Financial Analysis Task

SEC 10k assignment 1 Genevieve Strobel

Why I Chose Starbucks

To begin with, I chose Starbucks because I am a customer of theirs. I am impressed with their products and service. I have always received excellent service from every barista. I would not mind being a barista there myself. I have heard that Starbucks is a wonderful company to work for from several of their employees. I used to go to a weekly meet up at a Starbucks, the meet up was for mothers and babies. The staff was always very friendly and accommodating to us. I enjoy Starbucks coffee, cups and mugs. I purchase Starbucks coffee to use in my home as well. Also in my home we use Starbucks mugs and to go thermal containers on almost a daily basis. My mother and I would go to our local Starbucks for a coffee and a cake, this was a special treat for me. When I was deployed we used to receive care packages of Starbucks coffee, that we would brew ourselves. This helped power me through long work hours and sometimes over night shifts. It was also a reminder that people back home care. I can also remember the moment I got off the plane, from my deployment and into the airport terminal and the next turn was a man playing somewhere over the rainbow, and there was Starbucks in all its glory. I was greeted so friendly and got myself a refreshing drink. It was a welcome home present and literally my first taste of America again. Having this luxury coffee holds a fold place in my heart with many warm memories. I have a drink I order for every season. I enjoy the products and I enjoy the excellent customer service. I also know that Starbucks invests in their employees, by paying for their first four-year degree. To me this speaks volumes about the company. They want their employees to grow and better themselves, even if it means they move on from the company. This is an excellent example of leadership. To sum up, I chose Starbucks because I truly enjoy their products as well as their service, they are a company that has a sentimental value to my life, and I believe they are a great example of leadership in the corporate world.

Company Profile

Starbucks Corporation is the roaster, marketer and retailer of specialty coffee in the world. The industry classification for the company is restaurants, specialty eateries, . The primary products by Starbucks Corp are specialty coffee. They sell a variety of coffee and tea products. Starbucks sells goods and services under brands including Teavana, Tazo and Seattle’s Best Coffee. (Starbucks Corp. 2017) Its stores offer coffee and tea beverages, packaged roasted whole bean and ground coffees, single-serve and ready-to-drink coffee and tea products, juices, and bottled water; an assortment of fresh food and snack offerings; and various food products, such as pastries, breakfast sandwiches, and lunch items, as well as beverage-making equipment and accessories. In addition to the company also licenses its trademarks through licensed stores, and grocery and national foodservice accounts. It offers its products under the Starbucks, Teavana, Tazo, Seattle’s Best Coffee, Evolution Fresh, La Boulange, Ethos, Frappuccino, Starbucks Doubleshot, Starbucks Refreshers, and Starbucks VIA brand names.

According to Starbucks.com, the company has more than 30 blends of premium coffee. They have hand crafted beverages ranging from fresh brewed coffee, either hot or iced, to their Frappuccino® coffee and non-coffee blended beverages, Starbucks Refreshers® beverages, smoothies and teas. They offer merchandise such as coffee and tea-brewing equipment, Verismo® System by Starbucks, mugs and accessories, packaged goods, books and gifts. In addition to their beverages hey also sell fresh food. This includes baked pastries, sandwiches, salads, oatmeal, yogurt parfaits and fruit cups. Lastly, Starbucks also has ready to go drinks, these ae sold in their stores and grocery stores. The list of these ready to drink beverages includes Starbucks® bottled Frappuccino® coffee drinks, Starbucks Discoveries® chilled cup coffees, Starbucks Discoveries Iced Café Favorites®, Starbucks Iced Coffee, Starbucks Doubleshot® espresso drinks, Starbucks Doubleshot® Energy Coffee drinks; Starbucks Refreshers® beverages, Evolution Fresh™ bottled juices, Tazo® bottled iced and juiced teas.

