Starbucks Financial performance 2017 and 2018 compared

Review of Starbucks Financial Performance in 2017 & 2018

 Starbucks is the largest premium coffee brand of the world with 29,324 stores operational worldwide as of September 30, 2018. The net revenue of Starbucks Coffee has grown steadily over the past five years.

The premium coffee brand has maintained consistent focus upon product quality and customer service. This is the main reason its revenue and profits have grown. Moreover, it made some changes to its business model in the recent years to grow its focus upon the core and most profitable segments.

Starbucks Net revenue 2014-2018
Starbucks Net Revenue 2014-2018 in millions

Starbucks Financial Performance 2018 versus 2017.

Item20182017
Net Revenues$24719.5 Million
$22386.8 Millions
Consolidated Operating Income3.9 Millions4.1 Millions
Operating Margin15.70%18.50%
EPS$3.24$1.97
Cashflow from Operations$11.9 Billion$4.3 Billion
Capital Expenditures$2 Billion$1.5 Billion
Advertising expenses$260.3 Million$282.6 Million
Operating Expenses$21.14 Billion$18.64 Billion
G&A Expenses$1.76 Billion$1.45 Billion
Net earnings$4.52 Billion$2.9 Billion
Net Revenues from company operated stores$19.7 Billion$17.65 Billion
Net Revenues from Licensed stores$2.65 Billion$2.35 Billion
Revenue from United States$17.4 Billion$16.5 Billion
Revenue from International Market$7.3 Billion$5.86 Billion
Revenue from Americas$16.73 Billion$15.62 Billion
Revenue from China/Asia Pacific$4.47 Billion$3.24 Billion
Revenue from EMEA$1048 Million$958.7 Million
  • Net Revenues of Starbucks grew to $24,719.5 million in 2018 from $22,386.8 million in 2017, a growth of $2.3 billion or 10%.   
  • Starbucks comparable store sales grew globally by 2% in 2018 compared to the previous year, driven by a 3% growth in average ticket size. 
  • Consolidated operating income came down to $3.9 billion in 2018 (15.7% of net revenues of the fiscal year) from $4.1 billion in 2017 (18.5% of net revenues of the fiscal year).
  • Operating Margin was 15.7% in 2018 compared to 18.5% in 2017.  Reduction in operating margin in 2018 was caused mainly by the changes in food and beverages mix in the American markets as well as ownership change in East China at the end of the first quarter of fiscal 2018 as well as higher restructuring, impairment and other costs.
  • Restructuring and impairment charges grew to $224 million in 2018 compared to $154 million in 2017.
  • EPS (Earnings Per Share) grew to $3.24 in 2018 from $1.97 in 2017.  The EPS increase was driven by several factors including gains form the acquisition of East China joint venture, sales of the Tazo brand as well as the net favorable impact from the Tax Cuts and Jobs Act (the “Tax Act”).
  • Cash Flow from operations grew to $11.9 billion in 2018 compared to $4.3 billion in fiscal 2017.  Cash flow from operations grew mainly due to the receipt of upfront Payment from Nestle related to global coffee allliance. 
  • Capital expenditures grew to $2 billion in 2018 compared to $1.5 billion in 2017. 
  • In 2018, Starbucks returned $8.9 billion to its shareholders compared to $3.5 billion in 2017 through share repurchases and dividends.  (During the fourth quarter of 2018, the company started licensing the rights for marketing and sales of Starbucks branded products to Nestle through authorized channels.)
  • Advertising expenses came down to $260.3 million in 2018 compared to $282.6 million in 2017.
  • Total Operating expenses grew to $21.14 billion in 2018 compared to $18.64 billion in 2017. Starbucks total operating expenses were 85.5% of the Net Revenue in 2018 compared to 83.3% in 2017.
  • General and administrative expenses grew to $1.76 billion in 2018 (7.1% of net revenues) compared to $1.45 billion in 2017 (6.5% of net revenues). 
  • Net Earnings attributable to Starbucks were $4.52 billion in 2018 (18.3% of net revenues for the fiscal year) compared to $2.9 billion in 2017 (12.9% of net revenues of the fiscal year).
  • Net Revenues of the company from the company operated stores grew by 11.6% from 2017 to 2018. 2018 net revenue from company operated stores was $19.7 billion compared to $17.65 billion in 2017.
  • Net Revenue of the company from licensed stores grew by 12.6% from 2017 to 2018. Starbucks net revenues from licensed stores reached $2.65 billion in 2018 compared to $2.35 billion in 2017.
  • Net revenue of Starbucks from United States grew to $17.4 billion in 2018 compared to $16.5 billion in 2017.
  • Net revenue of Starbucks from the other countries grew to $7.3 billion in 2018 from $5.86 billion in 2017.
  • Total net revenue of Starbucks from the Americas grew to $16.73 billion in 2018 compared to $15.62 billion in 2017.
  • Total Net Revenue of Starbucks from the China/Asia Pacific market grew to $4.47 billion in 2018 compared to $3.24 billion in 2017. 
  • Total Net Revenue of Starbucks from EMEA (Europe, Middle East & Africa) grew to $1,048 million in 2018 compared to $958.7 million in 2017.
  • Source: Starbucks Annual Report 2018.