Comp Store Sales Rise 7% Globally, 8% in the
Americas, and 11% in China/Asia Pacific; Global Traffic Up 4%
Global Revenues Rise 18%; GAAP Operating Income
Up 22% to a Q3 Record $939 Million
GAAP EPS Jumps 21% to a Q3 Record $0.41;
Non-GAAP EPS Jumps 24% to a Q3 Record $0.42
Company Increases Outlook for Fiscal 2015
Starbucks Corporation (NASDAQ: SBUX) today reported financial
results for its 13-week fiscal third quarter and 39-week fiscal
year to date ended June 28, 2015. Q3 FY15 GAAP results include
Starbucks Japan acquisition-related items, which are excluded from
the non-GAAP results. Please refer to the reconciliation of GAAP
measures to non-GAAP measures at the end of this release.
Q3 Fiscal 2015 Highlights:
- Global comparable store sales increased
7%, driven by a 4% increase in traffic
- Americas comp sales increased 8%,
driven by a 4% increase in traffic
- China/Asia Pacific comp sales increased
11%, driven by a 10% increase in traffic
- EMEA comp sales increased 3%, driven by
a 2% increase in traffic
- Consolidated net revenues increased 18%
over Q3 FY14 to a quarterly record $4.9 billion
- Consolidated operating income up 22% to
$938.6 million
- Non-GAAP operating income up 24% to
$950.1 million
- Consolidated operating margin expanded
70 basis points to 19.2%
- Non-GAAP operating margin increased 100
basis points to 19.5%
- GAAP earnings increased 21% over Q3
FY14 to $0.41 per share
- Non-GAAP earnings increased 24% over Q3
FY14 to $0.42 per share
- Starbucks Mobile Order & Pay
expanded to over 4,000 U.S. company-operated stores in Q3; full
deployment to all U.S. company-operated stores by holiday
- 431 net new stores opened in the
quarter; total store count reaches 22,519
- Year over year comparable store
customer transactions increased nearly 18 million in the U.S. and
over 23 million globally
“Starbucks Q3 fiscal 2015 stands as among the strongest and most
remarkable quarters in our over 23 years as a public company,” said
Howard Schultz, chairman and ceo. “The 4% increase in global
transactions we reported equates to our having served an additional
23 million customer occasions in Q3 of this year over last year,
clearly evidencing a continuation of the strong momentum we have
seen across our business and around the world this fiscal year,”
Schultz added.
“Starbucks very strong year over year financial performance in
Q3 demonstrates our commitment to delivering best in class
financial and operating results while at the same time investing in
our future growth - building new stores, renovating existing
stores, deploying new technology - investing in our partners and
delivering an elevated Starbucks Experience to our customers,”
said Scott Maw, Starbucks cfo. “We believe that by getting this
balance right, we will be able to continue delivering exceptional
growth, profitability and increased returns to our shareholders,”
Maw added.
Third Quarter
Fiscal 2015 Summary
Quarter Ended Jun 28, 2015
Comparable Store
Sales(1)
Sales Growth
Change in Transactions
Change in Ticket
Consolidated 7% 4%
3% Americas 8% 4% 4% EMEA 3% 2% 1% CAP
11% 10%
1%
(1) Includes only Starbucks
company-operated stores open 13 months or longer.
Operating Results
Quarter Ended
($ in millions, except per share
amounts)
Jun 28, 2015
Jun 29, 2014
Change Net New Stores 431
344 87 Revenues $4,881.2 $4,153.7 18%
Operating Income $938.6 $768.5 22% Operating Margin 19.2% 18.5% 70
bps EPS $0.41
$0.34 21%
Consolidated net revenues were $4.9 billion in Q3 FY15, an
increase of 18% over Q3 FY14. The increase was primarily driven by
incremental revenues from the acquisition of Starbucks Japan, a 7%
increase in global comparable store sales and the opening of 1,592
net new stores over the past 12 months.
Consolidated operating income grew 22% to $938.6 million in Q3
FY15, up from $768.5 million in Q3 FY14. Consolidated operating
margin expanded 70 basis points to 19.2% primarily driven by sales
leverage. This was partially offset by the impact of our ownership
change in Starbucks Japan, which drove 90 basis points of margin
decline, and by investments in our store partners (employees) in
the Americas segment.
Q3 Americas
Segment Results
Quarter Ended
($ in millions)
Jun 28, 2015
Jun 29, 2014
Change
Net New Stores 171 149 22
Revenues $3,414.6 $3,057.7 12% Operating Income $855.3 $728.5 17%
Operating Margin 25.0%
23.8%
120 bps
Net revenues for the Americas segment were $3.4 billion in Q3
FY15, an increase of 12% over Q3 FY14. The increase was driven by
8% growth in comparable store sales and incremental revenues from
658 net new store openings over the past 12 months.
Operating income of $855.3 million in Q3 FY15 increased 17% from
$728.5 million in Q3 FY14. Operating margin expanded 120 basis
points to 25.0% primarily due to sales leverage and lower commodity
costs, primarily dairy, and was partially offset by investments in
our store partners (employees).
