I put this together on FC as part of the 101 Equity Analysis Project. Do you think we could use this as the basis for an FAQ for this board? Have I missed anything important so far? 5. Business Become a Complete Fool
For reference, the 101 Company Profile template is here:
with this addendum
My sincere thanks to Stephane for the help in putting this together
1. Investor Relations:
Investor Relations S-FP1
P.O. Box 34067
Seattle, WA 98124-1067
206/447-7950 ext. 87118
Mellon Investor Services, LLC
In the United States:
Outside the United States: (201) 329-8660
(Monday through Friday, 6:00 a.m. to 4:00 p.m. PT)
Company website: www.starbucks.com
The site provides SEC filings since 1994 via http://ir.10kwizard.com/?source=518
However, it doesn't provide archived conference calls at the site
Fiscal year end is September
1971 : Starbucks opens with one store in Seattle's Pike Place Market.
1982 � Howard Schultz joins as Director of Retail Operations and Marketing
1985 : Unable to persuade Starbucks' owners of his vision for Starbucks as we know it today, Schultz leaves to set up Il Giornale, an Italian style 'coffee bar'.
1987 : Il Giornale acquires Starbucks assets and changes its name to Starbucks Corporation.
1992 : Listed on NASDAQ as SBUX on June 26 at $17 per share, or a split-adjusted price of $1.0625 for the Company's four subsequent 2-for-1 stock splits. Starbucks is registered in the state of Washington
1995: Starbucks Coffee International forms joint venture with SAZABY Inc., to open Starbucks coffeehouses in Japan � its first international venture
1996 : Total stores = 1,015
1998: Acquires Seattle Coffee Company (UK) with more than 60 retail locations and Pasqua Inc., a San Francisco based coffee retailer
1999: Acquires Tazo, a Portland, Oregon based tea company and Hear Music, a San Francisco based music company
Total stores = 2,135
2000: Howard Schultz transitions from Chairman and CEO to Chairman and Chief global strategist - Orrin Smith promoted to President and CEO
Total stores = 3,501
2001: Total stores = 4,709
2002: Total stores =5,886
2003 : Acquires Seattle Coffee Company, which includes Seattle's Best Coffee� (SBC) and Torrefazione Italia� (TI) coffee brands
Total stores = 7,225
97% of shares outstanding are available as float, and the # of shares has increased 7.4% from '99 to '03.
Only 3% is held by insiders, with Schultz being the largest single holder. Of the ~10MM shares held by insiders, net ~12% were sold in the last 6 months
Institutions hold >70% - net 8% of those shares were sold in the last 6 months
Short interest was 3.84% of the float @ Oct 04
Starbucks has spelt out its Corporate Governance principles and Board Committee charters and posted them on its website:
- Corporate Governance Principles and Practices for the Board of Directors
- Code of Ethics for CEO and Finance Leaders
- Director Nominations Policy
- Procedure for Communicating Complaints and Concerns
- Audit and Compliance Committee Charter
- Compensation and Management Development Committee Charter
- Nominating and Corporate Governance Charter
- Policy for Pre-Approval of Independent Auditor Services
Its Employee Stock Options policy is spelt out in its 10K ('03 10K � Ex 10.1 page 22), stipulating a maximum of ~70MM shares authorized for issuance "(i) to attract and retain the most talented personnel available for positions of substantial responsibility,
(ii) to encourage ownership of the Company's Common Stock by key Employees of
and Consultants to the Company and its Subsidiaries, and (iii) to promote the
Company's business success by providing both rewards for exceptional performance
and long-term incentives for future contributions."
Starbucks also posts an annual report on Corporate Social Responsibility on its site, in addition to providing several examples of its commitment to social responsibility, e.g. supporting coffee farmers, environment-friendly business practices, embracing supplier diversity etc.
