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Starbucks Financial Analysis

Autor:   •  November 28, 2011  •  Case Study  •  2,350 Words (10 Pages)  •  2,704 Views

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Starbucks is honored to have just celebrated its 40th year anniversary in providing exceptional coffee, world class customer experience, commitment to its employees and dedication to operating as a responsible corporate citizen. Starbucks Corporation is an international coffee and coffeehouse chain based in Seattle, Washington. In 1971, three friends, Jerry Baldwin, Zev Siegel, and Gordon Bowker, decided to open a coffee store at Pike's Place Market in Seattle, Washington. They named this store Starbucks Coffee, Tea and Spice. This store sold coffee beans and high quality coffee making equipment. In 1982, the three friends hired Howard Schultz to manage the sales and marketing division of the company. After going public in 1992, Starbucks is now the largest coffeehouse company in the world with roughly 17,000 stores in 50 countries, over 11,000 of which are in the US alone. During our presentation, we will compare Starbucks to Caribou Coffee, its closest competitor, with 541 stores across the US.

Caribou Coffee with its second place rank in the coffee world is still only a fraction of the size of Starbucks. In last year's financial statements, Caribou showed sales of $284 million and a net income of only $9.7 million compared to Starbucks' $10.9 billion in sales and $945 million net income.

Starting as a local coffee bean roaster and retailer in Seattle but quickly multiplying in the 90's, Starbucks was opening a new store every business day into the millennium. In the mid 1990's, the first store was opened outside the US and Canada and now the overseas stores make up almost 1/3 of all stores. Starbucks sells drip-brewed coffee, espresso-based hot drinks, coffee beans, pastries, snacks, salads, cold sandwiches, paninis, and other items such as hats, clothes, mugs and tumblers. They sell ice-cream and coffee in grocery stores. To celebrate 40 years of business, Starbucks is also putting out a variety of new food and drink products from its sweet new Petites that consist of cake pops, lemon squares and red velvet whoopie pies. Most recently, they are presenting their "Tribute Blend" which is in tribute to their customers, offering a blend of four of their highest quality beans all in one cup.

After having opened so many stores, Starbucks began to lose what made their coffee houses a great place for coffee lovers. Their stock went from a high $40 per share down to single digits in mid 2000. On the afternoon of February 26, 2008, shortly after Howard Schultz returned as CEO, he ordered all 7,100 US stores to close to retrain its 135,000 baristas in the art of pouring the perfect shot of espresso along with the preparation of the rest of its products. They planned to close 900 stores in the US in 2009 while opening 900 outside the US. Starbucks was on its way to bringing the soul back to the company and making its voice heard once again.


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