Company to add 12,000 stores globally – to a
total of 37,000 – by 2021
Projects 10 percent revenue growth, 15-20
percent EPS growth and mid-single digit comp growth annually
Roasteries and Starbucks Reserve® stores to
elevate the Starbucks brand and customer experience
New innovation to further accelerate momentum
of the company’s digital flywheel and mobile ecosystem
Capping another record quarter, and year of growth and
profitability, Starbucks (NASDAQ: SBUX) today will host its
biennial Investor Conference to present the company’s five-year
strategic plan to grow revenue by 10 percent, EPS by 15-20 percent,
and drive mid-single digit comp growth each year, as it plans to
open approximately 12,000 new stores globally by 2021 while
continuing to elevate the Starbucks Experience around the
world.1
“Industry-leading innovation is driving our core business and
creating further separation from competitors all around the world,”
said Howard Schultz, chairman and chief executive officer. “Our
Roasteries and Starbucks Reserve stores will further transform –
and elevate – the Starbucks Experience we deliver to our customers,
and are laying the foundation for our next wave of profitable,
global growth. I have never been more energized or optimistic about
the opportunities ahead as Kevin transitions to the ceo role and
leads the most talented and experienced leadership team in
Starbucks history.”
“Starbucks continues to deliver record financial performance.
The customer experience created in our stores by partners who
proudly wear the green apron is what makes Starbucks a destination
for 80 to 90 million customers a week,” said Kevin Johnson,
president and chief operating officer. “We are today executing
against an ambitious, carefully-curated, multi-year strategy to
further elevate the entire Starbucks brand and customer experience
around the world, and further extending Starbucks leadership around
all things coffee, retail and mobile. The power of our brand, the
strength and momentum in our business, and the world-class
management talent we have assembled give me great confidence in our
ability to capture the enormous global growth opportunities
ahead.”
Last week, it was announced that Johnson will assume the role of
president and ceo at Starbucks, and Schultz will become executive
chairman, effective April 3, 2017.
1 Revenue and EPS growth are based on
non-GAAP FY16 results. A reconciliation of FY16 GAAP revenue and
EPS to non-GAAP revenue and EPS can be found at the end of this
press release.
Transforming the Premium Coffee Experience
Since opening two years ago, the Starbucks Reserve® Roastery in
Seattle has become recognized as the most dynamic and immersive
coffee forward retail experience in the world, delivering an
unprecedented level of premiumization to the coffee category and
fueling the next wave of transformation that is elevating the
Starbucks Experience globally. Building on this, the company plans
to accelerate the presentation of the Roastery experience
around the world, opening its next Roastery in Shanghai
in 2017, Tokyo and New York City in 2018, and a fifth location in
Europe to be announced early next year.
Each Roastery will serve as the foundation for
Starbucks Reserve® stores – a new retail format that will integrate
the theatre and romance of the Roastery with the unique
culinary experience of the company’s new Italian food partner,
Princi. These Starbucks Reserve® stores, under the leadership of
the company’s new Siren Retail organization, represent a
significant growth opportunity for the company in the U.S. and
around the world. The first of these new stores will open in
Seattle and Chicago in the second half of FY17, with plans to open
1,000 or more globally over time. In addition, the company plans to
open standalone Princi stores in Seattle, New York and Chicago in
late 2017 and in early 2018. The company is also extending elements
of the high-end Roastery experience to its
core Starbucks® stores, adding Starbucks Reserve®
experience bars in up to 20 percent of its total portfolio
(including new and renovated locations) by 2021.
