Comp Store Sales Rise 7% Globally; 7% in the
Americas and 12% in CAP; Global Traffic Up 3%
Net Revenues Rise 18% to a Q2 Record $4.6
Billion
GAAP Operating Income Up 21% to a Q2 Record
$778 Million; Non-GAAP Operating Income Up 23% to $789 Million
Channel Development Revenues Up 16% and
Operating Income Up 23%
Earnings Per Share Jump 18% to a Split-Adjusted
Q2 Record $0.33 Per Share
Starbucks Corporation (NASDAQ: SBUX) today reported financial
results for its 13-week fiscal second quarter and 26-week fiscal
year to date ended March 29, 2015. All per-share data has been
adjusted for the stock split announced on March 18, 2015 and
effected on April 9, 2015. Q2 FY15 GAAP results include Starbucks
Japan acquisition-related items; non-GAAP results exclude these
items. Please refer to the reconciliation of GAAP measures to
non-GAAP measures at the end of this release.
Q2 Fiscal 2015 Highlights:
- Global comparable store sales increased
7%, with a 3% increase in traffic
- Americas comp sales increased 7%, with
a 2% increase in traffic
- CAP comp sales increased 12%, driven by
a 10% increase in traffic
- EMEA comp sales increased 2%, driven by
a 2% increase in traffic
- Consolidated net revenues increased 18%
to $4.6 billion
- Channel Development revenues grew 16%
to $428.0 million
- Consolidated operating income of $777.5
million, up 21% over Q2 of FY14
- Non-GAAP operating income of $789.4
million, up 23% over Q2 of FY14
- Consolidated operating margin of 17.0%
increased 40 basis points over Q2 of FY14
- Non-GAAP operating margin of 17.3%
increased 70 basis points over Q2 of FY14
- GAAP and non-GAAP earnings per share of
$0.33, up 18% over Q2 of FY14
- The company opened 210 net new stores
in Q2, including its 5,000th store in China/Asia Pacific, bringing
total stores worldwide to 22,088
- Year over year comp store transactions
increased over 10 million in the U.S., over 14 million
globally
- The company added a record 1.3 million
new My Starbucks Rewards members in Q2 - bringing total active
membership to 10.3 million - and realized a Q2 record $1.1 billion
in Starbucks Card loads
“Starbucks record financial and operating performance in Q2 was
driven by our people all around the world yet woven together by one
common thread - industry leading partner (employee) facing and
customer facing innovation,” said Howard Schultz, Starbucks
chairman and ceo. “Innovation is the force that will continue to
drive our business and enable us to expand and increase revenues
and profits - always through the lens of humanity - long into the
future,” Schultz added.
“Starbucks Q2 represented another quarter of strong revenue
growth and record operating and financial performance all around
the world, and despite significant foreign exchange headwinds,”
said Scott Maw, Starbucks cfo. “As we enter the second half of 2015
- and look to the future - we are ideally positioned to continue
benefiting from the investments we are making in our people, in
innovation and in our stores - and to continue delivering world
class returns to our shareholders.”
Second Quarter Fiscal 2015
Summary
Quarter Ended Mar 29, 2015
Comparable Store Sales(1)
Sales Growth Change in
Transactions Change in Ticket
Consolidated 7% 3% 4%
Americas 7% 2% 5% EMEA 2% 2% 1% CAP 12%
10% 2% (1) Includes only
Starbucks company-operated stores open 13 months or longer.
Operating Results Quarter Ended
($ in millions, except per share amounts)
Mar 29, 2015 Mar 30, 2014
Change Net New Stores(1) 210
335 (125) Revenues $4,563.5 $3,873.8 18% Operating Income
$777.5 $644.1 21% Operating Margin 17.0% 16.6% 40 bps EPS
$0.33 $0.28
18%
(1) Net new stores include the closure of
132 Target Canada licensed stores in the second quarter of fiscal
2015.