Q3 EMEA Segment
Results
Quarter Ended
($ in millions)
Jun 28, 2015
Jun 29, 2014
Change Net New Stores 58
37 21 Revenues $294.7 $323.5 (9)% Operating
Income $36.0 $29.2 23% Operating Margin
12.2% 9.0%
320 bps
Net revenues for the EMEA segment were $294.7 million in Q3
FY15, a 9% decrease versus Q3 FY14. The decrease was primarily
driven by unfavorable foreign currency translation and the shift in
the portfolio towards more licensed stores. Partially offsetting
the decrease was a 3% increase in comparable store sales.
Operating income increased 23% to $36.0 million in Q3 FY15, up
from $29.2 million in Q3 FY14. Operating margin expanded 320 basis
points to 12.2%, primarily due to sales leverage driven by the
ongoing shift in the portfolio towards more licensed stores.
Q3 China/Asia
Pacific Segment Results
Quarter Ended
($ in millions)
Jun 28, 2015
Jun 29, 2014
Change Net New Stores 205
160 45 Revenues $652.7 $287.6 127% Operating
Income $150.0 $100.8 49% Operating Margin
23.0% 35.0%
(1,200) bps
Net revenues for the China/Asia Pacific segment grew 127% to
$652.7 million in Q3 FY15. The increase was primarily driven by
incremental revenues from the acquisition of Starbucks Japan. Also
contributing were incremental revenues from 750 net new store
openings over the past 12 months and an 11% increase in comparable
store sales.
Operating income grew 49% to $150.0 million in Q3 FY15.
Operating margin declined 1,200 basis points to 23.0% due to the
impact of our ownership change in Starbucks Japan, which drove a
1,570 basis point decline. The remaining 370 basis point expansion
was primarily driven by sales leverage as well as improved
profitability in our company-operated stores in the region.
Q3 Channel
Development Segment Results
Quarter Ended ($ in millions)
Jun 28, 2015
Jun 29, 2014
Change Revenues $403.6
$375.3 8% Operating Income $143.4
$139.3 3% Operating Margin 35.5%
37.1%
(160) bps
Net revenues for the Channel Development segment grew 8% to
$403.6 million in Q3 FY15, primarily driven by increased sales of
premium single-serve products and higher foodservice sales.
Operating income of $143.4 million in Q3 FY15 grew 3% compared
to Q3 FY14. Operating margin decreased 160 basis points to 35.5%,
primarily driven by increased marketing spend and increased coffee
costs. The decrease was partially offset by leverage on cost of
sales and increased income from our North American Coffee
Partnership.
Q3 All Other
Segments Results
Quarter Ended
($ in millions)
Jun 28, 2015
Jun 29, 2014
Change
Net New Stores (3) (2) (1)
Revenues $115.6 $109.6 5% Operating Loss
$(13.1) $(18.9)
(31)%
Year to Date
Financial Results
Three Quarters Ended
Jun 28, 2015
Comparable Store
Sales(1)
Sales Growth
Change in Transactions
Change in Ticket
Consolidated 7% 3%
4% Americas 7% 3% 4% EMEA 3% 2% 1% CAP
10%
9% 1%
(1) Includes only Starbucks
company-operated stores open 13 months or longer.
Operating Results
Three Quarters Ended
($ in millions, except per share
amounts)
Jun 28, 2015
Jun 29, 2014
Change
Net New Stores (1)
1,153 1,096 57 Revenues
$14,247.9 $12,267.1 16% Operating Income $2,631.6 $2,226.3 18%
Operating Margin 18.5% 18.1% 40 bps EPS
$1.39 $0.97
43%
(1) Net new stores include the closure of
132 Target Canada licensed stores in the second quarter of fiscal
2015.
Fiscal 2015 Targets
Starbucks is providing the following fiscal 2015 targets.
Projected Q4 FY15 non-GAAP adjustments relate to the acquisition of
Starbucks Japan and the redemption of debt; please refer to the
reconciliation of GAAP measures to non-GAAP measures at the end of
this release.
The Company Provides the Following Targets:
- Total net new store openings for the
fiscal year remain at 1,650:
- Americas: remain at approximately 600,
half licensed
- EMEA: remain at approximately 200,
primarily licensed
- China/Asia Pacific: remain at
approximately 850, two-thirds licensed
- Continue to expect full year revenue
growth of 16% to 18%
- Global comparable store sales growth
remains in the mid-single digits
- Full year GAAP operating margin is
still expected to be flat to FY14 due to the impact of the
acquisition of Starbucks Japan; full year non-GAAP operating margin
is still expected to modestly improve over prior year non-GAAP
operating margin. Operating margin by segment:
- Americas: continue to expect modest
margin improvement over FY14
- EMEA: now expecting margin to be at or
slightly above the upper end of the 10% to 12% range
- China/Asia Pacific: now expecting
margin to be slightly over 20%
- Channel Development: continue to expect
margin improvement of approximately 150 basis points over FY14
- Continue to expect a consolidated tax
rate of approximately 31% on a GAAP basis
- GAAP Earnings per Share:
- Now expect full year EPS in the range
of $1.77 to $1.78
- Now expect Q4 EPS in the range of $0.38
to $0.39
- Non-GAAP Earnings per Share:
- Now expect full year EPS in the range
of $1.57 to $1.58
- Continue to expect Q4 EPS in the range
of $0.42 to $0.43
- The Company now expects capital
expenditures of approximately $1.3 billion
Company Updates
- Starbucks and PepsiCo, Inc. today
announced they have entered into an agreement for the marketing,
sales and distribution of a locally-relevant portfolio of Starbucks
ready-to-drink (RTD) coffee and energy products in Latin
America.
