USA: Starbucks Reiterates Growth Targets
During the meeting, Starbucks reiterated its revenue growth target of at least 25 percent per year through fiscal year 2005. Starbucks executives highlighted the company's plan for rapid global retail store expansion as the key to continued strong earnings growth. The company believes that a global target of 10,000 stores by fiscal year 2005 is well within reach.
"I believe that we have dramatically underestimated the size of the global market, including the number of points of distribution and the power of the Starbucks brand," Orin Smith, president and chief executive officer, said.
"When our targeted growth rates are applied to current revenue and earnings targets, they result in more than $6.6 billion in revenues and $2.17-$2.64 earnings per share in fiscal year 2005," Michael Casey, chief financial officer, said.
"This year, I have traveled to many countries and have once again experienced the power of the Starbucks brand," Howard Schultz, Starbucks chairman and chief global strategist, said. "After visiting with customers and partners (employees) around the world and experiencing the overwhelmingly positive reception that Starbucks has received in new, existing and future markets, I am more convinced than ever that the Starbucks brand has universal appeal."
Peter Maslen, president, Starbucks International, told analysts that the company's international business reached profitability well ahead of the original plan, and set new targets for international store growth.
"We have exceeded our own expectations in virtually every market," Maslen said while noting that Starbucks today has 545 international locations in 19 markets. "By fiscal year 2003, we plan to have 1,500 locations, including 650 locations in Europe and the Middle East, 800 locations in Asia and 50 locations in Latin America."
Recently, the company announced that Switzerland would be the first continental European market where it would have a retail presence. Starbucks plans to announce entry into at least six European markets in the next 6 to 24 months.
As part of the company's continued growth, Maslen added that Starbucks is presently in discussion with potential partners in key northern and southern European countries. He added that there is the long-term potential for more than 10,000 locations outside North America and that Starbucks is uniquely positioned to take advantage of this great opportunity.
Domestically, Paul Davis, president, North American Operations, explained to analysts that in a recent internal survey, partners (employees) place Starbucks in the top six percent of companies in terms of job satisfaction. "The passion that our partners bring to their customers everyday is truly our number one competitive advantage," he said. "Our partners love what they are doing and we continue to look at ways to make their experience on the job more rewarding."
Davis also discussed new store designs that will enhance Starbucks customers' in-store experience and simplify the company's partners' ability to provide great customer service.
Davis said the company has the potential to grow the North American retail store base from its approximately 3,000 locations today to a long-term potential of 7,000 to 10,000 locations. In addition, Davis reiterated plans to open 450 company-operated and 400 licensed locations in North America during fiscal year 2001.
During the meeting, Starbucks executives also said that they continue to look at innovative initiatives and products to help sustain the company's high growth rate. The company's business alliances also continue to contribute significantly to earnings while providing great brand building opportunities.
"Through our valuable business alliances, we serve more than 20 million customers per month by providing convenient points of access, such as airport locations, grocery stores, book stores, hotels and airline flights," said Jim Alling, senior vice president, Business Alliances. "We have executed a strategy where the broad reach of the brand and various points of distribution has benefited this channel and has created positive momentum for the brand."
This announcement contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements, including anticipated store openings and trends in or expectations regarding the Company's operations, are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Actual future results and trends may differ materially depending on a variety of factors, including, but not limited to, coffee and other raw materials prices and availability, successful execution of internal performance and expansion plans, the impact of competition, the effect of legal proceedings and other risks detailed in the Company's annual and quarterly reports filed with the Securities and Exchange Commission.
Starbucks Coffee Company is the leading retailer, roaster and brand of specialty coffee in the world. In addition to its 3,500 retail locations in North America, the United Kingdom, the Pacific Rim and the Middle East, Starbucks sells coffee and tea products through its specialty operations, including its online store at Starbucks.com. Additionally Starbucks produces and sells bottled Frappuccino® coffee drink and a line of superpremium ice creams through its joint venture partnerships and offers a line of innovative premium teas produced by its wholly owned subsidiary, Tazo Tea Company.
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