Premiumization Strategy to Drive Innovative New Customer
Experiences
Starbucks Reserve® Roasteries will serve as an innovation
pipeline that will elevate the brand and contribute a "halo" to the
entire Starbucks Experience. This includes new product
breakthroughs that will contribute to the growth of the company’s
ecosystem, segmented strategically across all
Starbucks® stores. Earlier this year, Starbucks introduced its
first limited-time beverage offering inspired by the Roastery, the
Smoked Butterscotch Latte. This was followed by Nitro Cold
Brew, which is now available in more than 500 U.S.
company-owned locations and select stores in Canada and
China, as Starbucks pursues a $600 million global Cold Brew
opportunity. Both products continue to reinforce the company’s
focus on Roastery-inspired craft at scale, as well as ongoing
investment in the cold coffee category. In core stores, Starbucks
innovative, coffee-forward beverages such as Flat White, Cold Brew,
Latte Macchiato and Iced Coconut Milk Mocha Macchiato all
support the company's premiumization strategy. In January,
customers nationwide will be introduced to another Roastery
offering with the introduction of the Cascara Latte. Made with the
fruit of the coffee cherry, Cascara lends subtle notes of dark
brown sugar and maple to classic Starbucks® espresso. With its
strong retail foundation and operational excellence, Starbucks is
bringing Roastery-inspired innovations like this to market
more rapidly than ever before, creating further distinction from
competitors.
Starbucks is simultaneously innovating and expanding its food
menu with products customers have been looking for, starting with
the launch of Sous Vide Egg Bites in January 2017 – a wheat-free,
low calorie, high protein, convenient breakfast; the spring launch
of a Certified Gluten-Free Breakfast Sandwich; the expansion of the
successful Bistro Box platform; as well as a regional rollout of
delicious organic soups. Relevant innovation has become fundamental
to unlocking the lunch daypart and building on existing breakfast
daypart momentum, giving the company the ability to realize
additional profitability and incremental sales. Starbucks®
Breakfast Sandwich sales have more than doubled over the past four
years and innovation will continue to drive meaningful growth,
creating and meeting customer demand for innovation across
all dayparts. Building on this strong
momentum, Starbucks once again aims to double food growth
over the next five years.
Extending the Digital Flywheel
Starbucks offers the largest and most robust mobile
ecosystem of any retailer in the world, with more than 12
million Starbucks Rewards™ members (up 18 percent year on
year), eight million mobile paying customers with one out
of three now using Mobile Order & Pay, and more than $6 billion
loaded onto prepaid Starbucks Cards in North America during the
past year alone. Today, Starbucks will unveil an
innovative conversational ordering system, My Starbucks® Barista,
powered by groundbreaking Artificial Intelligence (AI) for the
Starbucks® Mobile App. Starbucks® Mobile App customers
will be able to place their orders via voice command or messaging
interface, delivering unparalleled speed and convenience,
enhancing customer loyalty and engagement and further
extending the accessibility of the Starbucks® app. The My
Starbucks® Barista feature will roll out first on iOS in limited
beta in early 2017 and be made available to more iOS and Android
users in subsequent releases.
Starbucks digital flywheel has also continued to gain momentum
with the launch of true one-to-one personalization. While still
early in the evolution of this service, Starbucks
hyper-personalized e-mail reward offerings – with more than 400,000
variations – have more than doubled customer response rates over
previous segmented email campaigns, translating into increased
customer engagement and, importantly, accelerated spend. Starbucks
has delivered personalized offers to customers directly on the
front screen of the mobile app. By early 2017, the company expects
to complete the rollout of suggested selling and recommendations
(suggesting items for pairing or additions to a customer’s order)
during Mobile Order and Pay checkout, which the company believes
will further fuel engagement and growth. With Starbucks Rewards™,
the company’s new spend-based loyalty program, customers are
finding increased value when being rewarded for bigger
purchases. This enables the company to boost ticket, create greater
marketing flexibility and pursue “Stars Everywhere” partnerships to
create further Star earning opportunities, while reducing “order
splitting.” With a 94 percent program retention rate, and new
international markets on the horizon, the program is stronger than
ever before.
Unlocking High-Value Opportunities in China
Customers in China have continued to embrace the Starbucks
brand, with some of the company’s most innovative, efficient and
profitable stores producing record revenue and strong same-store
sales growth in FY16. Starbucks newest class of stores in China are
delivering the highest AUVs, ROI and profitability of any store
class in the company’s 17-year history in the market. Starbucks now
operates approximately 2,500 stores in 118 cities in China and
employs more than 30,000 partners (employees), opening over a
store a day – a growth rate that will continue to accelerate well
into the future. Starbucks remains on track to open more than 5,000
stores in China by 2021 and expects the market will eclipse that in
the U.S. over time. While Starbucks business in China is in its
very early stages of development, the company will announce today a
series of strategic moves it is making in the digital and mobile
space to further extend customer engagement and loyalty.