According to Starbucks.com, company operates globally, the company has more than 24,000 stores in 70 countries, believing that their great coffee and genuine service transcends language. The company operates in four segments: Americas; China/Asia Pacific; Europe, Middle East, and Africa. Starbucks CEO, president and director is Mr. Kevin R. Johnson. (SBUX Profile, 2017) Starbucks is currently number 131 in the current Fortune 500 List.

Starbucks Corporation’s current stock price is $54.88 per share, as of close 4:00pm on 27 October, 2017. The stock price per share was previously slightly higher at $54.91 before the slight drop before close. Earlier this summer the stock price was even up to $63.88 per share. (SBUX, 2017)

Recent Events

Starbucks closes online store.

Very recently, just over a month ago actually, Starbucks closed their online store. They did this to focus on more in person experience. This is a bold move considering the day and age we live in, where most other companies are moving towards an online based ecommerce. Previously before the store closed online you could purchase, mugs, tumblers, espresso machines and other accessories online. Starbucks stated that customers could still purchase these items, just in person at their local stores now. They also went on to claim that they guarantee the availability of these products in stores. The company spokeswoman, Maggie Jantzen, said that this decision was a part of simplifying Starbucks sales channels. “We’re continuing to invest in amplifying Starbucks as a must-visit destination and are looking across our portfolio to make disciplined, thoughtful decisions,” Ms. Jantzen said. According to Starbucks chief executive, Kevin Johnson, Starbucks’ most recent call about a “seismic shift” in retailing. To survive, he said, merchants need to create unique and immersive in-store experiences. Howard Schultz, the chairman of Starbucks, said “Your product and services, for the most part, cannot be available online and cannot be available on Amazon.” Included in this, Starbucks made their syrups unavailable for purchase. There were not sold in stores, but customers could previously purchase them online. Now to get your favorite specialty drink, customers have to go to the store themselves. Other items such as coffee can still be purchased from grocery stores. (Cowley, 2017)

Starbucks doubles down in China.

In a time when many America businesses are moving away from China, Starbucks has been opening more than 500 stores there a year. In Shanghai alone, there are already 600 stores.

Starbucks chairman, Howard Schultz says, when people ask me how much can you really grow in China, I don’t really know what the answer is, but I do believe it’s going to be larger than the U.S.” Starbucks has a 20-year history doing business in China. The company invests in China, pays higher wages, and offers ownership benefit to Chinese workers. (Sorkin, 2017)

"Continued focus on execution against our strategic priorities enabled us to gain share and positions us well for the future," says Mr. Kevin Johnson, CEO. One of the strategic priorities is the closure of all of its 379 Teavana retail stores, which the company said have been consistently underperforming. Earlier this year, Starbucks announced a $1.3 billion buyout of joint venture partners' 50 percent ownership stake of Chinas Shanghai Starbucks Coffee Corp. The buyout, the largest acquisition in company history, gives Starbucks 100 percent ownership of 1,300 Starbucks stores throughout China. (Duggan, 2017)

Starbucks has unequal family leave. Investors press for change on unequal family leave.

Currently at Starbucks, maternity leave all depends on whether the employee is a barista or a boss. There are different rules for corporate office employees and those who work in the stores. The first article on the issue gives real world insight, by telling the story of one of the baristas who is soon to have a baby. The barista herself, will get 6 weeks of partial leave at partial pay after her child is born. However, employees at Starbucks Seattle headquarters, which happens to have only been an hour from the baristas residence, along with other corporate offices receive 16 weeks of fully paid leave after delivering their children. Fathers and adoptive parents receive 12 weeks. This policy went into effect the beginning of this month, 1 October. The problem is that the new policy did not increase the length of leave for in store employees, not for those giving birth, adopting or fathers alike. Starbucks baristas and store managers felt they were being treated differently. Starbucks has argued that their parental leave policy is “exceptional within the retail industry”. While this is true compared to others brands, employees want the gab in leave closed. At Starbucks their employees are considered their “partners”. As Howard Schultz said “Not every decision in business is an economic one, We’re also in business to create value for our people. And I want to share with you, after 25 years of being a public company, I think what we’re most proud of is the unbelievable commitment and conviction that we’ve had to our partners and their families.” The rest of their partners and families want to see this in action and receive the same amount of parental leave and pay while on leave. (Redden, 2017)

