Q4 GAAP Earnings Per Share of $0.54; Non-GAAP
Earnings Per Share Increases to $0.55
Q4 Global and U.S. Comps Up 2%, Up 3% adjusted
for Hurricane Impact; China Up 8%; Global Traffic Up 1%
Board Approves 20% Increase in Quarterly
Dividend, to $0.30 Per Share
Company Commits to Returning $15 Billion to
Shareholders Over Next 3 Years; Updates Long Term Financial
Targets
Starbucks Corporation (NASDAQ: SBUX) today reported financial
results for its 13-week fiscal fourth quarter and 52-week fiscal
year ended October 1, 2017. Note that fiscal 2016 contained an
extra week in the fourth quarter, resulting in incremental revenue
and income in the comparable periods, which had 14- and 53-weeks,
respectively. Further, GAAP results in fiscal 2017 include items
related to strategic actions the company is taking as it focuses on
accelerating growth in high-returning businesses and streamlining
its operations. These items include restructuring and impairment
charges, transaction and integration costs, gains related to
changes in ownership of international markets, and other items,
which are excluded from non-GAAP results. A reconciliation of
non-GAAP measures with their corresponding GAAP measures is
available at the end of this release.
The company will hold a conference call, hosted by Kevin
Johnson, president and ceo, and Scott Maw, cfo, today at 2:00 p.m.
Pacific Time, in order to provide further commentary around
Starbucks non-GAAP business results. The call will be webcast and
can be accessed at http://investor.starbucks.com.
Q4 Fiscal 2017
Highlights
- Global comparable store sales
increased 2%, driven by a 2% increase in average ticket and a 1%
increase in transactions; up 3% excluding the impact from
Hurricanes Harvey and Irma
- Americas comp store sales
increased 3%, driven by a 2% increase in average ticket and a 1%
increase in transactions
- U.S. comp store sales increased 2%;
excluding the impact from Hurricanes Harvey and Irma, U.S. comp
sales up 3%, driven by a 1% increase in transactions
- CAP comp store sales increased
2%; China comp store sales increased 8%, driven by a 7% increase in
transactions
- Consolidated net revenues of $5.7
billion versus $5.7 billion in the prior year quarter. Excluding
$412.4 million for the extra week in Q4 FY16, consolidated net
revenues grew 8%
- GAAP operating income of $1.0 billion
declined 16.7% compared to the prior year quarter. Non-GAAP
operating income grew 2.8% to $1.1 billion
- GAAP operating margin of 17.9% declined
360 basis points compared to the prior year quarter. Non-GAAP
operating margin of 20.0% declined 90 basis points primarily due to
increased investments in our store partners
- GAAP Earnings Per Share of $0.54 was
flat to the prior year quarter. Non-GAAP EPS grew 10.0% to $0.55
per share
- The company opened 603 net new stores
globally, bringing total store count to 27,339 across 75
countries
- Membership in Starbucks Rewards grew
11% year-over-year to 13.3 million active members in the U.S., with
member spend representing 36% of U.S. company-operated sales
- Mobile Order and Pay reached 10% of
transactions in U.S. company-operated stores
Fiscal Year 2017
Highlights
- Global comparable store sales
increased 3%, comprised of a 3% increase in the Americas
segment and a 3% increase in the CAP segment
- U.S. comp store sales increased 3%;
China comp store sales increased 7%, driven by a 5% increase in
transactions
- Consolidated net revenues of $22.4
billion grew 5% versus the prior year. Excluding $412.4 million for
the extra week in Q4 FY16, consolidated net revenues grew 7% year
over year
- GAAP operating income of $4.1 billion
declined 0.9% compared to the prior year. Non-GAAP operating income
grew 7.8% to $4.4 billion
- GAAP operating margin of 18.5% declined
110 basis points compared to the prior year. Non-GAAP operating
margin expanded 10 basis points to 19.7%
- GAAP Earnings Per Share of $1.97 grew
3.7% versus the prior year. Non-GAAP EPS grew 11.4% to $2.06 per
share
"Today, Starbucks reported another quarter – and year – of
strong performance, with each of our business segments around the
world contributing to record results,” said Kevin Johnson, ceo and
president. “Food, beverage and digital innovation are bringing
customers into our stores at the same time as ongoing operational
improvements are enabling us to drive increased throughput -
particularly in our busiest stores at peak - and deliver a further
elevated Starbucks Experience to our customers.”
“Starbucks delivered solid top and bottom line growth – and our
strongest quarterly traffic number in the U.S. since mid-2016 –
despite a difficult operating environment in both the quarter and
year,” said Scott Maw, cfo. “Continued strong growth and
performance from CAP demonstrates that Starbucks now has two
significant profit engines driving our global returns, our North
America business and the broader CAP market.”
Long Term Financial
Targets
The company provides the following updates to long term
financial targets; more detail will be provided during its Q4 FY17
earnings conference call today at 2:00 p.m. Pacific Time. Following
the call, these items can be accessed on the company's Investor
Relations website.
- Annual global comparable store sales
growth of 3% to 5%
- Annual consolidated net revenue growth
in the high single digits
- Annual earnings per share growth of 12%
or greater
- Annual ROIC of 25% or greater
Fiscal Year 2018 Financial
Targets
The company will introduce fiscal year 2018 financial targets
during its Q4 FY17 earnings conference call starting today at 2:00
p.m. Pacific Time. These items can be accessed on the company's
Investor Relations website during and after the call.
Fourth Quarter
Fiscal 2017 Summary
Quarter Ended Oct 1, 2017 Comparable Store
Sales(1) Sales Growth
Change in Transactions Change in
Ticket Consolidated 2% 1% 2%
Americas 3% 1% 2% CAP 2% 1% 1% EMEA(2) 1%
(2)% 3% (1) Includes only Starbucks
company-operated stores open 13 months or longer. Comparable store
sales exclude the effect of fluctuations in foreign currency
exchange rates. For fiscal 2016, comparable store sales percentages
were calculated excluding the 53rd week. (2) Company-operated
stores represent 17% of the EMEA segment store portfolio as of
October 1, 2017.
Operating Results Quarter Ended
Change Oct 1, 2017 Oct 2, 2016
($ in millions, except per share amounts)
(13 Weeks Ended) (14 Weeks Ended)
Net New Stores (1) 603 690 (87) Revenues $5,698.3
$5,711.2 0% Operating Income $1,022.5 $1,227.5 (17)% Operating
Margin 17.9% 21.5% (360) bps EPS $0.54
$0.54 0% (1) Q4 2017 net new stores include
the closure of 54 Teavana-branded stores.