Consolidated net revenues were $4.6 billion in Q2 FY15, an
increase of 18% over Q2 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 1,511
net new stores over the past 12 months, and was partially offset by
unfavorable foreign currency translation.
Consolidated operating income grew 21% to $777.5 million in Q2
FY15, up from $644.1 million in Q2 FY14. Consolidated operating
margin of 17.0% expanded 40 basis points primarily driven by sales
leverage and partially offset by the impact of our ownership change
in Starbucks Japan, which drove 100 basis points of margin
decline.
Q2 Americas Segment
Results
Quarter
Ended ($ in millions)
Mar 29, 2015 Mar 30, 2014
Change
Net New Stores(1)
(2) 128 (130) Revenues $3,128.0 $2,808.8 11%
Operating Income $709.6 $605.6 17% Operating Margin
22.7% 21.6% 110
bps
(1) Net new stores include the closure of
132 Target Canada licensed stores in the second quarter of fiscal
2015.
Net revenues for the Americas segment were $3.1 billion in Q2
FY15, an increase of 11% over Q2 FY14. The increase was driven by
7% growth in comparable store sales and incremental revenues from
636 net new store openings over the past 12 months.
Operating income of $709.6 million in Q2 FY15 increased 17% from
$605.6 million in Q2 FY14. Operating margin of 22.7% expanded 110
basis points primarily driven by sales leverage and partially
offset by investments in our store partners (employees).
Q2 EMEA Segment Results
Quarter
Ended ($ in millions)
Mar 29, 2015 Mar 30, 2014
Change Net New Stores 35
32 3 Revenues $280.3 $309.9 (10)% Operating Income $29.2 $17.7 65%
Operating Margin 10.4%
5.7% 470 bps
Net revenues for the EMEA segment were $280.3 million in Q2
FY15, a 10% decrease versus Q2 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 2% increase in comparable store sales.
Operating income increased 65% to $29.2 million in Q2 FY15, up
from $17.7 million in Q2 FY14. Operating margin expanded 470 basis
points to 10.4%, primarily due to sales leverage driven by the
ongoing shift in the portfolio towards more licensed stores.
Q2 China/Asia Pacific Segment
Results
Quarter
Ended ($ in millions)
Mar 29, 2015 Mar 30, 2014
Change Net New Stores 176
174 2 Revenues $595.2 $265.3 124% Operating Income $112.4 $87.0 29%
Operating Margin 18.9%
32.8% (1,390) bps
Net revenues for the China/Asia Pacific segment grew 124% to
$595.2 million in Q2 FY15. The increase was primarily driven by
incremental revenues from the acquisition of Starbucks Japan. Also
contributing were incremental revenues from 711 net new store
openings over the past 12 months and a 12% increase in comparable
store sales.
Operating income grew 29% to $112.4 million in Q2 FY15.
Operating margin declined 1,390 basis points to 18.9% due to the
impact of our ownership change in Starbucks Japan, which drove a
1,470 basis point decline. The remaining 80 basis point expansion
was primarily driven by sales leverage.
Q2 Channel Development Segment
Results
Quarter
Ended ($ in millions)
Mar 29, 2015 Mar 30, 2014
Change Revenues $428.0
$370.4 16% Operating Income $156.1 $127.3 23% Operating Margin
36.5% 34.4%
210 bps
Net revenues for the Channel Development segment grew 16% to
$428.0 million in Q2 FY15, primarily driven by increased sales of
premium single-serve products. Increased sales of packaged coffee
and foodservice sales also contributed.
Operating income of $156.1 million in Q2 FY15 grew 23% compared
to Q2 FY14. Operating margin increased 210 basis points to 36.5%,
primarily due to efficiencies in cost of goods sold, increased
income from our North American Coffee Partnership and sales
leverage.
