does not create value. If ROIC is lower than cost of capital, growth destroys value.
As there is no return in most of “#unicorns”, these are extremely successful at #value destruction.
Have a look at Gorillas: “Over the past 12 months, it was, on average, losing more than €1.50 for every €1 it generated in net revenue”
Source: Jefferies Research
Petrol fiyatları daha uzun yıllar bu seviyelerde kalabilir…
When in comes to strategy, it pays to have a closer look at the global market leaders which are -in general- the quality assets in terms of their operations, services and financials performance.
As discussed before, #Starbucks is one these with sticky and loyal customer base.
It hosted Investor Day on 9/13 at which the management surprised the market players by guiding 3-year outlook of EPS growth 15-20%, driven by investments in partners, customers and stores. The announced algoritm includes 10-12% revenue growth, global unit growth of 7% and US SSS (same store sales) 7-9% and progressive #marginimprovement.
Demand for the company’s products show no slowdown despite price incereases. Analysts argues that this achievement is closely tied to a number of factors including its sophisticated digital ecosystem, most frequent customer base in restaurants (1-2x a week), product portfolio that is difficult to replicate i.e. highly personalized product mix. The latter is also a serious challenge in terms of store productivity. Majority of the bestseller products at #SBUX (Cold Brew for instance) have labor intensive processes. This not only increases average #waitingtime by customer at the delivery desk (which is an important problem if someone is waiting you at a table or if you are just passing by a store) but also increases the pressure on the staff in the stores that are designed to fill 1,200 orders daily but actually serve around 1,500 on average.
Management is planning to leverage on the technology (#automatedordering for beverages, coffee and merchandise, #loadbalancing between stores to deal with peak hour demand, deployment of AI tools to improve wait times) and HR tools (better compensation, career planning) to deal with “good problems” they have in the system under consistently increasing demand. Will have a close eye on these fronts.
It will also be interesting to track what the management shall do for the Delivery which is a small (2% of revenues) but growing channel for the company. SBUX has an exclusive partnership with Uber Eats which shall become non-exclusive following the planned launch with DoorDash next year.
If the guidance will be achieved, SBUX could well be benchmarked with the Tech stocks in terms of growth. Comparing coffee with semiconductors or online advertisement!
Strategy is a great domain to involve.
I read Jamie Dimon (CEO of JPMorgan) emphasizing the benefits of organic growth at the expense of M&A:
“ Companies talk about acquisitions like that is what is going to save them. It’s not. What is going to save us is organic growth. Better products, better services, better bankers, better technology, hiring and training better people. Organic growth is harder and better than acquisitions. Most companies don’t do it because growing a sales force is hard. Opening branches is hard. Most people come up with a million reasons why they don’t do it.”
Hope investment banking division of JP and their clients will not hear this : ))
My view: When it comes to shareholder value creation, organic growth is a great way to deliver provide that the return marginal sales is high compared to the cost of marginal capital needed to fund the growth. However, bolt-on acquisitions also do create great deal of value if the targeting, valuation, transaction and integration is executed in the right way.
Instance? Look at the deals #Sika and #SaintGobain has been closing each year.
#Digital advertising market is going through a serious change for the last couple of years. State-level privacy laws in the US and platform privacy policy decisions (ATT of #Apple for instance) those have propelled are changing the ownership of the data available in the web and platforms and the ways it could be deployed by the platforms and advertisers.
Once having their utmost privilege to the abundant “first-party” user data and freedom to process these to create a well-crafted audiance “profiles” for the advertisers, platform companies such as Facebook and Google are trying to turn their apps into content and app distribution portals. AMP (Google) and Instant Articles (Facebook) are the recent examples of this trend. That is happening because “hub-and-spoke” model* of digital advertising (summarized at the end of this article) is not working well anymore.
And that is the primary reason behind recent collapse of #Meta share price as its first-party data (your likes, comments and inputs into the groups) is not much helpful for #targeting as your purchases in a mobile game or on the web.
So what is the next?
Many companies (advertisers) are developing their own proprietary ad network. Yes, that is.
Reason being that will allow them to #monetize their own data (and #Apple is among them).
Just to provide a couple of instances:
> Walmart is expanding its ad business through M&A
> Following UberEats, Doordash launched an ad platform.
> Zoom is introducing ads to its for free users
> Ironsource acquired an ad network Tapjoy…
So dear investors, get ready to see “Ad Network” lines in the 10-Ks of listed companies soon.
And sorry for those large platforms, those good old days seems to be too far away to make a good comeback. They, certainly, will try to adapt to the new circumstances.
*The model was based on operating a data warehouse full of usage “signals”, converting those signals into #targeting parameters, applying those to the ad inventory and creating positive feedback loop for the advertisers through engagement data.
Quality of the asset is of significance when it comes to #valueinvesting. Under a cloudy sky, it is even more so. #SBUX is one of those names in consumer universe that I feel the need to follow closely.
What makes #SBUX a quality asset?
The question that should be asked in the boards of all consumer/restaurant players around the world I believe.
A couple of elements relevant to #SBUX through my lens:
> Managing expectations of its own people well. “Because if we want to exceed the expectations of the customers, we have to exceed the expectations of our people” (Schulz explaining further increases in wages beign “ahead of the curve” at discussion of F2Q22 results)
> Ensuring customer continuity. Hugely successful Rewards programme which currently has 27.4Mn members in the US! By F3Q22, the spend by rewards members is at record levels. %58 of revenues come from Rewards members which showes huge #brandloyalty, which is challenging to create in restaurants/ food retail universe. What I like (for cash flow yield) in the Members program is the following: Customers #prepaid $11Bn of their purchases in 2021!
> Cash-on-cash returns (what a shareholder could like to see more?). It is around 70% at F3Q22. ROIC being 101%.
Going through F3Q22 numbers, one should note that US SSS of 9% is not a great performance compared to its universe where +15% is average topline growth in the same quarter. However, I liked the shift to cold beverages (75% of the beverages) which is difficult to replicate at home and higher partner engagement scores which has a track record of converging into SSS.
Her birey kendisini gündelik hayatın haksızlıklarının üzerine çıkarmalı, ancak bu sayede ‘kaderin cilveleri’ ile iyilik arasındaki çelişkiyi aşarak, nihai ‘İyi’ ile birleşebilir.
Benim için geçen haftanın kitabı olan, Ortaçağ Avrupa’sında en çok okunan kitapların başında gelen “Felsefenin Avuntusu Üzerine” eserinden aklımda kalan, bu önerme oldu.
Kitabın yazarı, imparatorluğun çöküşünü takiben, Ostrogot Theodorich’in hüküm sürdüğü, yaşlı ve bakımsız Roma’da sarayın himayesinde felsefe çalışan, Aristo’nun mantıkla ilgili tüm kitaplarını Latince’ye çeviren Boethius’tur.
Theodorich’e ihanet ile suçlanan Boethius’un, idamını beklerken hapishanede yazdığı “Felsefenin Avuntusu Üzerine”, Dante’ye -kendi ifadesine göre- sevgilisi Beatrice’nin ölümünün ardından tahammül kazandıracaktı.
Boethius’un bu savı, akla Augustinus’un (ve esasında onu esinleyen Plotinus’un) iyi “idea”sını ve onun ancak sevgi aracılığıyla bulunabileceği önermesini getiriyor.
Her şey zıddı ile mevcut ise, bu kısa notu, Uruguay’ın bilge adamı (eski devlet başkanı) Jose “Pepe” Mujica’nın sözü ile bitirmek ilginç olabilir: “Bazen iyi olan kötüdür, kötü olan ise bazen iyiye yol açar”
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