- Enhancing the digital experience for My
Starbucks Rewards® members, the company has recently made three
strategic relationship announcements, starting with Spotify in May,
The New York Times on July 21 and Lyft on July 22. Each of the
announcements supports a new opportunity for Starbucks loyalty
program members to earn stars through purchases made with other
companies and then have the ability to redeem those earned stars
for food and beverages at participating Starbucks® stores. These
relationships, collectively, lend to a broader strategy to build a
robust digital ecosystem with businesses that complement our
customer experience.
- The Company recently announced two new
strategic business partnerships; the first is a licensed agreement
with Casino Restauration (a subsidiary of Groupe Casino) that will
open Starbucks stores within Géant Casino Hypermarkets and Casino
Supermarkets across France. The second is a licensed partnership
with Taste Holdings to open Starbucks stores across South Africa,
starting with Johannesburg which is expected to open in 2016. This
will be Starbucks first store in sub-Saharan Africa.
- In May, Starbucks opened a store in
Japan’s Tottori Prefecture, the last district in Japan without a
Starbucks store. The company operates more than 1,000 stores across
the country.
- Starbucks, along with more than a dozen
leading, U.S.-based companies, announced on July 13 the formation
of the 100,000 Opportunities Initiative, an employer-led coalition
with a collective goal of engaging 100,000 Opportunity Youth - 16
to 24 year olds who face systemic barriers to jobs and education -
through apprenticeships, internships, training programs, and both
part-time and full-time jobs.
- In June, Starbucks raised $850 million
in proceeds from a public offering of $500 million of 2.700% Senior
Notes due 2022 and $350 million of 4.300% Senior Notes due 2045. As
previously announced, a portion of the proceeds from the offering
were used to redeem the Company’s $550 million of 6.250% Senior
Notes due 2017. The redemption was settled July 1, 2015.
- The Company repurchased 12.1 million
shares of common stock in Q3 FY15; 61 million shares remain
available for purchase under current authorizations, comprised of
11 million shares that remained available for repurchase as of June
28, 2015 under an existing authorization and an additional 50
million shares which the Company announced today has been
authorized for repurchase by its Board of Directors under its
ongoing share repurchase program.
- The Board of Directors declared a cash
dividend of $0.16 per share, payable on August 21, 2015 to
shareholders of record as of August 6, 2015.
Conference Call
Starbucks will be holding a conference call today at 2:00 p.m.
Pacific Time, which will be hosted by Howard Schultz, chairman and
ceo; Kevin Johnson, president and coo; and Scott Maw, cfo. The call
will be webcast and can be accessed at http://investor.starbucks.com. A replay of the
webcast will be available through approximately 9:00 p.m. Pacific
Time on Thursday, August 20, 2015.
About Starbucks
Since 1971, Starbucks Coffee Company has been committed to
ethically sourcing and roasting high-quality arabica coffee. Today,
with stores around the globe, the company is the premier roaster
and retailer of specialty coffee in the world. Through our
unwavering commitment to excellence and our guiding principles, we
bring the unique Starbucks Experience to life for every customer
through every cup. To share in the experience, please visit us in
our stores or online at news.starbucks.com or www.starbucks.com.
Forward-Looking
Statements
This release contains forward-looking statements relating to
certain company initiatives, strategies and plans, as well as
trends in or expectations regarding our diversified business model,
the strength, momentum, health and potential of our business,
operations and brand, our innovation, growth and growth
opportunities and related investments, earnings per share,
revenues, operating margins, profitability, capital expenditures,
tax rate, financial discipline, anticipated gains and costs related
to the acquisition of Starbucks Japan, comparable store sales and
net new stores. These forward-looking statements are based on
currently available operating, financial and competitive
information and are subject to a number of significant risks and
uncertainties. Actual future results may differ materially
depending on a variety of factors including, but not limited to,
fluctuations in U.S. and international economies and currencies,
our ability to preserve, grow and leverage our brands, potential
negative effects of material breaches of our information technology
systems if any were to occur, costs associated with, and the
successful execution of, the company’s initiatives and plans,
including the acquisition of Starbucks Japan, the acceptance of the
company’s products by our customers, the impact of competition,
coffee, dairy and other raw material prices and availability, the
effect of legal proceedings, and other risks detailed in the
company filings with the Securities and Exchange Commission,
including the “Risk Factors” section of Starbucks Annual Report on
Form 10-K for the fiscal year ended September 28, 2014. The
company assumes no obligation to update any of these
forward-looking statements.