Consolidated net revenues of $5.7 billion in Q4 FY17 were flat
to the prior year quarter, which included an extra week. Excluding
$412.4 million for the extra week in Q4 FY16, consolidated net
revenues grew 8%, driven by incremental revenues from the opening
of 2,254 net new stores over the past 12 months and a 2% growth in
global comparable store sales. The impact from Hurricanes Irma and
Harvey affected consolidated and U.S. comp growth by 1% as over
1,000 stores were temporarily closed for storm related reasons.
Consolidated operating income declined 17% to $1,022.5 million
in Q4 FY17, down from $1,227.5 million in Q4 FY16. Consolidated
operating margin declined 360 basis points to 17.9%, primarily due
to increased partner investments, largely in the Americas segment,
and the lapping of the 53rd week in Q4 FY16. Additionally,
operating margin was adversely impacted by product mix shift,
largely towards food, a higher donation to The Starbucks
Foundation, and costs related to restructuring and impairments.
These were partially offset by sales leverage.
Q4 Americas
Segment Results
Quarter
Ended Change Oct 1, 2017 Oct 2, 2016 ($ in
millions)
(13 Weeks Ended)
(14 Weeks Ended) Net New Stores 257 307
(50) Revenues $3,949.0 $3,968.1 0% Operating Income $903.7 $1,096.9
(18)% Operating Margin 22.9%
27.6% (470) bps
Net revenues for the Americas segment of $3.9 billion in Q4 FY17
were flat to the prior year quarter, which included an extra week.
Excluding $288.9 million for the extra week in Q4 FY16, net
revenues grew 7%, driven by incremental revenues from 952 net new
store openings over the past 12 months and a 3% growth in
comparable store sales.
Operating income of $903.7 million in Q4 FY17 declined 18%
versus $1,096.9 million in Q4 FY16. Operating margin of 22.9%
declined 470 basis points primarily due to increased investments in
our store partners (employees), product mix shift, largely towards
food, and the lapping of the 53rd week in Q4 FY16.
Q4 China/Asia
Pacific Segment Results
Quarter
Ended Change Oct 1, 2017 Oct 2, 2016 ($ in
millions)
(13 Weeks Ended)
(14 Weeks Ended) Net New Stores 296 316
(20) Revenues $859.9 $839.2 2% Operating Income $201.7 $192.4 5%
Operating Margin 23.5% 22.9%
60 bps
Net revenues for the China/Asia Pacific segment grew 2% over Q4
FY16 to $859.9 million in Q4 FY17. Excluding $56.9 million for the
extra week in Q4 FY16, net revenues grew 10%, primarily driven by
incremental revenues from 1,036 net new store openings over the
past 12 months and a 2% growth in comparable store sales. The
increase was partially offset by unfavorable foreign currency
translation.
Q4 FY17 operating income of $201.7 million grew 5% over Q4 FY16
operating income of $192.4 million. Operating margin expanded 60
basis points to 23.5%, primarily driven by higher income from our
joint venture operations and partially offset by the lapping of the
53rd week in Q4 FY16.
Q4 EMEA Segment
Results
Quarter
Ended Change Oct 1, 2017 Oct 2, 2016 ($ in
millions)
(13 Weeks Ended)
(14 Weeks Ended) Net New Stores 104 77
27 Revenues $269.9 $270.2 0% Operating Income $34.8 $45.8 (24)%
Operating Margin 12.9% 17.0%
(410) bps
Net revenues for the EMEA segment of $269.9 million in Q4 FY17
were flat to the prior year quarter, which included an extra week.
Excluding $18.3 million for the extra week in Q4 FY16, net revenues
grew 7%, driven by incremental revenues from the opening of 339 net
new licensed stores over the past 12 months.
Operating income of $34.8 million in Q4 FY17 declined 24% versus
operating income of $45.8 million in Q4 FY16. Operating margin
declined 410 basis points to 12.9% primarily driven by sales
deleverage in certain company-operated stores, the impact of a tax
settlement, and the lapping of the 53rd week in Q4 FY16. Partially
offsetting the decline was sales leverage due to the shift in the
portfolio towards more licensed stores.
Q4 Channel
Development Segment Results
Quarter
Ended Change Oct 1, 2017 Oct 2, 2016 ($ in
millions)
(13 Weeks Ended)
(14 Weeks Ended) Revenues $514.9 $518.5
(1)% Operating Income $246.7 $244.3 1% Operating Margin
47.9% 47.1% 80 bps
Net revenues for the Channel Development segment of $514.9
million in Q4 FY17 declined 1% versus the prior year quarter, which
included an extra week. Excluding $39.9 million for the extra week
in Q4 FY16, net revenues grew 8%, driven by higher sales through
our foodservice, international and U.S. packaged coffee
channels.
Operating income of $246.7 million in Q4 FY17 increased 1%
compared to Q4 FY16. Operating margin expanded 80 basis points to
47.9% primarily driven by the lapping of the 53rd week in Q4
FY16.
Q4 All Other
Segments Results
Quarter
Ended Change Oct 1, 2017 Oct 2, 2016 ($ in
millions)
(13 Weeks Ended)
(14 Weeks Ended) Net New Stores (54)
(10) (44) Revenues $104.6 $115.2 (9)% Operating Loss
$(46.0) $(10.1) 355%
All Other Segments primarily includes Teavana-branded stores,
Seattle’s Best Coffee, as well as Starbucks Reserve® and Roastery
businesses. The increase in the operating loss in Q4 FY17 compared
to Q4 FY16 was primarily due to restructuring and impairment costs
related to our strategy to close Teavana retail stores and focus on
Teavana tea within Starbucks stores.
Full Year
Financial Results
Year Ended
October 1, 2017 Comparable Store Sales(1)
Sales Growth Change in
Transactions Change in Ticket Consolidated
3% 0% 3% Americas 3% 0% 4% CAP 3% 1% 1% EMEA(2)
1% (1)% 1% (1) Includes only
Starbucks company-operated stores open 13 months or longer.
Comparable store sales exclude the effect of fluctuations in
foreign currency exchange rates. For fiscal 2016, comparable store
sales percentages were calculated excluding the 53rd week. (2)
Company-operated stores represent 17% of the EMEA segment store
portfolio as of October 1, 2017.
Operating Results
Year Ended Change
Oct 1, 2017 Oct 2, 2016
($ in millions, except per share
amounts)
(52 Weeks Ended) (53
Weeks Ended) Net New Stores (1) 2,254 2,042 212
Revenues $22,386.8 $21,315.9 5% Operating Income $4,134.7 $4,171.9
(1)% Operating Margin 18.5% 19.6% (110) bps EPS
$1.97 $1.90 4% (1) Fiscal 2017
net new stores include the net closure of 64 Teavana-branded
stores.