Q2 All Other Segments
Results
Quarter
Ended ($ in millions)
Mar 29, 2015 Mar 30, 2014
Change Net New Stores 1 1
0 Revenues $132.0 $119.4 11% Operating Loss
$(4.1) $(7.8) (47)%
Year to Date Financial
Results
Two Quarters Ended Mar 29, 2015
Comparable Store Sales(1)
Sales Growth Change in
Transactions Change in Ticket
Consolidated 6% 2% 4%
Americas 6% 2% 4% EMEA 3% 2% 1% CAP 10%
9% 1% (1) Includes only
Starbucks company-operated stores open 13 months or longer.
Operating Results Two Quarters Ended
($ in millions, except per share amounts)
Mar 29, 2015 Mar 30, 2014
Change
Net New Stores(1)
722 752 (30) Revenues $9,366.8 $8,113.4 15%
Operating Income $1,693.1 $1,457.7 16% Operating Margin 18.1% 18.0%
10 bps EPS $0.97 $0.63
54%
(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 FY15 non-GAAP adjustments relate to the acquisition of
Starbucks Japan; please refer to the reconciliation of GAAP
measures to non-GAAP measures at the end of this release.
The Company Reaffirms the Following Targets:
- Full year revenue growth of 16% -
18%
- Global comparable store sales growth of
mid-single digits
- Consolidated tax rate of approximately
31% on a GAAP basis
- Capital expenditures of approximately
$1.4 billion
The Company Updates the Following Targets:
- Total new store openings remain at
1,650 net new:
- Americas: now expecting approximately
600, half licensed
- EMEA: now expecting approximately 200,
primarily licensed
- China/Asia Pacific: continue to expect
approximately 850, two-thirds licensed
- GAAP operating margin is now expected
to be flat to FY14:
- Americas: continue to expect modest
margin improvement over FY14
- EMEA: now expecting margin to be at the
upper end of the 10% to 12% range
- China/Asia Pacific: now expecting
margin to approach 20%
- Channel Development: now expecting
margin improvement of approximately 150 basis points over FY14
- Now expecting modest non-GAAP operating
margin improvement over prior year non-GAAP operating margin
- GAAP Earnings per Share:
- Continue to expect full year EPS in the
range of $1.77 to $1.79
- Q3 EPS in the range of $0.39 to
$0.40
- Q4 EPS in the range of $0.40 to
$0.41
- Non-GAAP Earnings per Share:
- Continue to expect full year EPS in the
range of $1.55 to $1.57
- Q3 EPS in the range of $0.40 to
$0.41
- Q4 EPS in the range of $0.42 to
$0.43
Company Updates
- Starbucks welcomed Kevin Johnson to his
new role as president and coo in March. Johnson manages all
operational functions including the company’s global businesses in
the Americas, EMEA, China/Asia Pacific and Channel Development and
also oversees Starbucks global supply chain. In addition, Johnson
will continue to serve on Starbucks Board of Directors, where he
has served since 2009.
- The Board of Directors declared a
2-for-1 stock split, payable on April 8, 2015, to shareholders of
record as of March 30, 2015. Starbucks common stock began trading
on a split-adjusted basis on April 9, 2015. This is the sixth
2-for-1 split of the company’s common stock since its initial
public offering in 1992 and its first since October 2005.
- Starbucks and Chinese leading food and
beverage producer Tingyi Holding Corp. announced in March that they
have entered into an agreement to manufacture and expand the
distribution of Starbucks ready-to-drink (RTD) products throughout
mainland China, a $6 billion RTD coffee category.
- After completing the first step of its
tender offer to acquire Starbucks Japan in the first quarter of
fiscal 2015, the company obtained control of the remaining public
shares this quarter, bringing total ownership to 100%.
- The company expanded its Mobile Order
and Pay functionality throughout the Pacific Northwest on March
17th; the feature, which allows customers to place an order in
advance and pick it up at their selected Starbucks location, is now
available in more than 650 stores in Washington, Idaho, Oregon and
Alaska.
- Starbucks hosted its 23rd Annual
Meeting of Shareholders on March 18; the company reaffirmed its
seven growth strategies, previewed new delivery options, discussed
ongoing investments in its partners (employees) and announced a
commitment to hire 10,000 opportunity youth in the next three
years.