STARBUCKS
CORPORATIONCONSOLIDATED STATEMENTS OF
EARNINGS(unaudited, in millions, except per share data)
Quarter Ended
Quarter Ended
Jun 28, 2015
Jun 29, 2014
%Change
Jun 28, 2015 Jun 29,
2014
As a % of totalnet
revenues
Net revenues: Company-operated stores $ 3,915.0 $ 3,290.5 19.0 %
80.2 % 79.2 % Licensed stores 475.2 408.1 16.4 9.7 9.8 CPG,
foodservice and other 491.0 455.1 7.9 10.1
11.0
Total net revenues
4,881.2 4,153.7 17.5 100.0 100.0
Cost of sales including occupancy costs 1,953.9 1,711.5 14.2 40.0
41.2 Store operating expenses 1,392.4 1,176.5 18.4 28.5 28.3 Other
operating expenses 131.6 120.6 9.1 2.7 2.9 Depreciation and
amortization expenses 236.5 180.1 31.3 4.8 4.3 General and
administrative expenses 288.5 269.4 7.1 5.9
6.5
Total operating expenses
4,002.9 3,458.1 15.8 82.0 83.3 Income from equity investees 60.3
72.9 (17.3 ) 1.2 1.8
Operating income
938.6 768.5 22.1 19.2 18.5
Interest income and other, net 25.5 19.4 31.4 0.5 0.5 Interest
expense (19.1 ) (16.4 ) 16.5 (0.4 ) (0.4 ) Earnings before income
taxes 945.0 771.5 22.5 19.4 18.6 Income taxes 318.5 259.0
23.0 6.5 6.2 Net earnings including
noncontrolling interests 626.5 512.5 22.2 12.8 12.3
Net earnings/(loss) attributable to
noncontrolling interests
(0.2 ) (0.1 ) 100.0 — —
Net earnings attributable to
Starbucks
$ 626.7 $ 512.6
22.3 12.8 % 12.3 %
Net earnings per common share -
diluted
$ 0.41 $ 0.34 20.6
% Weighted avg. shares outstanding - diluted 1,515.7 1,522.0
Cash dividends declared per share $ 0.16 $ 0.13
Supplemental Ratios:
Store operating expenses as a percentage of company-operated store
revenues 35.6 % 35.8 % Effective tax rate including noncontrolling
interests 33.7 % 33.6 %
Three Quarters Ended Three Quarters Ended
Jun 28, 2015
Jun 29, 2014
%Change
Jun 28, 2015
Jun 29, 2014
As a % of totalnet
revenues
Net revenues: Company-operated stores $ 11,310.7 $ 9,702.3 16.6 %
79.4 % 79.1 % Licensed stores 1,380.5 1,166.1 18.4 9.7 9.5 CPG,
foodservice and other 1,556.7 1,398.7 11.3 10.9
11.4
Total net revenues 14,247.9
12,267.1 16.1 100.0 100.0 Cost of sales
including occupancy costs 5,804.9 5,135.7 13.0 40.7 41.9 Store
operating expenses 4,032.5 3,486.1 15.7 28.3 28.4 Other operating
expenses 394.5 346.3 13.9 2.8 2.8 Depreciation and amortization
expenses 659.6 524.2 25.8 4.6 4.3 General and administrative
expenses 892.8 752.6 18.6 6.3 6.1 Litigation credit — (20.2
) (100.0 ) — (0.2 ) Total operating expenses 11,784.3
10,224.7 15.3 82.7 83.4 Income from equity investees 168.0
183.9 (8.6 ) 1.2 1.5
Operating income
2,631.6 2,226.3 18.2 18.5 18.1
Gain resulting from acquisition of joint venture 390.6 —
nm
2.7 — Interest income and other, net 36.6 57.0 (35.8 ) 0.3 0.5
Interest expense (52.3 ) (47.7 ) 9.6 (0.4 ) (0.4 ) Earnings before
income taxes 3,006.5 2,235.6 34.5 21.1 18.2 Income taxes 899.7
755.4 19.1 6.3 6.2 Net earnings
including noncontrolling interests 2,106.8 1,480.2 42.3 14.8 12.1
Net earnings/(loss) attributable to noncontrolling interests 1.9
(0.1 ) nm — —
Net earnings attributable to
Starbucks
$ 2,104.9 $ 1,480.3
42.2 % 14.8 % 12.1 %
Net earnings per common share -
diluted
$ 1.39 $ 0.97 43.3
% Weighted avg. shares outstanding - diluted 1,516.3 1,527.8
Cash dividends declared per share $ 0.48 $ 0.39
Supplemental Ratios:
Store operating expenses as a percentage of company-operated store
revenues 35.7 % 35.9 % Effective tax rate including noncontrolling
interests 29.9 % 33.8 %
Segment Results
(in millions)
Americas
Jun 28, 2015
Jun 29, 2014
%Change
Jun 28, 2015
Jun 29, 2014
Quarter
Ended
As a % of Americas
total net revenues
Net revenues: Company-operated stores $ 3,061.3 $ 2,772.3 10.4 %
