What were the main drivers of revenue growth for Starbucks in this quarter?

Revenue growth was primarily driven by the expansion of the company's store base, with 1,279 new company-operated retail stores opened in the last 12 months. Additionally, comparable store sales increased by 4% for the quarter, indicating healthy demand at existing locations. Specialty operations, including licensing and foodservice, also contributed significantly to revenue growth.

How did the company's profitability perform compared to the previous year?

Starbucks demonstrated improved profitability, with net earnings increasing by 18.5% to $150.8 million. Diluted earnings per share saw a healthy increase from $0.16 to $0.19. The operating margin remained stable at 10.7%, showing the company's ability to manage costs effectively amidst revenue growth and increased expenses like cost of sales.

What is Starbucks' strategy for future growth?

Starbucks continues its aggressive growth strategy focused on opening new retail stores, both company-operated and licensed, with plans to open approximately 2,400 new stores globally in fiscal year 2007. The company also aims to drive growth by increasing comparable store sales through improved customer service, innovative products, and faster service. Internationally, Starbucks is selectively increasing its equity stake in licensed operations and investing in emerging markets like China.

How is Starbucks managing its capital and returning value to shareholders?

Starbucks is actively managing its capital through a share repurchase program, having bought back approximately 14.3 million shares during the quarter. The company also has a revolving credit facility and a commercial paper program to support its operations, capital expenditures, and potential acquisitions. Management believes its cash flow, liquid investments, and borrowing capacity are sufficient to fund its operations and growth initiatives.

SBUX 10-Q Quarterly Report Q3 FY2007 — Revenue, Net Income, EPS

Summary

Starbucks Corporation reported solid financial performance for the quarter and first half of fiscal year 2007, demonstrating continued growth driven by strategic expansion and comparable store sales. Total net revenues increased by 20% for the 13-week period ended April 1, 2007, reaching $2.3 billion. This growth was fueled by a 20% rise in company-operated retail revenues, largely due to the opening of 1,279 new stores over the past year and a 4% increase in comparable store sales. Specialty operations also saw a significant 16% increase in revenues, highlighting diversification. The company maintained a strong focus on operational execution across its U.S. and international segments, aiming for a balance between core business growth and long-term expansion. Despite increased costs in areas like Cost of Sales (including occupancy) and distribution, Starbucks managed to maintain its operating margin at 10.7% for the quarter, reflecting efforts to control other operating expenses and general and administrative costs. Net earnings saw an 18% increase, reaching $151 million, with diluted earnings per share rising to $0.19. The company continues its aggressive store opening strategy, planning for approximately 2,400 new stores in fiscal 2007, and also actively engaged in share repurchases as part of its capital management program, underscoring a commitment to shareholder value.

Key Highlights

1Total net revenues increased by 19.6% to $2.26 billion for the 13 weeks ended April 1, 2007, compared to $1.89 billion in the prior year.
2Company-operated retail revenues grew by 20.2% to $1.92 billion, driven by new store openings and a 4% increase in comparable store sales.
3Specialty revenues, including licensing and foodservice, increased by 16.4% to $333 million.
4Net earnings rose by 18.5% to $150.8 million, with diluted EPS increasing to $0.19 from $0.16 year-over-year.
5Starbucks opened 1,288 new stores in the first half of fiscal 2007 and plans to open approximately 2,400 in fiscal 2007.
6The company repurchased approximately 14.3 million shares of common stock during the 13-week period for an average price of $32.51 per share.
7Operating margin remained stable at 10.7% for the 13-week period, despite increased cost of sales.

STARBUCKS CORP Quarterly Report for Q3 Ended Apr 1, 2007

Summary

Key Highlights

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