Starbucks purchases and roasts high-quality whole bean coffees and sells them, along with fresh, rich-brewed coffees, Italian style espresso beverages, cold blended beverages, a variety of complementary food items, coffee-related accessories and equipment, a selection of premium teas and a line of compact discs, primarily through Company operated retail stores. Starbucks sells coffee and tea products through other channels, and, through certain of its equity investees, Starbucks also produces and sells bottled Frappuccino� and Starbucks DoubleShot TM coffee drinks and a line of premium ice creams. These non-retail channels are collectively known as "Specialty Operations."
The Company has two operating segments, United States and International, each of which include Company-operated retail stores and Specialty Operations.
Company-operated Stores: End 2003, Starbucks had 4,546 such stores: 3,779 in the US, 373 in the UK, 316 in Canada, 40 in Australia and 38 in Thailand, collectively generating 85% of total net revenues during fiscal 2003.
Specialty Operations take various forms including licensing arrangements, foodservice accounts and other initiatives related to the Company's core businesses. During fiscal 2003, specialty revenues accounted for approximately 15% of total net revenues.
Licensed/Franchised stores: End 2003, the Company had a total of 2,679 such stores - 1,422 in the US and 1,257 internationally � Asia-Pacific 968, EMEA 176, Americas 113. Product sales to and royalty and license fees from these stores accounted for approximately 39% of specialty revenues in fiscal 2003.
Recently Starbucks has been buying back ownership of some of its international stores � e.g. Singapore, Switzerland, Austria,
Starbucks competes in the Services sector of the Restaurant industry, with the 2nd largest Market Cap after McDonald's.
Major Customers: The Company sells whole bean and ground coffees, including the Starbucks�, Seattle's Best Coffee� and Torrefazione Italia� brands, to institutional foodservice companies that service business, industry, education and healthcare accounts, office coffee distributors, hotels, restaurants, airlines and other retailers. In fiscal 2003, the Company had approximately 12,800 foodservice accounts, including Hyatt, United Airline, Staples, Sysco etc. and revenues from these accounts comprised approximately 27% of specialty revenues.
For the rest of the business, individual consumers in various markets constitute its largest customer group.
Major Competitors: Starbucks competes across a huge spectrum � at home, at work, in transit, at leisure and entertainment venues.
As a product, it competes not just with other kinds of coffee but also with other kinds of refreshment - tea, sodas, juices, water, beer, liqueur � you name it. Almost every opportunity to drink something is a Starbucks opportunity � and most consumers are continuously making choices about whether to have a Coke, a Minute Maid, an Earl Grey, a lemonade, a Bud or a Cointreau, depending on the situation.
As a service, it competes with a host of alternatives � diners, restaurants, bars, the library, office, home, hotels, frequent flyer lounges, even a park bench.
In terms of competitors focused on comparable offerings, in the US they are, among many others, Peet's, Gloria Jean's, Coffee People, New World and Caribou. Internationally, some key competitors are: Japan - Tully's and Doutour; UK � Coffee Republic, Costa; Australia : Coffee Bean & Tea Leaf, Hudsons.
Major suppliers: Starbucks sources Arabica coffee from almost every continent bridging the Tropic of Cancer and the Tropic of Capricorn � Mexico and Hawaii in N. America, Brazil and Peru in S. America, Ethiopia and Kenya in Africa, Thailand and Indonesia in Asia. In 2003, Starbucks paid average $1.20 per lb. For green coffee (excluding freight) predominantly via direct negotiation of prices (as compared to $0.55-0.70 per lb. for commercial grade Arabica).
The company expects vendors to conform to its Supplier Code of Conduct, emphasizes non GM ingredients, and actively supports farmers through programs like the Free Trade movement.
The Company's mission is: "Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow."
It spells out its value system in the following guiding principles :
"Provide a great work environment and treat each other with respect and dignity.
Embrace diversity as an essential component in the way we do business.
Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee.
Develop enthusiastically satisfied customers all of the time.
Contribute positively to our communities and our environment.