The next article related to this policy covers investors pressing the company for change on the policy. Shareholders in a meeting in Marched, called for the company to change. It seems to be the first of its kind, where shareholders call for a company to rethink its policy on paid family leave. In this article it also adds that fathers whose partners give birth get no leave at all. (Redden, 2017)

The Securities and Exchange Commission (SEC)

When the stock market crashed in 1929, the public’s confidence in the U.S. markets did too. Congress then held hearings to identify the problems and solutions. This prompted the formation of SEC. In the peak year of the depression congress to pass the Securities Act of 1933. That law, along with the Securities Exchange Act of 1934, which created the SEC, was designed to restore investor confidence in our capital markets by providing investors and the markets with more reliable information and clear rules of honest dealing. The SEC primary role is the disclosure of important market-related information, maintaining fair dealing, and protecting against fraud. (SEC, 2013) (The Role of SEC, 2017) SEC regulates the stock market and influences GAAP. (General Accepted Accounting Principles) A 10K report is an annual report that gives a comprehensive summary of a company’s financial performance. Any company with more than $10 million in assets and a class equality security that is held by more than 2000 owners must file annual and other periodic reports, regardless of whether the securities are publicly or privately traded.

References

Cowley, Stacey. “Starbucks Closes Online Store to Focus on In-Person Experience.” The New York Times, The New York Times , 1 Oct. 2017, www.nytimes.com/2017/10/01/business/starbucks-online store.html?rref=collection%2Ftimestopic%2FStarbucks%20Corporation.

Duggan, Wayne. “Starbucks Dumps Teavana, Doubles Down in Chin.” U.S. News , U.S. News , 28 July 2017, money.usnews.com/investing/stock-market-news/articles/2017-07 28/starbucks-corporation-sbux-dumps-teavana-doubles-down-in-china.

“International Stores.” Starbucks Coffee Company, 29 Oct. 2017, www.starbucks.com/business/international-stores.

Redden, Molly. “At Starbucks, Your Maternity Leave Depends on Whether You're a Barista or a Boss.” The Guardian, Guardian News and Media, 30 Aug. 2017, www.theguardian.com/us news/2017/aug/30/starbucks-coffee-paid-parental-leave.

Redden, Molly. “Starbucks Investors Press Coffee Chain for Change on Unequal Family Leave.” The Guardian, Guardian News and Media, 2 Oct. 2017, www.theguardian.com/business/2017/oct/02/starbucks-investors-coffee-family-parental

birth-leave.

“SBUX Profile | Starbucks Corporation Stock.” Yahoo! Finance, Yahoo!, 29 Oct. 2017, finance.yahoo.com/quote/sbux/profile?ltr=1.

“SBUX : Summary for Starbucks Corporation.” Yahoo! Finance, Yahoo!, 29 Oct. 2017, finance.yahoo.com/quote/SBUX/.

Sorkin, Andrew Ross. “While Other U.S. Companies Flee China, Starbucks Doubles Down.”The New York Times, The New York Times, 31 July 2017, www.nytimes.com/2017/07/31/business/dealbook/sorkin-china starbucks.html?rref=collection%2Ftimestopic%2FStarbucks+Corporation.

“Starbucks Corp.” SBUX: Starbucks Corp Company Profile, Morning Star , 27 Oct. 2017, financials.morningstar.com/company-profile/c.action?t=SBUX.

“Starbucks Company Profile.” Starbucks Coffee Company, 29 Oct. 2017, www.starbucks.com/about-us/company-information/starbucks-company-profile.

“The Role of the SEC.” Investor.gov, 29 Oct. 2017, www.investor.gov/introduction investing/basics/role-sec.

“What We Do.” SEC Emblem, 10 June 2013, www.sec.gov/Article/whatwedo.html.