- In April, Starbucks and Arizona State
University announced an expansion to the Starbucks College
Achievement Plan, first introduced in June 2014. The program will
now offer 100 percent tuition coverage for all four years of
college for every eligible U.S. Starbucks partner (employee).
- The company repurchased nearly 3
million shares of common stock in Q2 FY15; 23 million shares remain
available for purchase under the current authorization.
- The Board of Directors declared a cash
dividend of $0.16 per share, payable on May 22, 2015 to
shareholders of record as of May 7, 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,
May 21, 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, health and potential of our business, operations and
brand, our innovation, growth and growth opportunities and related
investments, earnings per share, revenues, operating margins,
profits, 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 CORPORATION
CONSOLIDATED STATEMENTS OF
EARNINGS
(unaudited, in millions, except per share
data)
Quarter Ended Quarter Ended Mar 29,
2015 Mar 30, 2014
%
Change
Mar 29, 2015 Mar 30,
2014
As a % of total
net revenues
Net revenues: Company-operated stores $ 3,622.9 $ 3,068.0
18.1 % 79.4 % 79.2 % Licensed stores 421.3 356.2 18.3 9.2 9.2 CPG,
foodservice and other 519.3 449.6 15.5 11.4
11.6
Total net revenues 4,563.5 3,873.8
17.8 100.0 100.0 Cost of sales including
occupancy costs 1,859.8 1,629.2 14.2 40.8 42.1 Store operating
expenses 1,324.6 1,134.5 16.8 29.0 29.3 Other operating expenses
133.5 110.9 20.4 2.9 2.9 Depreciation and amortization expenses
217.1 174.4 24.5 4.8 4.5 General and administrative expenses 305.9
240.6 27.1 6.7 6.2 Total operating
expenses 3,840.9 3,289.6 16.8 84.2 84.9 Income from equity
investees 54.9 59.9 (8.3 ) 1.2 1.5
Operating income 777.5 644.1 20.7
17.0 16.6 Interest income and other, net 1.3 17.8
(92.7 ) — 0.5 Interest expense (16.9 ) (16.7 ) 1.2 (0.4 ) (0.4 )
Earnings before income taxes 761.9 645.2 18.1 16.7 16.7 Income
taxes 266.3 218.3 22.0 5.8 5.6 Net
earnings including noncontrolling interests 495.6 426.9 16.1 10.9
11.0 Net earnings/(loss) attributable to noncontrolling interests
0.7 (0.1 ) nm — —
Net earnings attributable
to Starbucks $ 494.9 $ 427.0
15.9 10.8 % 11.0 %
Net earnings per common share - diluted $ 0.33
$ 0.28 17.9 % Weighted
avg. shares outstanding - diluted 1,516.5 1,529.1 Cash
dividends declared per share $ 0.160 $ 0.130
Supplemental
Ratios: Store operating expenses as a percentage of
company-operated store revenues 36.6 % 37.0 % Effective tax rate
including noncontrolling interests 35.0 % 33.8 %
Two Quarters Ended
Two Quarters Ended Mar 29, 2015 Mar
30, 2014 %
Change
Mar 29, 2015 Mar 30, 2014
As a % of total
net revenues
Net revenues: Company-operated stores $ 7,395.7 $ 6,411.8 15.3 %
79.0 % 79.0 % Licensed stores 905.3 758.0 19.4 9.7 9.3 CPG,
foodservice and other 1,065.8 943.6 13.0 11.4
11.6
Total net revenues 9,366.8 8,113.4