Recognize that profitability is essential to our future success."
The Company's retail goal is to become the leading retailer and brand of coffee in each of its target markets by selling the finest quality coffee and related products and by providing superior customer service, thereby building a high degree of customer loyalty.
For the next three to five years, the Company estimates that revenues will grow by approximately 20% per year with earnings per share increasing by 20%-25% per year and comparable store sales growth of 3% to 7%.
Top management succession is transitioning through its second generation with the announcement of Orrin Smith's retirement in Mar '05 after a 5 year stint as President and CEO. Smith will be succeeded by Jim Donald, Starbucks President, North America. Meanwhile Howard Schultz continues as Chairman, his role since Smith took over as CEO. Schultz regularly meets with analysts and media to discuss company performance and plans, and focuses on international growth.
During Smith's CEO tenure Starbucks increased store count from 2,498 and annual total net revenues of $1.7 billion at fiscal year end 1999 to more than 8,500 locations and more than $5 billion in annual total net revenues today. Over that same time period, Starbucks market capitalization grew from $4.5 billion to more than $18 billion and the Company's split-adjusted, diluted earnings per share increased from $0.27 to Starbucks target of $0.94 to $0.95 for fiscal 2004. Smith is also credited with sponsoring Starbucks Corporate Social Responsibility programs.
Both Schultz and Smith men were paid a salary plus bonus of $2.55 million in 2003, about average with their peer group. Starbucks rewards executives mostly for achieving annual earnings-per-share targets and then pays them a total compensation package based on a scaled comparison with peers.
The company lays special emphasis on its employees (called 'partners') by putting them first in its mission statement: "Provide a great work environment and treat each other with respect and dignity."
For the fifth time, Starbucks was listed among Fortune's "100 Best Companies to Work For." In 2003, Starbucks received its highest ranking of 47 on the list � up from 58 in 2002.
Some aspects of the workplace environment are:
- It's customary not to capitalize partners' titles at Starbucks, which signals that everyone, regardless of their position, contributes to the company's success.
- Through Mission Review, partners are encouraged to voice opinions about whether or not company practices are consistent with the Mission Statement and Guiding Principles
- The Standards of Business Conduct Helpline is open for calls around the clock so that partners can speak directly with non-company, impartial agents
- There are 30-plus recognition programs at Starbucks that are used to highlight the achievements of partners.
- CUP Fund is an emergency assistance program available only to Starbucks partners funded exclusively by partners through payroll deductions and special fundraisers
� In 1987, Starbucks became one of the first retail companies to offer part-time partners the same comprehensive health benefits that full-time partners receive. � Starbucks pays approximately 75% of the costs of healthcare coverage for U.S. partners.
� Bean Stock, Starbucks stock option plan, is offered to all eligible part-time and full-time partners in the U.S., Canada, the UK, Hong Kong and Netherlands.
� S.I.P. (Stock Investment Plan) allows all eligible part-time and full-time partners in the U.S. and Canada to purchase company stock at discounted prices. A similar plan � Starbucks Corporation Share Save Plan � is available to eligible partners in the UK.
� Starbucks 401(k) plan, Future Roast, is a savings program open to all eligible U.S. partners. Contributions made by partners are matched by Starbucks, and immediately vested. Canadian partners receive a 25% match on their contributions to the Registered Retirement Savings Plan (RRSP), which is similar to the 401(k).
Starbucks is not unionized, and has resisted the recent unionization efforts of some of its Manhattan store partners by having them arrested. In Canada, 11 of Vancouver's 105 stores are unionized, and the union spokesman says Starbucks is trying to break the union which is seeking a 20 per cent pay hike over three years, a relaxed dress code, more vacation time, education leave, paid sick leave and laundry allowances.
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I put this together on FC as part of the 101 Equity Analysis Project. Do you think we could use this as the basis for an FAQ for this board? Have I missed anything important so far?
Become a Complete Fool