Question

Please review the financial statements of Starbucks. Discuss in detail how the international market impacted their returns in their latest 10K in 2018.

Answer 1

Starbucks operates in the following geographical regions – Americas (includes USA, Canada and Latin America), China/Asia Pacific, EMEA (Europe, Middle East and Africa). The company derives around 68% of its revenues from Americas, 18% from CAP and 4% from EMEA. The balance 10% is derived from channel development and corporate.

The growth in international market is driving up returns for Starbucks. The company is witnessing good growth in China/Asia Pacific with China, India and Thailand leading the growth in a robust manner. For the financial year 2018 the company opened 528 stores in China, 84 in Japan and 41 in Thailand. This data is for company owned stores. With regards to licensed stores the company opened 482 stores in China/Asia Pacific, 645 stores in Americas and 426 stores in EMEA.

Comparable store sales growth is being witnessed across different geographies with Americas reporting a growth of 2% and China/Asia Pacific reporting a growth rate of 1%. EMEA did not report any growth. As a result of this international growth the company’s net revenue increased by 10% in 2018.