Letter to Shareholders
First Quarter 2008 Report
May 11, 2008
Dear shareholders,
We are delighted to announce that 2008 is our 35th anniversary! During the last fiscal year we opened 2,199 stores in global locations, exceeding our goal of 1,800 stores. This is an average of six new stores opening daily, making our current total 12,440 stores in 17 countries.
Our goal for this year is to open 2,400 stores internationally. Our financial target for total revenue growth is approximately 20 percent and our annual earnings-per-share growth expectancy is 20 percent to 25 percent, for the next three to five years. In addition, due to exponential growth rates, we raised our long-term store count target to 40,000 stores worldwide (20,000 U.S. and 20,000 international).
For 15 consecutive years, we have experienced 5 percent or greater comparable store sales growth. Our plans for this year give no indication that this will change as we continue to grow and expand. Plans for expansion this year include not only growth in established fronts but also expansion into entirely new markets by opening our first locations in Russia and India.
One of our many goals is to focus on providing long-term value for our shareholders while respecting the contributions of our farmers and everyone else who helps to make our business a success.
Last year’s net revenue increased by 22 percent for a total of $7.8 billion. Operating income increased by 14 percent for a total of $894 million. Net earnings increased by 25 percent for a total of $564 million, and the current market value is $0.85 per share.
Successful future growth is based on Starbuck’s coffee expertise. By buying only the highest quality of coffee and paying premium prices to support coffee-farming communities, we have established our reputation as an industry leader.
We hold ourselves accountable to our commitment of good governance, ethical conduct and social responsibility. These principles are aligned with our drive to create and increase shareholder value. We are also dedicated to maintaining our relationships with shareholders and encourage input and feedback on issues of mutual importance.
As part of our corporate social responsibility (CSR), we are dedicated to attracting and retaining our partners, building customer loyalty, reducing operating costs, strengthening our supply chain, and building rapport within communities who grant us acceptance to operate in their area.
In 2006 Starbucks was ranked 17th on the list of “100 Best Corporate Citizens” by Business Ethics magazine, as well as being ranked 29th on the list of “The 100 Best Companies to Work For.” These awards, along with many others, help us clearly demonstrate our commitment to maintaining our CSR.
Starbucks has the highest commitment to innovation. We are continuously adding creative new beverages and food items, including indulgent treats, as well as lower-fat and reduced-calorie options to help satisfy our diverse customers’ tastes. In addition, we are continuously working to expand our packaged coffee offerings.
We take great pride in our support of the arts, particularly music. But the innovation will not stop there. In 2007 we experienced our first venture into a film partnership featuring Akeelah and the Bee, the expansion of our music strategy outside of the United States, and the initiation of our book strategy.
We have also integrated our lunch and breakfast programs to a total of 4,150 stores and introduced the ability to warm pastries and provide hot breakfast items to stores across the United States.
These are only a few of the many ways in which we are committed to the growth and overall success of our company. Throughout the years we have proven our dedication to the growth of our company, the fair and ethical treatment of all of our partners, including our employees, and an involvement in the support of many global communities. By continuing to follow through with our commitments, Starbucks has and will continue to grow as one of the world’s most successful corporations.
Howard Schultz Jim Donald
Chairman President & Chief Executive Officer
I created this writing sample for my class. The information is not meant to represent the organization described. It is for academic purposes only.