It's no stretch to say that the financial acumen of Orin Smith, CEO of Starbucks Corp. (SBUX), has been largely responsible for making the Seattle company the world's largest chain of coffee shops. Chairman Howard Schultz may be the inspiration behind Starbucks, but Smith, 61, is the one who turns that vision into reality. And it's a pretty hot reality: Revenues grew 24%, to $4.1 billion, for fiscal 2003, which ended on Sept. 28, while net earnings climbed 26%, to a record $268.3 million.
Starbucks skeptics never expected that it would keep growing so long. But people remain more than willing to pay premium prices for a cup of joe, or new peppermint, toffee, and malt-flavored drinks. Automatic espresso machines and the Starbucks Card have helped shorten the lines at the counter. "Speed of service is a critical issue for us," says Smith. He also improved Starbucks' food and other merchandise, which now account for some 10% of revenues. And Starbucks is putting new shops in the rural areas and inner cities that it initially ignored.
The company struggled with its international growth, but even those woes appear to be easing: Smith says he expects overseas stores to turn a profit in 2004. And he wants to intensify expansion in the tea-drinking nation of China. For Smith and Starbucks, it's full steam ahead.
-- Starbucks kept growing even in a soft economy, posting record sales and profits for the fiscal 2003 year ended Sept. 28. Same-store sales in November grew 11% -- the best showing in three years.
-- Introducing peppermint, toffee, and malt-flavored drinks lifted sales, while the companywide use of automatic espresso machines helped speed customers through long lines.