Case Study Analysis Of Starbucks Corporation Stock

Starbucks Corporation (NASDAQ: SBUX) is one of the most recognizable brand names in the world. While the company is best known for its coffee shops, it generates business by selling other products through different channels.

The Business

Starbucks operates specialty coffee locations in 68 countries. The company sells high-quality coffee, tea and fresh food items through company-operated stores, and also licenses brands that are sold through other channels. Starbucks Coffee, along with brands such as Teavana and Tazo, are sold through grocery stores and other retailers. The company faces strong competition from other specialty coffee stores and quick-service restaurants.

The firm manages the operations of five distinct segments, which include three geographic regions. Starbucks manages an Americas segment for North America and South America, as well as a China/Asia Pacific segment. Business operations in Europe, the Middle East and Africa are combined into a third segment. Product sales through other stores and channels are managed in the channel development segment and the all-other segment.

2015 Earnings Results

For the fiscal year that ended on Sept. 27, 2015, Starbucks generated diluted earnings per share (EPS) of $1.82 per share, compared to a $1.35 diluted EPS total for fiscal year 2014. The increase is partially due to a fair market value adjustment for the company’s equity ownership in Starbucks Japan. The value increased 2015 EPS by 26 cents.

The remainder of the increase in EPS can be attributed to sales leverage, which Starbucks measures through average ticket size and the number of sales transactions. This firm uses comparable store sales to determine if the average customer is spending more money compared to the prior year. Starbucks measures that spending by the average ticket size for a customer sale and the number of transactions processed by a particular store. If the company can increase sales per store, it gets a higher return out of the fixed costs it incurs to manage a store location.

In fiscal year 2015, comparable store sales increased by 7% and net revenue increased by 18%. These increases generated an operating margin of 18.8%. The Americas segment had a 4% increase in average tickets sales and a 3% increase in the number of transactions. The China/Asia Pacific segment had a 9% increase in comparable store sales and an 8% increase in transactions. This segment had 767 net new store openings during the 2015 fiscal year.

Projected 2016 Earnings

For fiscal year 2016, Starbucks projects 10% revenue growth, along with comparable store sales growth of 5 to 6%. The company expects to open 1,800 net new stores during the 2016 fiscal year. Consolidated operating margin results will increase slightly, along with EPS.

One factor that will increase EPS is the fact that 2016 will include a 53rd fiscal week. The extra week in 2016's financial results will add 6 cents to Starbucks' EPS, according to company projections.

The mean of EPS estimates by stock analysts is $1.89 per share for fiscal year 2016 and $2.27 per share for fiscal year 2017. These analysts expect sales growth of 12.3% for fiscal year 2016 and 8.8% in fiscal year 2017. Analysts consider Starbucks to be part of the specialty eateries industry. The EPS for the industry is 99 cents based on earnings for the trailing 12 months. Starbucks' earnings results are outperforming others in its industry.

Starbucks' strong earnings and sales projections are driving buy recommendations by analysts. As of April 8, 2016, 28 firms are currently following the stock and providing buy or sell opinions. Of those 28, 13 companies rate Starbucks with a strong buy rating. None of these firms rank the company's stock performance with a sell rating.

Starbucks Organization Structure and Departmentalization Form Analysis

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Starbucks organization structure and departmentalization form analysis
Starbucks is the biggest coffee shops network with over 19000 stores all over the world. The company has gained consumer by providing new perspective on coffee drinking. Coffee consumption as a cultural experience allowed Howard Schultz to create truly new market and became a monopolist. However, time passes and competitors evolve as well. Although Starbucks Company has managed to pass 2008 crisis successfully that is proven by stock market indicators (Starbucks Corporation (SBUX) stock price), some specialists predict loosing marketing positions due to economic troubles and rise of competitors such as McCoffee or DD. Small coffee stores and other competitors all over…show more content…

Starbucks organization structure and departmentalization form analysis
Starbucks is the biggest coffee shops network with over 19000 stores all over the world. The company has gained consumer by providing new perspective on coffee drinking. Coffee consumption as a cultural experience allowed Howard Schultz to create truly new market and became a monopolist. However, time passes and competitors evolve as well. Although Starbucks Company has managed to pass 2008 crisis successfully that is proven by stock market indicators (Starbucks Corporation (SBUX) stock price), some specialists predict loosing marketing positions due to economic troubles and rise of competitors such as McCoffee or DD. Small coffee stores and other competitors all over the world started to copy Starbucks model (interior, music, etc.) so wherever you go to drink coffee the place will look alike. Moreover, modern coffee machines brew excellent drinks so the taste will also be very similar. In such situation the company needs to look for new ways of keeping consumer. So the question is: can Starbucks sustain its business model and place in the market? The paper examines Starbucks business from the point of organizational structure and management.
I would like to start my analysis from general departmentalization form of the company. In my opinion Starbucks should use combined one. On the initial level the company should be structured by geographical principle. This principle is often a good idea for large

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