15.4 100.0 100.0 Cost of sales including
occupancy costs 3,851.0 3,424.2 12.5 41.1 42.2 Store operating
expenses 2,640.1 2,309.6 14.3 28.2 28.5 Other operating expenses
262.9 225.8 16.4 2.8 2.8 Depreciation and amortization expenses
423.1 344.1 23.0 4.5 4.2 General and administrative expenses 604.3
483.2 25.1 6.5 6.0 Litigation credit — (20.2 ) (100.0 ) —
(0.2 ) Total operating expenses 7,781.4 6,766.7 15.0 83.1
83.4 Income from equity investees 107.7 111.0 (3.0 )
1.1 1.4
Operating income 1,693.1
1,457.7 16.1 18.1 18.0 Gain resulting
from acquisition of joint venture 390.6 — nm 4.2 — Interest income
and other, net 11.1 37.6 (70.5 ) 0.1 0.5 Interest expense (33.2 )
(31.3 ) 6.1 (0.4 ) (0.4 ) Earnings before income taxes 2,061.6
1,464.0 40.8 22.0 18.0 Income taxes 581.2 496.4 17.1
6.2 6.1 Net earnings including noncontrolling
interests 1,480.4 967.6 53.0 15.8 11.9 Net earnings/(loss)
attributable to noncontrolling interests 2.1 — nm —
—
Net earnings attributable to Starbucks
$ 1,478.3 $ 967.6
52.8 % 15.8 % 11.9 %
Net earnings per common share - diluted $
0.97 $ 0.63 54.0 %
Weighted avg. shares outstanding - diluted 1,516.7 1,530.7
Cash dividends declared per share $ 0.320 $ 0.260
Supplemental Ratios: Store operating expenses as a
percentage of company-operated store revenues 35.7 % 36.0 %
Effective tax rate including noncontrolling interests 28.2 % 33.9 %
Segment Results (in
millions)
Americas
Mar 29, 2015
Mar 30, 2014 %
Change
Mar 29, 2015 Mar 30,
2014
Quarter
Ended
As a % of Americas
total net revenues
Net revenues: Company-operated stores $ 2,818.6 $ 2,561.3
10.0 % 90.1 % 91.2 % Licensed stores 301.9 237.8 27.0 9.7 8.5
Foodservice and other 7.5 9.7 (22.7 ) 0.2 0.3
Total net revenues 3,128.0 2,808.8
11.4 100.0 100.0 Cost of sales including
occupancy costs 1,135.8 1,059.6 7.2 36.3 37.7 Store operating
expenses 1,065.0 963.9 10.5 34.0 34.3 Other operating expenses 36.4
23.7 53.6 1.2 0.8 Depreciation and amortization expenses 128.6
114.8 12.0 4.1 4.1 General and administrative expenses 52.6
41.2 27.7 1.7 1.5 Total operating expenses
2,418.4 2,203.2 9.8 77.3 78.4
Operating income $ 709.6 $
605.6 17.2 % 22.7 %
21.6 % Supplemental Ratios: Store operating
expenses as a percentage of company-operated store revenues 37.8 %
37.6 %
Two Quarters
Ended
Net revenues: Company-operated stores $ 5,829.2 $ 5,348.2 9.0 %
89.8 % 90.9 % Licensed stores 648.1 512.1 26.6 10.0 8.7 Foodservice
and other 17.6 21.4 (17.8 ) 0.3 0.4
Total net revenues 6,494.9 5,881.7 10.4
100.0 100.0 Cost of sales including occupancy costs
2,396.8 2,223.8 7.8 36.9 37.8 Store operating expenses 2,149.4
1,963.5 9.5 33.1 33.4 Other operating expenses 66.6 49.0 35.9 1.0
0.8 Depreciation and amortization expenses 255.7 227.1 12.6 3.9 3.9
General and administrative expenses 99.3 80.7 23.0
1.5 1.4 Total operating expenses 4,967.8
4,544.1 9.3 76.5 77.3
Operating income
$ 1,527.1 $ 1,337.6
14.2 % 23.5 % 22.7 %
Supplemental Ratios: Store operating expenses as a
