Fiscal Update and Analysis for Starbucks Corporation
Fiscal Update and Analysis for Starbucks Corporation
Starbucks Corporation continued its impressive growth after the close of the case, recording fiscal 1999 revenues and earnings of $1.7 billion and $101.7 million, respectively. The company's 1999 revenues represented a 28% increase over fiscal 1998 revenues, while the earnings increase represented a 25% increase over 1998's earnings before expenses related to the 1998 acquisition of the Seattle Coffee Company. The chain's same store sales increased 6% during 1999. During its first 30 weeks of 2000, revenues increased 33% over the same period in 1999 to $1.2 billion. Same store sales increased 9% over the comparable 30-week period in 1999. Starbucks income statements for fiscal 1998 and 1999 and the first six months of fiscal 2000 are presented in Table 1.
On April 6, 2000 Starbucks announced that effective June 1, 2000, Howard Schultz would step down as CEO to become the company's new Chief Global Strategist. Schultz would remain the company's chairman and Orin Smith, the current COO and President, would become the new CEO. The transition was said to allow Schultz to focus on global expansion and international brand development.
Starbucks undertook a number of initiatives in 1999 and 2000 to maintain its historical revenue and earnings growth. The company continued its domestic and international expansion, announced plans to make its premium home brewing equipment available through traditional retail outlets in addition to its own Starbucks locations, began an office coffee program, entered into a licensing agreement to open over 100 coffee bars in Albertson's supermarkets, and introduced a line of chocolate confections that would be sold in Starbucks' 2,498 locations. Starbucks also added organically grown coffees, extended its line of super-premium ice creams with six new flavors (including four non coffee flavors), introduced two new flavors of Frappuccino blended coffee drinks, and added cool beverages for summer that included iced coffee and blended juiced teas. In addition, Starbucks added 484 coffee shop locations in North America, the United Kingdom, the Pacific Rim, and the Middle East during the first 30 weeks of fiscal 2000.
Starbucks' stock experienced mediocre performance for the last half of 1999 and the first quarter of 2000 after the company announced in early June 1999 that its products and an array of non coffee products would be offered over the Internet to...