strategic-management

132 SHARYNN TOMLIN
EXHIBIT 2 Starbucks’ Income Statement (values in 000’s)
PERIOD ENDING 28-Sep-08 30-Sep-07 1-Oct-06
Total Revenue $10,383,000 9,411,497 7,786,942
Cost of Revenue 4,645,300 3,999,124 3,178,791
Gross Profit 5,737,700 5,412,373 4,608,151
Operating Expenses
Research Development — — —
Selling General and Administrative 4,531,200 3,999,274 3,420,925
Non Recurring 153,300 - (93,937)
Other 549,300 467,160 387,211
Total Operating Expenses — — —
Operating Income or Loss 503,900 945,939 893,952
Income from Continuing Operations
Total Other Income/Expenses Net 9,000 2,419 12,291
Earnings Before Interest And Taxes 512,900 1,056,364 906,243
Interest Expense 53,400 — —
Income Before Tax 459,500 1,056,364 906,243
Income Tax Expense 144,000 383,726 324,770
Minority Interest — — —
Net Income from Continuing Ops 315,500 672,638 581,473
Non-recurring Events
Discontinued Operations — — —
Extraordinary Items — — —
Effect of Accounting Changes — — (17,214)
Other Items — — —
Net Income $ 315,500 $ 672,638 $ 564,259
Source: www.starbucks.com
Financial Position
Starbucks’ income statements and balance sheets shown in Exhibits 2 and 3 reveal
continuous growth in revenues, but a 47 percent drop in earnings in one year. For the 26
weeks ending March 2009, Starbucks’ revenues decreased 7 percent to $4.95 billion and
net income decreased 72 percent to $89.3 million. Moody’s Investors Service recently
downgraded Starbucks’ credit ratings.
Fiscal 2009 Targets
Starbucks expects to add approximately 20 net new stores to its global store base in fiscal
2009. This plan includes closing approximately 425 company-operated stores in the
United States and adding of approximately 60 company-operated stores internationally.
The company plans to open approximately 65 net new licensed stores in the United States
and approximately 320 net new licensed stores internationally. Capital expenditures for
fiscal 2009 are expected to remain unchanged, at approximately $600 million.
Segments
Starbucks has three reportable operating segments: United States, International, and
Global Consumer Products (CPG).
UNITED STATES The U.S. operations represent 80 percent of total company-operated
retail revenues, 55 percent of total specialty revenues, and 76 percent of total net revenues