Company Updates
- Starbucks appointed Rosalind Brewer as
group president, Americas and chief operating officer, effective
October 2nd. Brewer reports to Kevin Johnson and serves as a member
of the Starbucks senior leadership team. She also continues to
serve on the Starbucks board of directors. As group president,
Americas and chief operating officer, Brewer leads the company’s
operating businesses across the Americas (U.S., Canada, and Latin
America), as well as the global functions of supply chain, product
innovation, and store development organizations.
- Unilever and Starbucks today announced
entry into a definitive agreement for Unilever to acquire the
assets of the TAZO® brand including TAZO®’s signature recipes,
intellectual property and inventory for $384 million. In turn,
Starbucks will drive a single tea brand strategy and focus with its
super premium tea brand, Teavana.
- The company announced in September that
it had entered into an agreement with its long-time strategic
partner Maxim’s Caterers Limited – a leading restaurant operator of
multiple brands across Asia – to fully license Starbucks operations
in Singapore, including transitioning the more than 130
company-operated Starbucks stores open in the market today. The
partnership between Starbucks and Maxim’s started in 2000 in Hong
Kong. Currently, they operate more than 210 Starbucks stores across
Cambodia, Hong Kong, Macau and Vietnam.
- On September 20th the company launched
Starbucks Rewards™ in Japan, a loyalty program which offers members
exclusive and personalized benefits. Alongside the launch of the
program, the company launched a redesigned mobile app for iPhone®
and Android™, with updates that make it easier to track stars
earned and to redeem rewards. Additionally, the new digital
Starbucks Card feature allows users to instantly receive a digital
card, makes joining Starbucks Rewards™ quick and convenient, and
provides a fast and convenient way for customers to pay at the more
than 1,200 stores across the country.
- In the wake of unprecedented storms
impacting Texas, Florida and Puerto Rico, Starbucks granted more
than 2,100 Caring Unites Partners (CUP) Fund grants to impacted
partners. And Starbucks customers engaged in the overall relief
effort as well, donating nearly $900,000 to the American Red Cross,
Center for Disaster Philanthropy and Music City Cares Fund through
the Starbucks mobile app and in stores.
- The company repurchased 15.1 million
shares of common stock in Q4 FY17; approximately 80 million shares
remain available for purchase under current authorizations.
- The Board of Directors declared a cash
dividend of $0.30 per share, an increase of 20%, payable on
December 1, 2017, to shareholders of record as of November 16,
2017.
- The company announced a new commitment
of returning $15 billion to shareholders over the next 3 years
through dividends and share repurchases.
Conference Call
Starbucks will hold a conference call today at 2:00 p.m. Pacific
Time, which will be hosted by Kevin Johnson, president and ceo, 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 until end of day Saturday, December 2, 2017.
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, resilience, momentum and potential of our business,
operations and brand, the impact of our food, beverage and digital
innovation, operational improvements, our two significant profit
engines driving our global returns, our customer base, our focus on
accelerating growth in high-returning businesses and streamlining
operations, revenues, operating margins, comparable store sales,
and ROIC, our commitment of returning $15 billion to shareholders
over the next three years through dividends and share buybacks, our
fiscal 2018 and long-term financial targets, and our strategic,
operational, and digital moves, including the purchase of the
remaining 50% ownership of the East China market and the closure of
Teavana 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 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, including the integration of Starbucks Japan, the
purchase of the remaining 50% ownership of the East China market
and the closure of Teavana stores, the acceptance of the company’s
products by our customers, our ability to obtain financing on
acceptable terms, 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 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
CONSOLIDATED STATEMENTS OF
EARNINGS
(unaudited, in millions, except per share
data)
Quarter Ended
Quarter Ended Oct 1, 2017 Oct
2, 2016
%Change
Oct 1, 2017 Oct 2, 2016
(13 WeeksEnded)
(14 WeeksEnded)
As a % of totalnet revenues Net
revenues: Company-operated stores $ 4,477.0 $ 4,507.8
(0.7 )% 78.6 % 78.9 % Licensed stores 617.6 593.2 4.1 10.8 10.4
CPG, foodservice and other 603.7 610.2 (1.1 ) 10.6
10.7
Total net revenues 5,698.3
5,711.2 (0.2 ) 100.0 100.0 Cost
of sales including occupancy costs(1) 2,352.9 2,254.2 4.4 41.3 39.5
Store operating expenses 1,639.8 1,562.3 5.0 28.8 27.4 Other
operating expenses 131.1 122.1 7.4 2.3 2.1 Depreciation and
amortization expenses 255.4 249.9 2.2 4.5 4.4 General and
administrative expenses 385.2 401.2 (4.0 ) 6.8 7.0 Restructuring
and impairments(2) 33.3
—
nm 0.6 — Total operating expenses 4,797.7
4,589.7 4.5 84.2 80.4 Income from equity investees 121.9
106.0 15.0 2.1 1.9
Operating income
1,022.5 1,227.5 (16.7 ) 17.9
21.5 Interest income and other, net(3) 151.6 12.5 1,112.8
2.7 0.2 Interest expense (22.3 ) (24.7 ) (9.7 ) (0.4 ) (0.4 )
Earnings before income taxes 1,151.8 1,215.3 (5.2 ) 20.2 21.3
Income tax expense 362.5 413.5 (12.3 ) 6.4 7.2
Net earnings including noncontrolling interests 789.3 801.8
(1.6 ) 13.9 14.0 Net earnings/(loss) attributable to noncontrolling
interests 0.8 0.8 — — —
Net earnings
attributable to Starbucks $ 788.5 $
801.0 (1.6 ) 13.8 %
14.0 % Net earnings per common share -
diluted $ 0.54 $ 0.54
— % Weighted avg. shares outstanding - diluted
1,451.2 1,478.4 Cash dividends declared per share $ 0.30 $
0.25
Supplemental Ratios: Store operating expenses as
a % of company-operated store revenues 36.6 % 34.7 % Other
operating expenses as a % of non-company-operated store revenues
10.7 % 10.1 % Effective tax rate including noncontrolling interests
31.5 % 34.0 % (1) As a result of our
restructuring efforts, $11.3 million was recorded in cost of sales
including occupancy cost related to inventory write-offs. (2)
Represents restructuring charges of $27.3 million associated with
our Teavana-branded stores, $4.1 million related to our Starbucks
Canada retail business and $1.9 million related to our e-commerce
business. (3) Included in interest income and other, net is the Q4
FY17 gain on the sale of our Singapore retail operations of $83.9
million.
