Starbucks’ top line and margin performance



Top line performance

After looking at the revenue drivers in the previous sections, let’s understand now how they have impacted Starbucks’ (SBUX) revenues. Starbucks reported revenues of $4.1 billion from three sources: company-operated stores, licensed stores, and consumer packaged goods, food services, and other, each representing 80%, 9%, and 11% of revenues, respectively. Following is a breakdown in terms of geographic segments.

Segment-wise Quarterly Revenue Growth 2014-11-29

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The Americas segment

As noted earlier, 74% of Starbucks’ revenues come from its Americas segment. Looking at the graph above, we can see that this segment’s revenues grew 9%, to $3 billion from $2.7 billion in the corresponding quarter a year ago. McDonald’s (MCD) holds the biggest share in the United States in the fast-food segment and has given tough competition to other chains, including Starbucks and Dunkin Brands (DNKN), by introducing breakfast menus.

The EMEA and China/Asia Pacific segments

The Europe, Middle East, and Africa (or EMEA) segment and the China/Asia Pacific segment contributed 8% and 7%, respectively, to Starbucks’ revenues in the third quarter of 2014. In terms of growth, EMEA segment revenues grew 9%, to $322 million from $293 million year-over-year. The China/Asia Pacific segment grew 21%, to $310 million from $256 million year-over-year. China is also Yum! Brand’s (YUM) key market.

In the next section of this series, we’ll discuss channel development. Investors who would like to invest in the restaurant industry as a whole can invest in exchange-traded funds (or ETFs) like the Consumer Discretionary Select Sector Standard & Poors depositary receipt (or SPDR) fund (XLY).


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