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.
The Business plan on Starbucks Coffee Company 2
Beauty is only skin deep, companies must look within to secure longevity. Before a company can successfully bring a mission statement and vision to fruition, they must take a good hard look at their business plan. A company must reflect upon internal strengths and weaknesses, external opportunities and threats, and consider the trends associated with each. The fundamental process of strategic ...
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 Starbucks’ customers. Howard Schultz described a “canopy brand” site that would represent a single online destination for customers to purchase Starbucks coffee, tea and music as well as products ranging from gourmet foods to furniture. On June 30, 1999 the company announced that its revised earnings estimates for fiscal 1999 of $0.54 per share would fall below analysts’ consensus estimate of $0.60 per share. In Starbucks’ after market-close announcement, it blamed its disappointing sales and earnings on its non coffee related businesses and difficulties and cost overruns associated with the launch of its Internet initiative. The company’s stock traded in the $35-$40 range after a two-for-one split on March 19, 1999, but fell 28% on the first day of trading after the announcement to close at $26.9375.
Some analysts were critical of Schultz’s move to offer a wide variety of non coffee-related products over the Internet. A restaurant analyst commented to The Wall Street Journal that “This Internet thing needs to go away. I don’t think it makes a lot of sense. I think they’ve lost their focus in an attempt to keep a growth rate up which ultimately is not supportable. Moving into the furniture business is straying an awfully long way from what they do extremely well.” As of June 2000, it appeared that the company had scaled back its e-commerce efforts to sale of coffee and coffee-related products and that its shares had largely recovered and returned to their June 1999 trading range. Starbucks’ latest company news and financial market performance can be found at Yahoo! Finance.
The Business plan on Swot Starbucks Coffee Company Products
SWOT Analysis StarbucksStrengthso Starbucks Corporation is a very profitable organisation, earning in excess of $600 million in 2004. The company generated revenue of more than $5000 million in the same year. o It is a global coffee brand built upon a reputation for fine products and services. It has almost 9000 cafes in almost 40 countries. o Starbucks was one of the Fortune Top 100 Companies to ...
Table 1 Starbucks Corporation Income Statements, 1998- Six Months Ended April 2, 2000 (in thousands, except per share amounts)
Six Months Ended April 2, 2000 Year-end 1999 Year-end 1998
Net revenues$1,031,680$1,680,145$1,308,702
Cost of sales and related occupancy costs461,651741,010 578,483
Store operating expense333,457543,572 418,476
Other operating expense30,72451,374 43,479
Depreciation and amortization61,24197,797 72,543
General and administrative54,76789,681 77,575
Merger expenses — — 8,930
Operating income89,840156,711109,216
Interest and other income3,6568,678 8,515
Interest and other expense–1,363 (1,381)
Earnings before income taxes93,496164,026 116,350
Income taxes35,34162,333 47,978
Net earnings$58,155$101,693 $68,372
EPS–Basic$0.32$0.56 $0.78
EPS–Diluted$0.30$0.54 $0.75
Shares used in calculation–Basic184,106181,842 88,055
Shares used in calculation–Diluted191,041188,531 91,885
Sources: Starbucks Corporation 1998 10-K and Business Wire, April 27, 2000.