Expanding Global Leadership Position in At-Home Coffee and
Ready-to-Drink
Over the next five years, Starbucks expects its Channel
Development segment, which includes its Consumer Packaged Goods
(CPG) portfolio, Branded Solutions (licensed stores and
foodservice), and Ready-to-Drink (RTD) segments, will generate an
incremental $1 billion in revenue, grow operating income by 75
percent, and double its RTD business outside of the U.S. The
company is the industry leader in premium single serve, premium
packaged roast and ground coffee, and Ready-to-Drink products, and
is well positioned to grow its share of these markets both in the
U.S. and globally. The company's more than 20-year partnership
with PepsiCo to create the North America Coffee Partnership (NACP)
is a more than $2 billion business and has approximately 97 percent
share of the RTD coffee category. The NACP continues to bring to
the market highly relevant, new and innovative coffee and energy
products to meet the needs of customers looking for premium,
on-the-go coffee offerings. In spring 2017, the company will launch
new bottled Starbucks® Cold Brew Cocoa and Honey with Cream in
select markets across the U.S. In Latin America, Starbucks has
expanded its partnership with PepsiCo to begin distribution of the
iconic bottled Frappuccino® chilled coffee beverage across ten
markets. In China, where the RTD coffee and energy category
represents a $6 billion opportunity that is projected to grow by 20
percent over the next three years, Starbucks and its partner,
Tingyi Holding Corp., have rapidly achieved distribution in over 37
major Chinese cities and over 7,100 points of distribution,
experiencing strong consumer demand.
Starbucks is extending this same disciplined growth and
innovation to the RTD tea category, which is a fast growing $4
billion category, starting with the upcoming launch of bottled
Teavana® Craft Iced Teas in partnership with Anheuser-Busch. The
first line of teas will begin shipping to select Northeast U.S.
retailers in February and customers will soon enjoy four new,
vibrant varieties brewed from the finest Teavana® teas and
botanicals with no artificial flavors. The new RTD teas include
Pineapple Berry Blue Herbal Tea, Peach Green Tea, Mango Black Tea
and Passion Tango® Herbal Tea. Later in 2017, select flavors will
roll out to Starbucks® stores with plans for national channel
availability by 2018.
Creating Long-Term Opportunities for Partners
From being among the first to offer comprehensive health
benefits and equity in the form of stock for partners who work
20 hours or more a week, to providing them with the
opportunity for full tuition reimbursement for a bachelor’s degree
from Arizona State University through the innovative Starbucks
College Achievement Plan, Starbucks has continued to
invest in and innovate around the partner experience while
balancing the needs of its customers, shareholders and the
marketplace. Starbucks has now matched $78 million in 401K savings
in the U.S. with a total fund balance of $1.3 billion as of FY16.
Its Global Bean Stock program, which grants partners equity in the
form of company stock, generated $221.6 million in pre-taxed gains
in FY16. The company also recently announced it will add an
enhancement to the program in 2017, doubling the annual Bean
Stock award for U.S. hourly store partners with at least two years
of continuous service with the company. Further, with the recent
move to a new healthcare platform, U.S. partners are now saving an
average of 15 percent per pay check on healthcare premiums compared
to last year.
Starbucks is finding that these incremental investments in both
wages and benefits have helped support and elevate its partners,
attract and retain the best talent, provide measured improvement in
service to customers and deliver outsized returns to shareholders.
In fact, since announcing the Starbucks College Achievement Plan
two years ago, the company has enrolled more than 6,300 U.S.
partners in the program and is on track to celebrate 1,000
graduates in 2017, with a commitment to graduating 25,000 partners
from the program by 2025. Early results from the program are
showing that participants have twice the retention rate and are
more than four times more likely to achieve a promotion in
responsibility.