Year Ended
Year Ended Oct 1, 2017
Oct 2, 2016 %
Change
Oct 1, 2017 Oct 2, 2016
(52 WeeksEnded)
(53 WeeksEnded)
As a % of totalnet revenues Net
revenues: Company-operated stores $ 17,650.7 $
16,844.1 4.8 % 78.8 % 79.0 % Licensed stores 2,355.0 2,154.2 9.3
10.5 10.1 CPG, foodservice and other(1) 2,381.1
2,317.6 2.7 10.6 10.9
Total net
revenues 22,386.8 21,315.9 5.0
100.0 100.0 Cost of sales including occupancy
costs(2) 9,038.2 8,511.1 6.2 40.4 39.9 Store operating expenses
6,493.3 6,064.3 7.1 29.0 28.4 Other operating expenses 553.8 545.4
1.5 2.5 2.6 Depreciation and amortization expenses 1,011.4 980.8
3.1 4.5 4.6 General and administrative expenses 1,393.3 1,360.6 2.4
6.2 6.4 Restructuring and impairments(3) 153.5 —
nm 0.7 —
Total operating expenses
18,643.5 17,462.2 6.8 83.3 81.9 Income from equity investees
391.4 318.2 23.0 1.7 1.5
Operating
income 4,134.7 4,171.9 (0.9 )
18.5 19.6 Interest income and other, net(4) 275.3
108.0 154.9 1.2 0.5 Interest expense (92.5 ) (81.3 ) 13.8
(0.4 ) (0.4 ) Earnings before income taxes 4,317.5 4,198.6 2.8 19.3
19.7 Income tax expense 1,432.6 1,379.7 3.8
6.4 6.5 Net earnings including noncontrolling
interests 2,884.9 2,818.9 2.3 12.9 13.2 Net earnings/(loss)
attributable to noncontrolling interests 0.2 1.2
(83.3 ) — —
Net earnings attributable to
Starbucks $ 2,884.7 $
2,817.7 2.4 % 12.9 %
13.2 % Net earnings per common share -
diluted $ 1.97 $ 1.90
3.7 % Weighted avg. shares outstanding - diluted
1,461.5 1,486.7 Cash dividends declared per share $ 1.05 $
0.85
Supplemental Ratios: Store operating expenses as
a % of company-operated store revenues 36.8 % 36.0 % Other
operating expenses as a % of non-company-operated store revenues
11.7 % 12.2 % Effective tax rate including noncontrolling interests
33.2 % 32.9 % (1) CPG revenues included an
unfavorable revenue deduction adjustment pertaining to periods
prior to FY17 of $13.2 million, as recorded in Q2 FY17. (2) As a
result of our restructuring efforts, $11.3 million was recorded in
cost of sales including occupancy cost related to inventory
write-offs. (3) Represents restructuring and impairment charges of
$129.6 million associated with our Teavana-branded stores, goodwill
impairment of $17.9 million related to our Switzerland retail
business, and restructuring charges associated with Starbucks
Canada retail and e-commerce businesses of $4.1 million and $1.9
million, respectively. (4)
Included in interest income and other, net
is the Q4 FY17 gain on the sale of our Singapore retail operations
of $83.9 million and the Q2 FY17 gain on the sale of our investment
in Square, Inc. warrants of $41 million.
Segment Results (in
millions)
Americas
Oct 1,2017
Oct 2,2016
%Change
Oct 1,2017
Oct 2,2016
Quarter
Ended
(13 WeeksEnded)
(14 WeeksEnded)
As a % of Americastotal net
revenues
Net revenues: Company-operated stores $ 3,524.1 $ 3,550.1 (0.7 )%
89.2 % 89.5 % Licensed stores 414.7 410.5 1.0 10.5 10.3 Foodservice
and other 10.2 7.5 36.0 0.3 0.2
Total net revenues 3,949.0 3,968.1 (0.5
) 100.0 100.0 Cost of sales including
occupancy costs 1,483.5 1,406.0 5.5 37.6 35.4 Store operating
expenses 1,326.0 1,259.7 5.3 33.6 31.7 Other operating expenses
32.0 10.2 213.7 0.8 0.3 Depreciation and amortization expenses
154.3 148.5 3.9 3.9 3.7 General and administrative expenses 45.4
46.8 (3.0 ) 1.1 1.2 Restructuring and impairments(1) 4.1
— nm 0.1 — Total operating expenses
3,045.3 2,871.2 6.1 77.1 72.4
Operating
income $ 903.7 $ 1,096.9
(17.6 )% 22.9 % 27.6 %
Supplemental Ratios: Store operating expenses as a % of
company-operated store revenues 37.6 % 35.5 % Other operating
expenses as a % of non-company-operated store revenues 7.5 % 2.4 %
Oct 1, 2017
Oct 2,2016
%Change
Oct 1,2017
Oct 2,2016
Year
Ended
(52 WeeksEnded)
(53 WeeksEnded)
As a % of Americastotal net
revenues
Net revenues: Company-operated stores $ 13,996.4 $ 13,247.4 5.7 %
89.4 % 89.5 % Licensed stores 1,617.3 1,518.5 6.5 10.3 10.3
Foodservice and other 39.0 29.5 32.2 0.2 0.2
Total net revenues 15,652.7 14,795.4
5.8 100.0 100.0 Cost of sales including
occupancy costs 5,720.3 5,271.9 8.5 36.5 35.6 Store operating
expenses 5,320.2 4,909.3 8.4 34.0 33.2 Other operating expenses
128.5 96.0 33.9 0.8 0.6 Depreciation and amortization expenses
615.0 590.1 4.2 3.9 4.0 General and administrative expenses 201.4
186.1 8.2 1.3 1.3 Restructuring and impairments(1) 4.1
— nm — — Total operating expenses
11,989.5 11,053.4 8.5 76.6 74.7
Operating
income $ 3,663.2 $ 3,742.0
(2.1 )% 23.4 % 25.3 %
Supplemental Ratios: Store operating expenses as a % of
company-operated store revenues 38.0 % 37.1 % Other operating
expenses as a % of non-company-operated store revenues 7.8 % 6.2 %
(1) Represents restructuring charges of $4.1
million related to our Starbucks Canada retail business.
