Expansion and increased margin push Starbucks forward

Expansion and increased margin push Starbucks forward

American coffee chain Starbucks has profited from its expansion: for its fiscal year 2013, which ended in September, it managed to increase its turnover 12 % to 14.892 billion dollars (10.7 billion euro), while its profits went up by 24.4 % to 1.721 billion dollars (1.3 billion euro).

New stores and higher margins create record profit

7 % of the turnover bump was created through the existing coffee bar network: additional customers accounted for 5 %, while another 2 % came through additional customer spending. The remaining 5 % came from the 1,701 new coffee bars Starbucks has opened in the past fiscal year, lifting the total to 19,767 stores by the end of September.

 

The turnover increase was accompanied by a raised profitability: the operating margin rose from 15.4 % to 17.6 %, especially in the latest quarter. The July-September quarter saw a 3.795 billion dollar turnover (2.8 billion euro) and a 481.1 million dollar (350 million euro) net profit, meaning Starbucks performed 12.8 % (turnover) and 34 % (net profit) better than the year before.  “The fourth quarter of fiscal 2013 capped off by far the best year in Starbucks' 42-year-history,” CEO Howard Schultz stated.

 

Despite the positive news, not every region performed as well: Asian fourth quarter turnover increased 9 % and the American segment sold 7 % more, but Europe, the Middle East and Africa remained flat. The less favourable European economic situation did lead to 2 % more customers, but they spent 2 % less.

 

Starbucks is aiming for another 1,500 new stores in the upcoming year, with 600 in the Americas, 750 in Asia and the remaining 150 in Europe, the Middle East and Africa.

 

 

(translated by Gary Peeters)

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