In the spirit of the company’s Mission and Values, Starbucks CUP
(Caring Unites Partners) Fund, an emergency financial assistance
program for partners impacted by natural disasters and family
emergencies, generated over $2.1 million in contributions from
partners in FY16 through a combination of “round up” in stores and
payroll contributions. Since it launched in 1998, partners have
raised more than $18 million toward the CUP Fund. The company also
matched $784,000 in individual partner charitable donations and
volunteer hours, and donated more than 300,000 meals since
launching its FoodShare initiative in select U.S. markets in March
2016. Looking ahead, Starbucks plans to roll out FoodShare to all
8,000+ U.S. company-operated stores over the next three years.
Live Webcast Details
Starbucks Investor Day 2016 will be live-streamed exclusively on
Yahoo Finance at http://finance.yahoo.com/live/starbucks, and
simultaneously available at http://investor.starbucks.com. The
event is scheduled to begin at 8:00 a.m. ET and will continue until
approximately 12 noon ET. Following a break for lunch, the webcast
of the live event will resume at approximately 1:30 p.m. ET and is
expected to conclude at approximately 3:00 p.m. ET.
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 Statement
Certain statements contained herein are “forward-looking
statements” within the meaning of the applicable securities laws
and regulations. Generally, these statements can be identified by
the use of words such as “anticipate,” “expect,” “believe,”
“could,” “estimate,” “feel,” “forecast,” “intend,” “may,” “plan,”
“potential,” “project,” “should,” “will,” “would,” and similar
expressions intended to identify forward-looking statements,
although not all forward-looking statements contain these
identifying words. These statements are based upon information
available to Starbucks as of the date hereof, and Starbucks actual
results or performance could different materially from those stated
or implied due to risks and uncertainties associated with its
business. These risks and uncertainties include, but are 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 incidents involving food or
beverage-borne illnesses, tampering, contamination or mislabeling,
potential negative effects of material breaches of our information
technology systems to the extent we experience a material breach,
material failures of our information technology systems, costs
associated with, and the successful execution of, the company’s
initiatives and plans, the acceptance of the company’s products by
our customers, the impact of competition, coffee, dairy and other
raw materials 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 the Starbucks Annual Report on Form 10-K for
the fiscal year ended October 2, 2016. The company assumes no
obligation to update any of these forward-looking statements.
STARBUCKS CORPORATION HISTORICAL REVENUE AND
EARNINGS PER SHARE DATA INCLUDING A RECONCILIATION OF
SELECTED GAAP MEASURES TO NON-GAAP MEASURES (unaudited)
Year Ended
Consolidated
October 2, 2016 Revenue, as reported (GAAP) - 53 weeks $ 21,315.9
Impact of the extra week 412.4 Non-GAAP revenue - 52
weeks $ 20,903.5 Diluted net earnings per share, as
reported (GAAP) $ 1.90 Starbucks Japan acquisition-related items -
other(1) 0.04 Sale of Germany retail operations(2) - Income tax
effect on Non-GAAP adjustments(3) (0.01 ) Other tax matters(4)
(0.01 ) Non-GAAP net earnings per share - 53 weeks $ 1.91
Impact of the extra week (0.09 ) Income tax effect on the impact of
the extra week 0.03 Non-GAAP net earnings per share -
52 weeks $ 1.85
(1) Includes ongoing amortization expense of acquired intangible
assets and transaction and integration costs, such as incremental
IT and compensation-related costs associated with the acquisition.
(2) The sale of Germany retail operations is net of certain costs
associated with the transfer of these stores to licensed stores.
(3) Income tax effect on non-GAAP adjustments was determined based
on the nature of the underlying items and their relevant
jurisdictional tax rates. (4) Other tax matters include the
incremental benefit from additional domestic manufacturing
deductions claimed in our U.S. consolidated tax returns pertaining
to periods prior to FY16.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161207005611/en/
Starbucks Coffee CompanyInvestor Relations:Durga
Doraisamy,
206-318-7118investorrelations@starbucks.comorMedia:Alisha
Damodaran, 206-318-7100press@starbucks.com
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