China/Asia Pacific (CAP)
Oct 1,
2017 Oct 2, 2016
%Change
Oct 1, 2017 Oct 2, 2016
Quarter
Ended
(13 WeeksEnded)
(14 WeeksEnded)
As a % of CAPtotal net
revenues
Net revenues: Company-operated stores $ 770.0 $ 756.4
1.8 % 89.5 % 90.1 %
Licensed stores
88.7 81.6 8.7 10.3 9.7 Foodservice and other 1.2 1.2
— 0.1 0.1
Total net revenues 859.9
839.2 2.5 100.0 100.0 Cost of sales
including occupancy costs 369.6 363.2 1.8 43.0 43.3 Store operating
expenses 226.6 221.4 2.3 26.4 26.4 Other operating expenses 20.5
22.1 (7.2 ) 2.4 2.6 Depreciation and amortization expenses 53.3
48.9 9.0 6.2 5.8 General and administrative expenses 46.8
37.2 25.8 5.4 4.4 Total operating expenses
716.8 692.8 3.5 83.4 82.6 Income from equity investees 58.6
46.0 27.4 6.8 5.5
Operating income
$ 201.7 $ 192.4 4.8 %
23.5 % 22.9 % Supplemental
Ratios: Store operating expenses as a % of company-operated
store revenues 29.4 % 29.3 % Other operating expenses as a % of
non-company-operated store revenues 22.8 % 26.7 %
Oct 1, 2017 Oct 2, 2016
%Change
Oct 1, 2017 Oct 2, 2016
Year
Ended
(52 WeeksEnded)
(53 WeeksEnded)
As a % of CAPtotal net
revenues
Net revenues: Company-operated stores $ 2,906.0 $ 2,640.4 10.1 %
89.7 % 89.8 % Licensed stores 327.4 292.3 12.0 10.1 9.9 Foodservice
and other 6.8 6.1 11.5 0.2 0.2
Total
net revenues 3,240.2 2,938.8 10.3
100.0 100.0 Cost of sales including occupancy costs
1,393.9 1,296.7 7.5 43.0 44.1 Store operating expenses 845.5 779.4
8.5 26.1 26.5 Other operating expenses 74.6 70.3 6.1 2.3 2.4
Depreciation and amortization expenses 202.2 180.6 12.0 6.2 6.1
General and administrative expenses 156.0 130.3 19.7
4.8 4.4 Total operating expenses 2,672.2 2,457.3 8.7
82.5 83.6 Income from equity investees 197.0 150.1
31.2 6.1 5.1
Operating income $
765.0 $ 631.6 21.1 % 23.6
% 21.5 % Supplemental Ratios: Store
operating expenses as a % of company-operated store revenues 29.1 %
29.5 % Other operating expenses as a % of non-company-operated
store revenues 22.3 % 23.6 %
EMEA
Oct 1, 2017
Oct 2, 2016
%Change
Oct 1, 2017 Oct 2, 2016
Quarter
Ended
(13 WeeksEnded)
(14 WeeksEnded)
As a % of EMEAtotal net
revenues
Net revenues: Company-operated stores $ 141.4 $ 156.0 (9.4 )% 52.4
% 57.7 % Licensed stores 113.7 100.2 13.5 42.1 37.1 Foodservice
14.8 14.0 5.7 5.5 5.2
Total net
revenues 269.9 270.2 (0.1 )
100.0 100.0 Cost of sales including occupancy costs
140.8 137.7 2.3 52.2 51.0 Store operating expenses 63.1 51.2 23.2
23.4 18.9 Other operating expenses 13.8 15.0 (8.0 ) 5.1 5.6
Depreciation and amortization expenses 8.4 8.4 — 3.1 3.1 General
and administrative expenses 9.0 12.1 (25.6 ) 3.3
4.5 Total operating expenses 235.1
224.4 4.8 87.1 83.0
Operating income $
34.8 $ 45.8 (24.0 )% 12.9
% 17.0 % Supplemental Ratios: Store
operating expenses as a % of company-operated store revenues 44.6 %
32.8 % Other operating expenses as a % of non-company-operated
store revenues 10.7 % 13.1 %
Oct 1, 2017
Oct 2, 2016
%Change
Oct 1, 2017 Oct 2, 2016
Year
Ended
(52 WeeksEnded)
(53 WeeksEnded)
As a % of EMEAtotal net
revenues
Net revenues: Company-operated stores $ 551.0 $ 732.0 (24.7 )% 54.4
% 65.1 % Licensed stores 407.7 339.5 20.1 40.2 30.2 Foodservice
55.0 53.4 3.0 5.4 4.7
Total net
revenues 1,013.7 1,124.9 (9.9 )
100.0 100.0 Cost of sales including occupancy costs
533.5 565.0 (5.6 ) 52.6 50.2 Store operating expenses 214.1 260.6
(17.8 ) 21.1 23.2 Other operating expenses 59.1 57.0 3.7 5.8 5.1
Depreciation and amortization expenses 31.3 40.8 (23.3 ) 3.1 3.6
General and administrative expenses 41.7 51.4 (18.9 ) 4.1 4.6
Restructuring and impairments(1) 17.9 — nm 1.8
— Total operating expenses 897.6 974.8 (7.9 ) 88.5 86.7
Income from equity investees — 1.5 (100.0 ) —
0.1
Operating income $ 116.1 $
151.6 (23.4
)%
11.5 % 13.5 % Supplemental
Ratios: Store operating expenses as a % of company-operated
store revenues 38.9 % 35.6 % Other operating expenses as a % of
non-company-operated store revenues 12.8 % 14.5 % (1)
Represents goodwill impairment related to our Switzerland
retail business recorded in Q3 FY17.
Channel Development
Oct 1, 2017
Oct 2, 2016
%Change
Oct 1, 2017 Oct 2, 2016
Quarter
Ended
(13 WeeksEnded)
(14 WeeksEnded)
As a % ofChannel
Developmenttotal net revenues
Net revenues: CPG $ 396.0 $ 401.7 (1.4 )% 76.9 % 77.5 % Foodservice
118.9 116.8 1.8 23.1 22.5
Total net
revenues 514.9 518.5 (0.7 )
100.0 100.0 Cost of sales 278.9 271.9 2.6 54.2 52.4
Other operating expenses 49.3 56.7 (13.1 ) 9.6 10.9 Depreciation
and amortization expenses 0.5 0.7 (28.6 ) 0.1 0.1 General and
administrative expenses 2.8 4.9 (42.9 ) 0.5
0.9 Total operating expenses 331.5 334.2 (0.8 ) 64.4 64.5
Income from equity investees 63.3 60.0 5.5 12.3
11.6
Operating income $ 246.7
$ 244.3 1.0 % 47.9 %
47.1 %
Oct 1, 2017
Oct 2, 2016
%Change
Oct 1, 2017 Oct 2, 2016
Year
Ended
(52 WeeksEnded)
(53 WeeksEnded)
As a % ofChannel
Developmenttotal net revenues
Net revenues: CPG(1) $ 1,543.7 $ 1,488.2 3.7 % 76.9 % 77.0 %
Foodservice 464.9 444.3 4.6 23.1 23.0
Total net revenues 2,008.6 1,932.5 3.9
100.0 100.0 Cost of sales 1,074.3 1,042.6 3.0 53.5
54.0 Other operating expenses 222.2 228.5 (2.8 ) 11.1 11.8
Depreciation and amortization expenses 2.2 2.8 (21.4 ) 0.1 0.1
General and administrative expenses 10.9 17.9 (39.1 )
0.5 0.9 Total operating expenses 1,309.6 1,291.8 1.4
65.2 66.8 Income from equity investees 194.4 166.6
16.7 9.7 8.6
Operating income $
893.4 $ 807.3 10.7 % 44.5
% 41.8 % (1) Includes an
unfavorable revenue deduction adjustment pertaining to periods
prior to FY17 of $13.2 million, as recorded in Q2 FY17.