89.7 % 90.7 % Licensed stores 344.9 275.6 25.1 10.1 9.0 Foodservice
and other 8.4 9.8 (14.3 ) 0.2 0.3
Total net revenues 3,414.6 3,057.7 11.7
100.0 100.0 Cost of sales including occupancy costs
1,227.7 1,130.0 8.6 36.0 37.0 Store operating expenses 1,126.7
1,002.4 12.4 33.0 32.8 Other operating expenses 26.9 26.2 2.7 0.8
0.9 Depreciation and amortization expenses 130.8 119.5 9.5 3.8 3.9
General and administrative expenses 47.2 51.1 (7.6 )
1.4 1.7 Total operating expenses 2,559.3
2,329.2 9.9 75.0 76.2
Operating income
$ 855.3 $ 728.5
17.4 % 25.0 % 23.8 %
Supplemental Ratios: Store operating expenses as a
percentage of company-operated store revenues 36.8 % 36.2 %
Three Quarters
Ended
Net revenues: Company-operated stores $ 8,890.5 $ 8,120.6 9.5 %
89.7 % 90.8 % Licensed stores 993.0 787.6 26.1 10.0 8.8 Foodservice
and other 26.0 31.2 (16.7 ) 0.3 0.3
Total net revenues 9,909.5 8,939.4 10.9
100.0 100.0 Cost of sales including occupancy costs
3,624.4 3,353.8 8.1 36.6 37.5 Store operating expenses 3,276.1
2,965.9 10.5 33.1 33.2 Other operating expenses 93.4 75.2 24.2 0.9
0.8 Depreciation and amortization expenses 386.5 346.6 11.5 3.9 3.9
General and administrative expenses 146.6 131.9 11.1
1.5 1.5 Total operating expenses 7,527.0
6,873.4 9.5 76.0 76.9
Operating income
$ 2,382.5 $ 2,066.0
15.3 % 24.0 % 23.1 %
Supplemental Ratios: Store operating expenses as a
percentage of company-operated store revenues 36.8 % 36.5 %
EMEA
Jun 28,
2015 Jun 29, 2014
%Change
Jun 28, 2015
Jun 29, 2014
Quarter
Ended
As a % of EMEAtotal net
revenues
Net revenues: Company-operated stores $ 217.8 $ 251.8 (13.5 )% 73.9
% 77.8 % Licensed stores 65.5 60.8 7.7 22.2 18.8 Foodservice 11.4
10.9 4.6 3.9 3.4
Total net
revenues 294.7 323.5 (8.9 )
100.0 100.0 Cost of sales including occupancy costs
143.1 161.4 (11.3 ) 48.6 49.9 Store operating expenses 78.4 91.4
(14.2 ) 26.6 28.3 Other operating expenses 12.9 12.5 3.2 4.4 3.9
Depreciation and amortization expenses 12.4 15.1 (17.9 ) 4.2 4.7
General and administrative expenses 12.8 15.0 (14.7 )
4.3 4.6 Total operating expenses 259.6 295.4 (12.1 )
88.1 91.3 Income from equity investees 0.9 1.1 (18.2
) 0.3 0.3
Operating income $
36.0 $ 29.2 23.3 %
12.2 % 9.0 % Supplemental
Ratios: Store operating expenses as a percentage of
company-operated store revenues 36.0 % 36.3 %
Three Quarters
Ended
Net revenues: Company-operated stores $ 688.0 $ 766.3 (10.2 )% 75.7
% 78.8 % Licensed stores 185.4 175.8 5.5 20.4 18.1 Foodservice 35.0
30.9 13.3 3.9 3.2
Total net
revenues 908.4 973.0 (6.6 )
100.0 100.0 Cost of sales including occupancy costs
434.4 487.9 (11.0 ) 47.8 50.1 Store operating expenses 240.4 280.1
(14.2 ) 26.5 28.8 Other operating expenses 40.0 35.9 11.4 4.4 3.7
Depreciation and amortization expenses 38.9 44.5 (12.6 ) 4.3 4.6
General and administrative expenses 41.6 47.1 (11.7 )
4.6 4.8 Total operating expenses 795.3 895.5 (11.2 )
87.5 92.0 Income from equity investees 2.1 3.0 (30.0
) 0.2 0.3
Operating income $
115.2 $ 80.5 43.1
% 12.7 % 8.3 %
Supplemental Ratios:
Store operating expenses as a percentage of company-operated store
revenues 34.9 % 36.6 %
China/Asia Pacific (CAP)
Jun 28, 2015
Jun 29, 2014
%Change
Jun 28, 2015 Jun 29, 2014
Quarter
Ended
As a % of CAPtotal net
revenues
Net revenues: Company-operated stores $ 588.4 $ 217.0 171.2 % 90.1
% 75.5 % Licensed stores 63.1 70.6 (10.6 ) 9.7 24.5 Foodservice and
other 1.2 — nm 0.2 —
Total net
revenues 652.7 287.6 126.9 100.0
100.0 Cost of sales including occupancy costs 281.8 137.8
104.5 43.2 47.9 Store operating expenses 161.2 54.8 194.2 24.7 19.1