percentage of company-operated store revenues 36.9 % 36.7 %
EMEA
Mar 29, 2015
Mar 30, 2014 %
Change
Mar 29, 2015 Mar 30,
2014
Quarter
Ended
As a % of EMEA
total net revenues
Net revenues: Company-operated stores $ 212.5 $ 245.5 (13.4
)% 75.8 % 79.2 % Licensed stores 56.6 54.4 4.0 20.2 17.6
Foodservice 11.2 10.0 12.0 4.0 3.2
Total net revenues 280.3 309.9 (9.6
) 100.0 100.0 Cost of sales including
occupancy costs 135.0 158.3 (14.7 ) 48.2 51.1 Store operating
expenses 76.2 92.4 (17.5 ) 27.2 29.8 Other operating expenses 13.5
11.8 14.4 4.8 3.8 Depreciation and amortization expenses 12.7 14.8
(14.2 ) 4.5 4.8 General and administrative expenses 14.7
16.0 (8.1 ) 5.2 5.2 Total operating expenses
252.1 293.3 (14.0 ) 89.9 94.6 Income from equity investees 1.0
1.1 (9.1 ) 0.4 0.4
Operating
income $ 29.2 $ 17.7
65.0 % 10.4 % 5.7 %
Supplemental Ratios: Store operating expenses as a
percentage of company-operated store revenues 35.9 % 37.6 %
Two Quarters
Ended
Net revenues: Company-operated stores $ 470.2 $ 514.5 (8.6 )% 76.6
% 79.2 % Licensed stores 119.9 115.0 4.3 19.5 17.7 Foodservice 23.6
20.0 18.0 3.8 3.1
Total net
revenues 613.7 649.5 (5.5 )
100.0 100.0 Cost of sales including occupancy costs
291.4 326.5 (10.8 ) 47.5 50.3 Store operating expenses 162.0 188.8
(14.2 ) 26.4 29.1 Other operating expenses 27.2 23.4 16.2 4.4 3.6
Depreciation and amortization expenses 26.5 29.4 (9.9 ) 4.3 4.5
General and administrative expenses 28.7 32.1 (10.6 )
4.7 4.9 Total operating expenses 535.8 600.2 (10.7 )
87.3 92.4 Income from equity investees 1.2 1.9 (36.8
) 0.2 0.3
Operating income $
79.1 $ 51.2 54.5 %
12.9 % 7.9 % Supplemental
Ratios: Store operating expenses as a percentage of
company-operated store revenues 34.5 % 36.7 %
China/Asia Pacific (CAP)
Mar 29, 2015
Mar 30, 2014 %
Change
Mar 29, 2015 Mar 30,
2014
Quarter
Ended
As a % of CAP
total net revenues
Net revenues: Company-operated stores $ 532.3 $ 202.5 162.9
% 89.4 % 76.3 % Licensed stores 61.4 62.8 (2.2 ) 10.3 23.7
Foodservice and other 1.5 — nm 0.3 —
Total net revenues 595.2 265.3 124.3
100.0 100.0 Cost of sales including occupancy costs
269.4 127.4 111.5 45.3 48.0 Store operating expenses 157.0 52.4
199.6 26.4 19.8 Other operating expenses 12.5 11.1 12.6 2.1 4.2
Depreciation and amortization expenses 37.0 11.8 213.6 6.2 4.4
General and administrative expenses 32.4 13.0 149.2
5.4 4.9 Total operating expenses 508.3 215.7 135.7
85.4 81.3 Income from equity investees 25.5 37.4
(31.8 ) 4.3 14.1
Operating income $
112.4 $ 87.0 29.2
% 18.9 % 32.8 % Supplemental
Ratios: Store operating expenses as a percentage of
company-operated store revenues 29.5 % 25.9 %
Two Quarters
Ended
Net revenues: Company-operated stores $ 954.1 $ 404.1 136.1 % 87.5
% 75.9 % Licensed stores 134.6 128.1 5.1 % 12.3 24.1 Foodservice
and other 2.3 — nm 0.2 —
Total net
revenues 1,091.0 532.2 105.0 100.0
100.0 Cost of sales including occupancy costs 503.0 260.2
