Everyone goes home happy from the Starbucks-palooza

Every year near Valentine's Day, Starbucks Coffee smoothes its hair down, dons its nicest bow tie and gives a corsage to its shareholders, in the form of an annual meeting.

In its 14th year, the courting was just as earnest.

More than 5,000 shareholders attended the specialty-coffee retailer's annual event at McCaw Hall on Wednesday, a meeting so popular it requires tickets and an overflow room.

The morning opened with a collage of images from Starbucks stores, synchronized to the hypnotic and haunting "Oh Fortuna," performed live by the Seattle Choral Company. The performances only rose in grandeur from there.

Starbucks Chairman Howard Schultz played a segment of "The Late Show with David Letterman," during which it used 550 feet of clear plastic tubing to funnel Starbucks coffee from a nearby cafe to a spigot at Letterman's desk.

After the video, Schultz surprised the audience by announcing the company would interpret it "Seattle style."

Using a nitrogen tank, the company shot Starbucks coffee through 3,100 feet of tubing, using live video cameras to follow the coffee from the top of the Space Needle and through Seattle Center, before it filled a large, glass urn on stage.

The crowd erupted in cheers as Schultz poured a cup of coffee from the urn, raised it to the audience and took a sip, before saying, "I'm sure glad that worked."

These shareholders would have forgiven him if it hadn't.

The company ended its 2005 fiscal year with 10,000 stores and 100,000 employees, serving 35 million customers a week in 37 countries. Its average U.S. cafe rung up $1 million in annual sales.

Starbucks last year opened new locations near a third of its existing cafes. Even then, same-store-sales — a key retail gauge for stores open at least a year — rose 8 percent.

The company's shares have also risen — by 6,400 percent since it first sold stock to the public in mid-1992. To put it in perspective, a shareholder who invested $10,000 when the company went public would own $640,000 worth of Starbucks stock today.

Starbucks, meanwhile, told shareholders to expect more of the same this year. It raised its full-year forecast by 5 cents a share to between 68 cents and 70 cents.

"I'm just surprised every year," said shareholder Lee Bjorklund, 59, of Seattle, who has attended the annual meetings with his wife for the past five years.

"Any questions [I have] would be surpassed by their performance."

No overnight success

Schultz reminded the audience Starbucks wasn't an overnight success.

This year marks the 20th anniversary of Il Giornale, the Italian-style coffee-bar chain Schultz began in 1986, and the precursor to the Starbucks business today.

Schultz said Il Giornale spoke with 242 potential investors over the course of a year before it found someone willing to put money the idea. The original business plan called for 100 stores in five years, but things got so bad the company lowered its forecast to 75.

The small coffee chain sometimes couldn't make payroll, and Schultz said he drew no pay for a year. Schultz's wife was pregnant with their first child and the sole breadwinner for the family at the time.

Schultz said his father-in-law even had a "come to Jesus" talk with him about how he planned to support the family.

"He was deeply concerned," Schultz recalled. "He asked me when I was going to get a job and give up this hobby."

A new chapter

Shareholders, of course, know how the story ends. But Starbucks on Wednesday said it's beginning a new chapter, one in which it will leverage its trust with customers to provide services beyond coffee.

The company last month announced plans to use its extensive retail footprint to market and distribute select films, starting with the Lions Gate feature "Akeelah and the Bee."

In exchange for equity in the film, Starbucks will promote the movie in its stores, plus sell the soundtrack and the DVD when it becomes available later this year.

The venture mirrors the economic partnership it created with the music industry, when it sold and marketed Ray Charles' album "Genius Loves Company" in its stores.

Meanwhile, Starbucks continues to focus on opening more stores in mainland China. The company forecast the country will become its No. 2 market, behind the U.S.

What a surprise

As is custom at the annual meeting, Starbucks saved its best for last. After each of the top executives delivered their presentations, the red velvet curtain curled up to reveal the biggest Valentine of them all — Tony Bennett in a tuxedo.

The company is carrying Bennett's CD "Artist's Choice," which features songs from his favorite singers and musicians.

Bennett launched into his three-song set with, "The Best is Yet to Come."

"We travel all over the world," Bennett told the audience, referring to himself and his band. "Starbucks — it's one mile in either direction. That's fantastic."

Monica Soto Ouchi: 206-515-5632 or msoto@seattletimes.com