All Other Segments
Oct 1,
2017 Oct 2, 2016 %Change (13
Weeks Ended) (14 Weeks Ended)
Quarter
Ended
Net revenues: Company-operated stores $ 41.5 $ 45.3 (8.4 )%
Licensed stores 0.5 0.9 (44.4 ) CPG, foodservice and other
62.6 69.0 (9.3 )
Total net revenues
104.6 115.2 (9.2 ) Cost of sales
including occupancy costs(1) 78.5 69.9 12.3 Store operating
expenses 24.1 30.0 (19.7 ) Other operating expenses 15.3 16.1 (5.0
) Depreciation and amortization expenses 0.7 3.1 (77.4 ) General
and administrative expenses 2.8 6.2 (54.8 ) Restructuring and
impairments(2) 29.2 — nm Total
operating expenses 150.6 125.3 20.2
Operating loss $ (46.0 ) $
(10.1 ) 355.4 %
Oct 1, 2017 Oct
2, 2016 %Change
Year
Ended
(52 Weeks Ended) (53 Weeks Ended) Net
revenues: Company-operated stores $ 197.3 $ 224.3 (12.0 )% Licensed
stores 2.6 3.9 (33.3 ) CPG, foodservice and other 271.7
296.1 (8.2 )
Total net revenues
471.6 524.3 (10.1 ) Cost of sales
including occupancy costs(1) 308.0 316.5 (2.7 ) Store operating
expenses 113.5 115.0 (1.3 ) Other operating expenses 68.2 91.4
(25.4 ) Depreciation and amortization expenses 10.1 13.3 (24.1 )
General and administrative expenses 14.6 26.5 (44.9 ) Restructuring
and impairments(3) 131.5 — nm Total
operating expenses 645.9 562.7 14.8
Operating loss $ (174.3 ) $
(38.4 ) 353.9 % (1)
As a result of our restructuring efforts, $9.3 million was
recorded in cost of sales including occupancy cost related to
inventory write-offs. (2) Represents restructuring related costs
associated with our Teavana-branded stores and our e-commerce
business of $27.3 million and $1.9 million, respectively. (3)
Represents restructuring and impairment charges of $129.6 million
associated with our Teavana-branded stores as well as restructuring
charges associated with our e-commerce business of $1.9 million.
STARBUCKS CORPORATION CONSOLIDATED BALANCE
SHEETS
(unaudited, in millions, except per share
data)
Oct 1, 2017
Oct 2, 2016 ASSETS Current assets: Cash and
cash equivalents $ 2,462.3 $ 2,128.8 Short-term investments 228.6
134.4 Accounts receivable, net 870.4 768.8 Inventories 1,364.0
1,378.5 Prepaid expenses and other current assets 358.1
347.4 Total current assets 5,283.4 4,757.9
Long-term investments 542.3 1,141.7 Equity and cost investments
481.6 354.5 Property, plant and equipment, net 4,919.5 4,533.8
Deferred income taxes, net 795.4 885.4 Other long-term assets 362.8
403.3 Other intangible assets 441.4 516.3 Goodwill 1,539.2
1,719.6 TOTAL ASSETS $ 14,365.6 $
14,312.5
LIABILITIES AND EQUITY Current liabilities:
Accounts payable $ 782.5 $ 730.6 Accrued liabilities 1,934.5
1,999.1 Insurance reserves 215.2 246.0 Stored value card liability
1,288.5 1,171.2 Current portion of long-term debt —
399.9 Total current liabilities 4,220.7 4,546.8
Long-term debt 3,932.6 3,185.3 Other long-term liabilities
755.3 689.7 Total liabilities 8,908.6 8,421.8
Shareholders’ equity: Common stock ($0.001 par value) — authorized,
2,400.0 shares; issued and outstanding, 1,431.6 and 1,460.5 shares,
respectively 1.4 1.5 Additional paid-in capital 41.1 41.1 Retained
earnings 5,563.2 5,949.8 Accumulated other comprehensive loss
(155.6 ) (108.4 ) Total shareholders’ equity 5,450.1
5,884.0 Noncontrolling interests 6.9 6.7
Total equity 5,457.0 5,890.7
TOTAL LIABILITIES AND EQUITY $ 14,365.6 $ 14,312.5
STARBUCKS CORPORATION CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited and in millions)
Fiscal Year
Ended
Oct 1, 2017 Oct 2, 2016 Sep 27,
2015 OPERATING ACTIVITIES: Net earnings including
noncontrolling interests $ 2,884.9 $ 2,818.9 $ 2,759.3 Adjustments
to reconcile net earnings to net cash provided by operating
activities: Depreciation and amortization 1,067.1 1,030.1 933.8
Deferred income taxes, net 95.1 265.7 21.2 Income earned from
equity method investees (310.2 ) (250.2 ) (190.2 ) Distributions
received from equity method investees 186.6 223.3 148.2 Gain
resulting from acquisition/sale of equity in joint ventures and
certain retail operations (93.5 ) (6.1 ) (394.3 ) Loss on
extinguishment of debt — — 61.1 Stock-based compensation 176.0
218.1 209.8 Excess tax benefit on share-based awards (77.5 ) (122.8
) (132.4 ) Goodwill impairments 87.2 — — Other 68.9 45.1 53.8 Cash
provided by changes in operating assets and liabilities: Accounts
receivable (96.8 ) (55.6 ) (82.8 ) Inventories 14.0 (67.5 ) (207.9
) Accounts payable 46.4 46.9 137.7 Stored value card liability
130.8 180.4 170.3 Other operating assets and liabilities
(4.7 ) 248.8 261.5 Net cash provided by
operating activities 4,174.3 4,575.1 3,749.1 INVESTING ACTIVITIES:
Purchases of investments (674.4 ) (1,585.7 ) (567.4 ) Sales of
investments 1,054.5 680.7 600.6 Maturities and calls of investments
149.6 27.9 18.8 Acquisitions, net of cash acquired — — (284.3 )
Additions to property, plant and equipment (1,519.4 ) (1,440.3 )
(1,303.7 ) Net proceeds from sale of equity in joint ventures and
certain retail operations 85.4 69.6 8.9 Other 54.3
24.9 6.8 Net cash used by investing
activities (850.0 ) (2,222.9 ) (1,520.3 ) FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 750.2 1,254.5 848.5
Repayments of long-term debt (400.0 ) — (610.1 ) Cash used for
purchase of non-controlling interest — — (360.8 ) Proceeds from
issuance of common stock 150.8 160.7 191.8 Excess tax benefit on
share-based awards 77.5 122.8 132.4 Cash dividends paid (1,450.4 )
(1,178.0 ) (928.6 ) Repurchase of common stock (2,042.5 ) (1,995.6