Other operating expenses 15.8 13.2 19.7 2.4 4.6 Depreciation and
amortization expenses 41.2 11.3 264.6 6.3 3.9 General and
administrative expenses 30.3 16.0 89.4 4.6 5.6
Total operating expenses 530.3 233.1 127.5 81.2 81.1 Income
from equity investees 27.6 46.3 (40.4 ) 4.2
16.1
Operating income $ 150.0
$ 100.8 48.8 % 23.0
% 35.0 % Supplemental Ratios: Store
operating expenses as a percentage of company-operated store
revenues 27.4 % 25.3 %
Three Quarters
Ended
Net revenues: Company-operated stores $ 1,542.5 $ 621.1 148.3 %
88.5 % 75.8 % Licensed stores 197.6 198.7 (0.6 )% 11.3 24.2
Foodservice and other 3.5 — nm 0.2 —
Total net revenues 1,743.6 819.8 112.7
100.0 100.0 Cost of sales including occupancy costs
784.8 398.0 97.2 45.0 48.5 Store operating expenses 436.0 158.5
175.1 25.0 19.3 Other operating expenses 43.4 34.8 24.7 2.5 4.2
Depreciation and amortization expenses 106.3 33.4 218.3 6.1 4.1
General and administrative expenses 88.4 43.1 105.1
5.1 5.3 Total operating expenses 1,458.9 667.8 118.5
83.7 81.5 Income from equity investees 85.8 116.8
(26.5 ) 4.9 14.2
Operating income $
370.5 $ 268.8 37.8
% 21.2 % 32.8 % Supplemental
Ratios: Store operating expenses as a percentage of
company-operated store revenues 28.3 % 25.5 %
Channel Development
Jun 28, 2015
Jun 29, 2014
%Change
Jun 28, 2015 Jun 29, 2014
Quarter
Ended
As a % ofChannel
Developmenttotal net revenues
Net revenues: CPG $ 302.2 $ 286.6 5.4 % 74.9 % 76.4 % Foodservice
101.4 88.7 14.3 25.1 23.6
Total net
revenues 403.6 375.3 7.5 100.0
100.0 Cost of sales 228.3 208.3 9.6 56.6 55.5 Other
operating expenses 58.9 48.3 21.9 14.6 12.9 Depreciation and
amortization expenses 0.7 0.4 75.0 0.2 0.1 General and
administrative expenses 4.1 4.5 (8.9 ) 1.0 1.2
Total operating expenses 292.0 261.5 11.7 72.3 69.7 Income
from equity investees 31.8 25.5 24.7 7.9 6.8
Operating income $ 143.4
$ 139.3 2.9 % 35.5
% 37.1 %
Three Quarters
Ended
Net revenues: CPG $ 975.8 $ 875.1 11.5 % 76.6 % 76.3 % Foodservice
298.4 271.7 9.8 23.4 23.7
Total net
revenues 1,274.2 1,146.8 11.1 100.0
100.0 Cost of sales 722.2 667.5 8.2 56.7 58.2 Other
operating expenses 160.9 142.9 12.6 12.6 12.5 Depreciation and
amortization expenses 2.0 1.2 66.7 0.2 0.1 General and
administrative expenses 12.5 13.8 (9.4 ) 1.0
1.2 Total operating expenses 897.6 825.4 8.7 70.4 72.0
Income from equity investees 80.1 64.1 25.0 6.3
5.6
Operating income $ 456.7
$ 385.5 18.5 %
35.8 % 33.6 %
All Other Segments
Jun 28, 2015 Jun 29, 2014
%Change
Quarter
Ended
Net revenues: Company-operated stores $ 47.5 $ 49.4 (3.8 )%
Licensed stores 1.7 1.1 54.5 CPG, foodservice and other 66.4
59.1 12.4
Total net revenues 115.6
109.6 5.5 Cost of sales including occupancy costs
72.7 65.9 10.3 Store operating expenses 26.1 27.9 (6.5 ) Other
operating expenses 17.3 20.5 (15.6 ) Depreciation and amortization
expenses 4.3 3.9 10.3 General and administrative expenses 8.3
10.3 (19.4 ) Total operating expenses 128.7
128.5 0.2
Operating loss $ (13.1
) $ (18.9 ) (30.7 )%
Three Quarters
Ended
Net revenues: Company-operated stores $ 189.7 $ 194.3 (2.4 )%
Licensed stores 4.5 4.0 12.5 CPG, foodservice and other 218.0
189.8 14.9
Total net revenues 412.2
388.1 6.2 Cost of sales including occupancy costs
242.5 217.2 11.6 Store operating expenses 80.0 81.6 (2.0 ) Other
operating expenses 57.1 58.1 (1.7 ) Depreciation and amortization
expenses 12.2 11.3 8.0 General and administrative expenses 27.2
32.9 (17.3 ) Total operating expenses 419.0
401.1 4.5
Operating loss $ (6.8
) $ (13.0 ) (47.7 )%
Supplemental
Information
The following supplemental information is
provided for historical and comparative purposes.
