Starbucks Financial Analysis: Annual Sales Revenue and Quarterly Earning Report of 2012-13

Starbuck is a Seattle based American company and the largest “Coffee House” company in the world. It was first opened by three partners who were students at the University of San Francisco. They were Jerry Baldwyn (English teacher), Zev Siegl (history teacher) and Gordon Bowker (writer) who opened the original store on March 30, 1971 at Pike Place Market, in Seattle, Washington. The conglomerate was named after Starbuck, a character in Herman Melville’s novel Moby Dick.

Starbucks Corporation (incorporated on November 4, 1985) purchases, roasts and sells coffees along with hand crafted one and sell a variety of hot and cold beverages, pastries, snacks and fresh food items from own stores. They also have a license to sell by own brand through other channels stores. The company operates in four segments: (i) USA; (ii) Europe, Middle East and Africa (EMEA); (iii) China/Asia Pacific (CAP) and (iv) Channel Development. The first store outside USA and Canada was opened in the middle of 1990s. As per 2012 year’s statistics, it has presence with 28,496 stores in 62 countries of which number of stores in the USA are 17,572, 1,324 in Canada, 989 in Japan, 851 in the People’s Republic of China, 806 in the United Kingdom, 556 in South Korea, 377 in Mexico, 291 in Taiwan, 206 in the Philippines, 179 in Turkey, 171 in Thailand, and 167 in Germany.

Tata Starbuck Ltd is a 50/50 joint venture between Tata Global Beverages and Starbuck Corporation that presently owns and operates 28 outlets in India (Delhi 12, Mumbai 13, Pune 2 and Bangalore 1) as Starbucks “A Tata Alliance” brand. The company sale coffee and hand crafted products with 100% local coffee to the Indian and overseas market. The company has plans to open total 50 outlets in India with an investment of US$ 61 million (Rs.400 crore).

 

Annual Sales, Annual Revenue, Annual Profits

The revenue of the company has constantly risen for the last four years. Although the gross profit margin has remained flat, fall in the operating income in the September 2013 year ending has reduced the EPS at $0.01. Consequently the net margin has also fallen to 0.06% from last year’s 10.40% when the operating income was maximum at $1,997 million within previous 5 year zone. This huge drop in operating income has made the whole picture gloomy. During the fiscal year ended 2012 on September 30, 2012, the total net revenues were Americas (75%), EMEA (9%), CAP (5%), and Channel Development (10%). The Other category consisted of approximately 1% of total net revenues.

Items Sep 2013 Sep 2012 Sep 2011 Sep 2010 Sep 2009
Revenue USD Mil

14,892

13,300

11,700

10,707

9,775

Gross Margin %

57.1

56.3

57.7

58.4

55.8

Operating Income USD Mil

-325

1,997

1,729

1,419

562

Operating Margin %

-2.2

15.0

14.8

13.3

5.7

Net Income USD Mil

8

1,384

1,246

946

391

Gross Profit

8509.9

7486.2

6784.9

6209.9

5454.5

Earnings Per Share USD

0.01

1.79

1.62

1.24

0.52

 Profitability 

Tax Rate %

32.75

31.09

34.01

30.11

Net Margin %

0.06

10.40

10.65

8.83

4.00

Asset Turnover (Average)

1.51

1.71

1.70

1.79

1.74

Return on Assets %

0.08

17.76

18.12

15.81

6.95

Financial Leverage (Average)

2.57

1.61

1.68

1.74

1.83

Return on Equity %

0.17

29.15

30.91

28.14

14.12

Return on Invested Capital %

-0.17

25.71

26.70

23.64

9.89

Interest Coverage

-7.18

63.97

55.39

44.95

15.30

Operating Margin             5.75             14.02      

17.77

            13.26             5.75

The following table shows the income of Starbuck in immediate preceding twelve months. The Company mainly generates its revenues through Company-operated stores which accounted 79% of its total net revenues in the financial year in 2012. Starbuck also earns through consumer packaged goods (CPG), licensed stores, and Foodservice operations. Revenues from sales of consumer packaged include both domestic and international sales of packaged coffee and tea, tea products to grocery, single-serve coffee, variety of ready-to-drink beverages, warehouse club and specialty retail stores. Revenues earned sales of consumer packaged goods comprised 8% of total net revenues in fiscal 2012.

Income Statement for Twelve Months  
Revenue $ 14.89 Billion
Revenue Per Share $19.88
Quarterly Revenue Growth (year to year basis): 12.80%
Gross Profit 7.49 Billion
EBITDA 2.86 Billion
Net Income 8.30 Million
Diluted EPS $ 0.01

Starbuck Earnings (Last Four Quarters)

Starbuck showed a marked improvement in the comparable store sales the company but made a loss of net income in the last quarter because it paid a whopping $2.784.1 (including $527 million for interest and legal fees) billion under an arbitration to Kraft Foods Inc that used to market and distribute bags of Starbucks coffee in grocery stores since September 1998. Starbucks ended the contract in March 2011, giving the business to privately held Acosta Inc.

The contract was scheduled to expire on March 2014 but if not terminated by either party, it would have to be renewed automatically for successive 10-year terms. Kraft Foods Inc split in to two separate companies in October 2012 as Mondelez International Inc and Kraft Foods Group Inc. Mondelez International Inc. will receive the entire compensation on the Starbucks-Kraft dispute’

Margin Sep 29,2013 June 30, 2013 March 31, 2013 Dec 31, 2012
Revenues 3,795.0 3,741.7 3,555.9 3,799.6
Total Revenues 3,795.0 3,741.7 3,555.9 3,799.6
Cost Of Goods Sold 1,633.7 1,597.6 1,530.4 1,620.7
Gross Profit 2,161.3 2,144.1 2,025.5 2,178.9
Selling General & Admin Expenses, Total 1,300.1 1,333.7 1,268.7 1,320.8
Depreciation & Amortization, Total 166.1 153.3 153.1 148.9
Other Operating Expenses 107.3 105.3 112.1 132.5
Other Operating Expenses, Total 1,573.5 1,592.3 1,533.9 1,602.2
Operating Income 587.8 551.8 491.6 576.7
Interest Expense -9.1 -6.3 -6.1 -6.6
Interest & Investment Income 0.8 5.0 12.1 16.8
Other Non-Operating Expenses, Total 107.5 61.9 56.0 34.8
Other Non-Operating Income (Expenses) 30.9 -1.9 -1.0 -13.0
Gain (Loss) On Sale Of Investments 44.9 35.2
Total Other Unusual Items -2,784.1 -0.6
EBT, Including Unusual Items -2,052.2 612.4 588.8 621.1
Income Tax Expense -820.1 194.6 198.1 188.7
Minority Interest In Earnings 0.1 -0.3 -0.2
Earnings From Continuing Operations -1,232.1 417.8 390.7 432.4
Net Income -1,232.0 417.8 390.4 432.2
Net Income To Common Including Extra Items -1,232.0 417.8 390.4 432.2
Net Income To Common Excluding Extra Items -1,232.0 417.8 390.4 432.2

About the Author

Sandra
I am working as Editor in Chief for Financeninvestments.com. Writing on Financial Topics is my passion. You can find me on , Seeking Alpha Instablogs or join our Facebook Community, s. FNI is a great Community for financial bloggers and writers. Get everything you wanted to know about your finance and investment related matters such as mutual funds, banking, retirement, economics and much more.

Be the first to comment on "Starbucks Financial Analysis: Annual Sales Revenue and Quarterly Earning Report of 2012-13"

Leave a comment

Your email address will not be published.


*