) (1,436.1 ) Minimum tax withholdings on share-based awards (82.8 )
(106.0 ) (75.5 ) Other (4.4 ) (8.4 ) (18.1 )
Net cash used by financing activities (3,001.6 ) (1,750.0 )
(2,256.5 ) Effect of exchange rate changes on cash and cash
equivalents 10.8 (3.5 ) (150.6 ) Net
increase/(decrease) in cash and cash equivalents 333.5 598.7 (178.3
) CASH AND CASH EQUIVALENTS: Beginning of period 2,128.8
1,530.1 1,708.4 End of period $
2,462.3 $ 2,128.8 $ 1,530.1 SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period
for: Interest, net of capitalized interest $ 96.6 $ 74.7 $ 69.5
Income taxes, net of refunds $ 1,389.1 $ 878.7 $ 1,072.2
Supplemental
Information
The following supplemental information is provided for
historical and comparative purposes.
U.S. Supplemental
Data
Quarter Ended ($ in millions)
Oct 1, 2017 Oct 2,
2016 Change Revenues $3,583.8
$3,615.5 (1)% Comparable Store Sales Growth(1) 2% 4% Change
in Transactions 0% (1%) Change in Ticket 2%
6%
(1) Includes only Starbucks company-operated stores open 13 months
or longer. For fiscal 2016, comparable store sales percentages were
calculated excluding the 53rd week.
Store
Data
Net stores opened/(closed) and transferred during the
period Quarter Ended
Year Ended Stores open as of Oct 1,
2017 Oct 2, 2016 Oct 1,
2017 Oct 2, 2016 Oct 1,
2017 Oct 2, 2016
(13 WeeksEnded)
(14 WeeksEnded)
(52 WeeksEnded)
(53 WeeksEnded)
Americas: Company-operated stores 112 144 394 348 9,413 9,019
Licensed stores 145 163 558 456 7,146
6,588 Total Americas 257 307 952 804
16,559 15,607 China/Asia Pacific(1): Company-operated stores (28 )
136 259 359 3,070 2,811 Licensed stores 324 180 777
622 4,409 3,632 Total China/Asia Pacific 296
316 1,036 981 7,479 6,443 EMEA(2):
Company-operated stores (4 ) (18 ) (21 ) (214 ) 502 523 Licensed
stores 108 95 353 494 2,472 2,119 Total
EMEA 104 77 332 280 2,974 2,642 All
Other Segments(3): Company-operated stores (54 ) (7 ) (68 ) (17 )
290 358 Licensed stores — (3 ) 2 (6 ) 37 35 Total All
Other Segments (54 ) (10 ) (66 ) (23 ) 327 393
Total Company 603
690 2,254 2,042
27,339 25,085 (1) China/Asia Pacific store
data includes the transfer of 133 company-operated retail stores in
Singapore to licensed stores as a result of the sale to Maxim's
Caterers Limited in the fourth quarter of fiscal 2017. (2) EMEA
store data includes the transfer of 144 Germany company-operated
retail stores to licensed stores as a result of the sale to AmRest
Holdings SE in the third quarter of fiscal 2016. (3) As of October
1, 2017, All Other Segments included 325 Teavana-branded stores, of
which 288 stores were company-operated.
Non-GAAP Disclosure
In addition to the GAAP results provided in this release, the
company provides certain non-GAAP financial measures that are not
in accordance with, or alternatives for, generally accepted
accounting principles in the United States. Our non-GAAP financial
measures of non-GAAP operating income, non-GAAP operating margin
and non-GAAP EPS exclude the below listed items. 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.
Non-GAAP Exclusion
Rationale Sale of Singapore
retail operations Management excludes the net gain
and associated transaction costs related to the sale of our
Singapore retail operations as these items do not reflect future
gains, losses or tax impacts and do not contribute to a meaningful
evaluation of the company's past or future operating performance.
Greater China transaction costs Management excludes
transaction costs related to the East China acquisition and the
Taiwan divestiture as these incremental costs are specific to the
purchase and sale activities that do not contribute to a meaningful
evaluation of the company’s future operating performance or
comparisons to the company’s past operating performance.
Restructuring and impairment charges Management
excludes restructuring and impairment charges related to strategic
shifts in its Teavana and e-commerce business units as well as
related to divesting certain lower margin businesses and assets,
such as closure of certain company-operated stores. These expenses
are anticipated to be completed within a finite period of time.
Additionally, management excludes goodwill impairment charges
related to its Switzerland retail business. These expenses do not
contribute to a meaningful evaluation of the company’s future
operating performance or comparisons to the company’s past
operating performance. Starbucks Japan acquisition-related items
Management excludes Starbucks Japan integration costs
and amortization of the acquired intangible assets when evaluating
performance because these expenses are not representative of our
core business operations. Although these items will affect earnings
per share beyond the current fiscal year, the majority of these
costs will be recognized over a finite period of time. Integration
costs are expected to be concentrated in the first several years
post-acquisition. Additionally, future amortization of the acquired
intangible assets was fixed at the time of acquisition and
generally cannot subsequently be changed or influenced by
management. Sale of Germany retail operations
Management excludes the net gain, associated costs and changes in
estimated indemnifications related to the sale of our Germany
retail operations as these items do not reflect future gains,
losses or tax impacts and do not contribute to a meaningful
evaluation of the company's past or future operating performance.