U.S. Supplemental
Data
Quarter Ended
($ in millions)
Jun 28, 2015
Jun 29, 2014
Change Revenues $3,091.0
$2,731.2 13% Comparable Store Sales Growth(1)
8% 7% Change in Transactions 4% 2% Change in Ticket
4% 5%
(1) Includes only Starbucks
company-operated stores open 13 months or longer
Store
Data:
Net stores opened (closed) and
transferred during the period
Quarter Ended Three Quarters
Ended Stores open as of
Jun 28, 2015
Jun 29, 2014
Jun 28, 2015
Jun 29, 2014
Jun 28, 2015
Jun 29, 2014
Americas(1) Company-operated stores 68 69 187 155 8,582 8,233
Licensed stores 103 80 192 264 5,988
5,679 Total Americas 171 149 379 419
14,570 13,912 EMEA(2) Company-operated stores (9 ) (3
) (33 ) 1 784 827 Licensed stores 67 40 184
132 1,507 1,275 Total EMEA 58 37 151
133 2,291 2,102 China/Asia Pacific (3,4)
Company-operated stores 82 45 1,219 159 2,351 1,041 Licensed stores
123 115 (604 ) 384 2,888 3,384 Total
China/Asia Pacific 205 160 615 543
5,239 4,425 All Other Segments Company-operated stores (1 )
10 9 21 378 378 Licensed stores (2 ) (12 ) (1 ) (20 ) 41 46
Total All Other Segments (3 ) (2 ) 8 1 419 424
Total Company
431 344 1,153
1,096 22,519 20,863
(1) Americas store data includes the
closure of 132 Target Canada licensed stores in the second quarter
of fiscal 2015.
(2) EMEA store data has been adjusted for
the transfer of certain company-operated stores to licensed stores
in the second and fourth quarters of fiscal 2014.
(3) China/Asia Pacific store data includes
the transfer of 1,009 Japan stores from licensed stores to
company-operated as a result of the acquisition of Starbucks Japan
in the first quarter of fiscal 2015.
(4) China/Asia Pacific store data has been
adjusted for the transfer of certain company-operated stores to
licensed stores in the fourth quarter of fiscal 2014.
Non-GAAP Disclosure
In addition to the GAAP results provided in this release, the
company provides consolidated non-GAAP earnings per share
("non-GAAP EPS") for Q4 and full year fiscal 2014, consolidated
non-GAAP operating income, non-GAAP operating margin and non-GAAP
EPS for Q3 fiscal 2015, China/Asia Pacific (“CAP”) segment non-GAAP
operating income and non-GAAP operating margin for Q3 fiscal 2015,
and projected consolidated non-GAAP EPS for Q4 and full year fiscal
2015. These non-GAAP financial measures are not in accordance with,
or alternatives for, generally accepted accounting principles in
the United States. The GAAP measures most directly comparable to
non-GAAP operating income, non-GAAP operating margin, and non-GAAP
EPS are operating income, operating margin, and diluted net
earnings per share, respectively. The company’s management believes
that providing these non-GAAP financial measures better enables
investors to understand and evaluate the company’s historical and
prospective operating performance.
The consolidated Q4 and full year fiscal 2014 non-GAAP EPS
excludes the net benefit from transactions in Q4 fiscal 2014. The
consolidated full year fiscal 2014 non-GAAP EPS also excludes the
benefit recognized from a Kraft related litigation credit in Q1
fiscal 2014. The net benefit from transactions in Q4 fiscal 2014
includes a gain on the sale of our Malaysia equity method
investment, partially offset by a loss on the sale of our Australia
retail operations and transaction costs incurred related to the
acquisition of Starbucks Japan. Management excludes these items
because they believe the impacts do not reflect expected future
gains or expenses and do not contribute to a meaningful evaluation
of the company’s future operating performance or comparisons to the
company’s past operating performance.
The consolidated Q3 fiscal 2015 non-GAAP financial measures
exclude certain Starbucks Japan acquisition-related items,
specifically amortization expense from acquired intangible assets
and transaction and integration costs. The Q3 fiscal 2015 CAP
segment non-GAAP financial measures exclude the amortization
expense from acquired intangible assets related to the acquisition
of Starbucks Japan. Management excludes the acquisition-related
transaction costs described above because they believe these items
do not reflect expected future expenses and do not contribute to a
meaningful evaluation of the company’s future operating performance
or comparisons to the company’s past operating performance. In
addition, management believes it is useful to exclude the
integration costs and the amortization of the acquired intangible
assets when evaluating performance because they are not
representative of our core business operations. Although these
items will affect earnings per share beyond fiscal 2015, the
majority of these costs will be recognized over a finite period of
time. More specifically, the amounts of the acquired intangible
assets are specific to the transaction and the related amortization
was fixed at the time of acquisition and generally cannot
subsequently be changed or influenced by management in a future
period. Therefore, these items do not contribute to a meaningful
evaluation of the company’s fiscal 2015 operating performance or
comparisons of the company’s fiscal 2015 operating performance to
the company’s past operating performance or, with respect to the
CAP segment, to a meaningful evaluation of the CAP segment’s
operating performance or comparisons to the CAP segment’s past
operating performance.
