Introduction: According to its 2007 10-K filing with the U.S. Securities and Exchange Commission, Starbucks achieved solid performance in fiscal 2007. Starbucks met its targets for store openings, revenue growth, comparable store sales growth, and earnings per share in spite of a challenging economic and operating environment, and significant cost increases. Consolidated net revenues for fiscal year 2007 increased 21 percent to $9.4 billion. Company-operated retail revenues in fiscal 2007 rose 21 percent to $8.0 billion, predominantly due to the opening of 1,342 stores and comparable store sales growth of 5 percent. Net earnings rose to $673 million in fiscal 2007 from $564 million for the previous year. Throughout fiscal 2007, Starbucks experienced a consistent weakening in its U.S. business. Management recognizes that it faces a more challenging environment from an economic, operational and competitive standpoint and in response to those challenges, management intends to focus on improving operational excellence at the store level; more innovation to continue to differentiate the store experience; and increased efficiencies and effectiveness in the general and administrative infrastructure.
According to its Annual Report, Starbucks' long-term goal is to open approximately 20,000 Starbucks stores in the United States and at least 20,000 stores in International markets. Starbucks expects to double the size of its business over the next four to five years and achieve higher annual growth in net earnings than revenue. Effectively managing growth on this scale is very challenging, particularly as Starbucks expands into new markets internationally. In fact, growth on this scale makes it increasingly difficult to ensure a consistent supply of high quality raw materials, to locate and hire sufficient numbers of key employees to meet the Company's growth targets, to maintain an effective system of internal controls for a glo...