The Starbucks Foundation donation Management excludes
the company's largest donation to a non-profit organization as this
item does not contribute to a meaningful evaluation of the
company's future operating performance or comparisons to the
company's past operating performance. Other tax matters
Management excludes incremental tax benefits in the U.S. as
these tax benefits do not contribute to a meaningful evaluation of
the company's past or future operating performance.
Non-GAAP operating income, non-GAAP operating margin and
non-GAAP EPS may have limitations as analytical tools. 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)
($ in millions)
Quarter Ended
Consolidated
Oct 1, 2017 Oct 2, 2016
Change (13 Weeks Ended) (14 Weeks Ended)
Operating income, as reported (GAAP) $ 1,022.5 $ 1,227.5 (16.7)%
Sale of Singapore retail operations (1) 1.4 — Greater China
transaction costs 3.9 — Restructuring and impairment charges (2)
44.6 — Starbucks Japan acquisition-related items (3) 15.9 16.7 The
Starbucks Foundation donation 50.0 — Non-GAAP
operating income 1,138.3 1,244.2 (8.5)% Impact of the extra week -
Q4 FY16 — 137.3 Non-GAAP operating income $ 1,138.3
$ 1,106.9 2.8% Operating margin, as reported
(GAAP) 17.9 % 21.5 % (360) bps Sale of Singapore retail operations
(1) — — Greater China transaction costs 0.1 — Restructuring and
impairment charges (2) 0.8 — Starbucks Japan acquisition-related
items (3) 0.3 0.3 The Starbucks Foundation donation 0.9 —
Non-GAAP operating margin 20.0 % 21.8 % (180) bps Impact of
the extra week - Q4 FY16 — 0.9 Non-GAAP operating
margin 20.0 % 20.9 % (90) bps Diluted net earnings per
share, as reported (GAAP) $ 0.54 $ 0.54 0.0% Sale of Singapore
retail operations (1) (0.06 ) — Greater China transaction costs — —
Restructuring and impairment charges (2) 0.03 — Starbucks Japan
acquisition-related items (3) 0.01 0.01 Sale of Germany retail
operations(4) — 0.02 The Starbucks Foundation donation 0.03 —
Income tax effect on Non-GAAP adjustments (5) (0.02 ) (0.01 )
Non-GAAP net earnings per share $ 0.55 $ 0.56 (1.8)%
Impact of the extra week - Q4 FY16 — (0.09 ) Income tax effect on
the impact of the extra week - Q4 FY16 (5) — 0.03
Non-GAAP net earnings per share $ 0.55 $ 0.50 10.0%
(1) Transaction costs of $1.4 million
associated with the transfer of Singapore company-operated retail
stores to licensed stores are recorded within operating income;
gain from the sale of $83.9 million is recorded within interest
income and other, net. (2)
Represents restructuring and impairment
charges of $33.3 million associated with our restructuring efforts.
Inventory write-offs of $11.3 million related to these efforts were
recorded within cost of sales including occupancy costs.
(3) Includes ongoing amortization expense of acquired intangible
assets associated with the acquisition and post-acquisition
integration costs, such as incremental information technology and
compensation-related costs. (4)
Represents additional cost incurred
associated with the sale of our Germany retail operations.
(5) Income tax effect on non-GAAP adjustments was determined based
on the nature of the underlying items and their relevant
jurisdictional tax rates.
($ in millions)
Year Ended
Consolidated
FY17 FY16 (52 Weeks Ended)
(53 Weeks Ended)
Change
Operating income, as reported (GAAP) $ 4,134.7 $ 4,171.9 (0.9)%
Sale of Singapore retail operations (1) 1.4 — Greater China
transaction costs 3.9 — Restructuring and impairment charges (2)
164.8 — Starbucks Japan acquisition-related items (3) 57.7 57.4
Sale of Germany retail operations(4) — 2.8 The Starbucks Foundation
donation 50.0 — Non-GAAP operating
income 4,412.5 4,232.1 4.3% Impact of the extra week - Q4 FY16
— 137.3 Non-GAAP operating income $
4,412.5 $ 4,094.8 7.8% Operating margin, as
reported (GAAP) 18.5 % 19.6 % (110) bps Sale of Singapore retail
operations (1) — — Greater China transaction costs — —
Restructuring and impairment charges (2) 0.7 — Starbucks Japan
acquisition-related items (3) 0.3 0.3 Sale of Germany retail
operations(4) — — The Starbucks Foundation donation 0.2
— Non-GAAP operating margin 19.7 % 19.9 % (20)
bps Impact of the extra week — 0.3
Non-GAAP operating margin 19.7 % 19.6 % 10 bps
Diluted net earnings per share, as reported (GAAP) $ 1.97 $ 1.90
3.7% Sale of Singapore retail operations (1) (0.06 ) — Greater
China transaction costs — — Restructuring and impairment charges
(2) 0.11 — Starbucks Japan acquisition-related items (3) 0.04 0.04
Sale of Germany retail operations(4) (0.01 ) — The Starbucks
Foundation donation 0.03 — Income tax effect on Non-GAAP
adjustments(5) (0.04 ) (0.01 ) Other tax matters (6) —
(0.01 ) Non-GAAP net earnings per share $ 2.06
$ 1.91 7.9% Impact of the extra week - Q4 FY16 — (0.09 )
Income tax effect on the impact of the extra week - Q4 FY16 (5)
— 0.03 Non-GAAP net earnings per share
$ 2.06 $ 1.85 11.4% (1)
Transaction costs of $1.4 million associated with the transfer of
Singapore company-operated retail stores to licensed stores are
recorded within operating income; gain from the sale of $83.9
million is recorded within interest income and other, net. (2)
Represents restructuring and impairment
charges of $153.5 million associated with our restructuring
efforts. Inventory write-offs of $11.3 million related to these
efforts were recorded within cost of sales including occupancy
costs.
(3) Includes ongoing amortization expense of acquired intangible
assets associated with the acquisition and post-acquisition
integration costs, such as incremental information technology and
compensation-related costs. (4) Costs incurred in Q3 FY16
associated with the sale of Germany retail operations are recorded
within operating income. Gain and subsequent adjustment on sale of
Germany retail operations is recorded within interest income and
other, net. (5) Income tax effect on non-GAAP adjustments was
determined based on the nature of the underlying items and their
relevant jurisdictional tax rates. (6) Other tax matters include
incremental benefit from additional domestic manufacturing
deductions claimed in our U.S. consolidated tax returns for periods
prior to the years presented.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171102006563/en/
Starbucks CorporationInvestor Relations:Tom Shaw,
206-318-7118investorrelations@starbucks.comorMedia:Alisha
Damodaran, 206-318-7100press@starbucks.com
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