The projected consolidated non-GAAP EPS for Q4 and full year
fiscal 2015 exclude certain Starbucks Japan acquisition-related
items comprised of projected amortization expense from acquired
intangible assets and transaction and integration costs, as well as
certain losses and costs related to the redemption of the company's
$550 million of 6.250% 2017 Senior Notes in Q4 fiscal 2015. Losses
and costs related to the redemption are included as debt
extinguishment-related items. The projected consolidated non-GAAP
EPS for full year fiscal 2015 also excludes the gain in Q1 related
to the fair value adjustment of Starbucks 39.5% ownership in
Starbucks Japan prior to the acquisition. Management is excluding
the Starbucks Japan acquisition-related items from our projected
non-GAAP measures for the same reasons described above.
Additionally, management is excluding the fair value gain and debt
extinguishment-related items because they believe these items do
not reflect future gains, losses or expenses and do not contribute
to a meaningful evaluation of the company's future operating
performance or comparisons to the company's past operating
performance.
These non-GAAP financial measures may have limitations as
analytical tools, and these measures should not be considered in
isolation or as a substitute for analysis of the company’s results
as reported under GAAP. Other companies may calculate these
non-GAAP financial measures differently than the company does,
limiting the usefulness of those measures for comparative
purposes.
STARBUCKS CORPORATION
RECONCILIATION OF SELECTED GAAP
MEASURES TO NON-GAAP MEASURES
(unaudited)
Quarter Ended
Jun 28, 2015
Jun 29, 2014
Change
Consolidated
Operating income, as reported (GAAP) $ 938.6 $ 768.5 22.1 %
Starbucks Japan acquisition-related items - other(1) 11.5 —
Non-GAAP operating income $ 950.1 $ 768.5 23.6
% Operating margin, as reported (GAAP) 19.2 % 18.5 % 70 bps
Starbucks Japan acquisition-related items - other(1) 0.2 —
Non-GAAP operating margin 19.5 % 18.5 % 100 bps
Diluted net earnings per share, as reported (GAAP) $ 0.41 $ 0.34
20.6 % Starbucks Japan acquisition-related items - other(1) 0.01
— Non-GAAP net earnings per share $ 0.42 $
0.34 23.5 %
China/Asia
Pacific (CAP)
Operating income, as reported (GAAP) $ 150.0 $ 100.8 48.8 %
Starbucks Japan amortization expense of acquired intangibles 11.0
— Non-GAAP operating income $ 161.0 $ 100.8
59.7 % Operating margin, as reported (GAAP) 23.0 %
35.0 % (1,200 ) bps Starbucks Japan amortization expense of
acquired intangibles 1.7 — Non-GAAP operating margin
24.7 % 35.0 % (1,030 ) bps
(1) Includes ongoing amortization expense
of acquired intangible assets and transaction and integration
costs.
Quarter Ended
Sep 27, 2015
Sep 28, 2014
Consolidated
(Projected)
(As Reported)
Change
Diluted net earnings per share (GAAP) $0.38 - $0.39 $ 0.39 (3 %) -
0% Net benefit from transactions in Q4 2014(1) — (0.02 ) Starbucks
Japan acquisition-related items - other(2) 0.01 — Debt
extinguishment-related items(3) 0.03 — Non-GAAP net
earnings per share $0.42 - $0.43 $ 0.37 14 % - 16%
Year Ended
Sep 27, 2015
Sep 28, 2014
Consolidated
(Projected)
(As Reported)
Change
Diluted net earnings per share (GAAP) $1.77 - $1.78 $ 1.35 31 % -
32% Litigation credit — (0.01 ) Net benefit from transactions in Q4
2014(1) — (0.02 ) Starbucks Japan acquisition-related items -
gain(4) (0.26 ) — Starbucks Japan acquisition-related items -
other(2) 0.03 — Debt extinguishment-related items(3) 0.03 —
Non-GAAP net earnings per share $1.57 - $1.58 $ 1.33
18 % - 19%
(1) The net benefit from transactions in
Q4 2014 relates primarily to a $0.02 gain on the sale of our
Malaysia equity method investment, partially offset by a loss on
the sale of our Australia retail operations and transaction costs
incurred in Q4 2014 related to the acquisition of Starbucks
Japan.
(2) Includes ongoing amortization expense
of acquired intangible assets and transaction and integration
costs.
(3) Represents the loss on extinguishment
of debt ($61.1M), which is comprised of the cost of the optional
redemption provision, unamortized debt issuance costs, and
unamortized discount associated with the $550 million of 6.250%
2017 Senior Notes redeemed in Q4 2015, as well as the related
unamortized interest rate hedge loss ($2.0M), which will be
recorded in interest expense.
(4) Gain represents the fair value
adjustment of Starbucks preexisting 39.5% ownership interest in
Starbucks Japan upon acquisition.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150723006370/en/
StarbucksInvestor Relations:JoAnn DeGrande,
206-318-7118investorrelations@starbucks.comorMedia:Alisha
Damodaran, 206-318-7100press@starbucks.com
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