Starbucks Corporation (SBUX) has reported a 22.76 percent rise in profit for the quarter ended Oct. 02, 2016. The company has earned $801 million, or $0.54 a share in the quarter, compared with $652.50 million, or $0.43 a share for the same period last year. On an adjusted basis, earnings per share were at $0.50 for the quarter compared with $0.43 in the same period last year. Revenue during the quarter grew 16.20 percent to $5,711.20 million from $4,914.80 million in the previous year period. Gross margin for the quarter expanded 87 basis points over the previous year period to 60.53 percent. Total expenses were 78.51 percent of quarterly revenues, down from 80.28 percent for the same period last year. This has led to an improvement of 177 basis points in operating margin to 21.49 percent.
Operating income for the quarter was $1,227.50 million, compared with $969.40 million in the previous year period.
However, the adjusted operating income for the quarter stood at $1,244.20 million compared to $981.30 million in the prior year period. At the same time, adjusted operating margin improved 182 basis points in the quarter to 21.79 percent from 19.97 percent in the last year period.
"Starbucks record Q4 and fiscal 2016 financial and operating results in the face of ongoing economic, consumer and geopolitical headwinds, and the significant investments we continue to make in our people and our business, once again demonstrate the power, relevance and resilience of the Starbucks business and brand," said Howard Schultz, Starbucks chairman and chief executive officer. "The trust and confidence our customers have in the Starbucks brand - and in our store partners - is propelling our business forward in markets and channels around the world as never before."
For fiscal year 2017, Starbucks Corporation expects diluted earnings per share to be in the range of $2.09 to $2.11. The company expects diluted earnings per share to be in the range of $2.12 to $2.14 on adjusted basis.
Operating cash flow improves
Starbucks Corporation has generated cash of $4,575.10 million from operating activities during the year, up 22.03 percent or $826 million, when compared with the last year. The company has spent $2,222.90 million cash to meet investing activities during the year as against cash outgo of $1,520.30 million in the last year.
The company has spent $1,750 million cash to carry out financing activities during the year as against cash outgo of $2,256.50 million in the last year period.
Cash and cash equivalents stood at $2,128.80 million as on Oct. 02, 2016, up 39.13 percent or $598.70 million from $1,530.10 million on Sep. 27, 2015.
Working capital drops significantly
Starbucks Corporation has witnessed a decline in the working capital over the last year. It stood at $213.60 million as at Oct. 02, 2016, down 69.45 percent or $485.60 million from $699.20 million on Sep. 27, 2015. Current ratio was at 1.05 as on Oct. 02, 2016, down from 1.19 on Sep. 27, 2015.
Debt increases substantially
Starbucks Corporation has witnessed an increase in total debt over the last one year. It stood at $3,602.20 million as on Oct. 02, 2016, up 53.45 percent or $1,254.70 million from $2,347.50 million on Sep. 27, 2015. Short-term debt stood at $400 million as on Oct. 02, 2016. Total debt was 25.14 percent of total assets as on Oct. 02, 2016, compared with 18.86 percent on Sep. 27, 2015. Debt to equity ratio was at 0.61 as on Oct. 02, 2016, up from 0.40 as on Sep. 27, 2015. Interest coverage ratio deteriorated to 49.70 for the quarter from 53.26 for the same period last year.
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