93.3 46.1 48.9 Store operating expenses 274.8 103.7 165.0 25.2 19.5
Other operating expenses 27.6 21.7 27.2 2.5 4.1 Depreciation and
amortization expenses 65.1 22.0 195.9 6.0 4.1 General and
administrative expenses 58.1 27.1 114.4 5.3
5.1 Total operating expenses 928.6 434.7 113.6 85.1 81.7
Income from equity investees 58.2 70.5 (17.4 ) 5.3
13.2
Operating income $ 220.6
$ 168.0 31.3 %
20.2 % 31.6 % Supplemental
Ratios: Store operating expenses as a percentage of
company-operated store revenues 28.8 % 25.7 %
Channel Development
Mar 29, 2015
Mar 30, 2014 %
Change
Mar 29, 2015 Mar 30,
2014
Quarter
Ended
As a % of
Channel Development
total net revenues
Net revenues: CPG $ 329.8 $ 282.1 16.9 % 77.1 % 76.2 %
Foodservice 98.2 88.3 11.2 22.9 23.8
Total net revenues 428.0 370.4 15.6
100.0 100.0 Cost of sales 244.5 213.6 14.5 57.1 57.7
Other operating expenses 50.9 46.6 9.2 11.9 12.6 Depreciation and
amortization expenses 0.6 0.4 50.0 0.1 0.1 General and
administrative expenses 4.3 3.9 10.3 1.0 1.1
Total operating expenses 300.3 264.5 13.5 70.2 71.4 Income
from equity investees 28.4 21.4 32.7 6.6 5.8
Operating income $ 156.1
$ 127.3 22.6 % 36.5
% 34.4 %
Two Quarters
Ended
Net revenues: CPG $ 673.5 $ 588.5 14.4 % 77.4 % 76.3 % Foodservice
197.0 183.0 7.7 22.6 23.7
Total net
revenues 870.5 771.5 12.8 100.0
100.0 Cost of sales 493.8 459.2 7.5 56.7 59.5 Other
operating expenses 102.0 94.6 7.8 11.7 12.3 Depreciation and
amortization expenses 1.3 0.8 62.5 0.1 0.1 General and
administrative expenses 8.4 9.3 (9.7 ) 1.0 1.2
Total operating expenses 605.5 563.9 7.4 69.6 73.1 Income
from equity investees 48.3 38.6 25.1 5.5 5.0
Operating income $ 313.3
$ 246.2 27.3 % 36.0
% 31.9 %
All Other Segments
Mar 29, 2015
Mar 30, 2014 %
Change
Quarter
Ended
Net revenues: Company-operated stores $ 59.5 $ 58.7
1.4 % Licensed stores 1.4 1.2 16.7 CPG, foodservice and other 71.1
59.5 19.5
Total net revenues 132.0
119.4 10.6 Cost of sales including occupancy costs
76.6 68.8 11.3 Store operating expenses 26.4 25.8 2.3 Other
operating expenses 20.3 18.0 12.8 Depreciation and amortization
expenses 3.9 3.7 5.4 General and administrative expenses 8.9
10.9 (18.3 ) Total operating expenses 136.1 127.2
7.0
Operating loss $ (4.1 )
$ (7.8 ) (47.4 )%
Two Quarters
Ended
Net revenues: Company-operated stores $ 142.2 $ 145.0 (1.9 )%
Licensed stores 2.7 2.8 (3.6 ) CPG, foodservice and other 151.8
130.7 16.1
Total net revenues 296.7
278.5 6.5 Cost of sales including occupancy costs
169.8 151.3 12.2 Store operating expenses 53.9 53.6 0.6 Other
operating expenses 39.8 37.6 5.9 Depreciation and amortization
expenses 7.9 7.3 8.2 General and administrative expenses 18.9
22.6 (16.4 ) Total operating expenses 290.3
272.4 6.6
Operating income $ 6.4
$ 6.1 4.9 %
Supplemental
Information
The following supplemental information is provided for
historical and comparative purposes.
U.S. Supplemental Data
Quarter
Ended ($ in millions)
Mar 29, 2015 Mar 30, 2014
Change Revenues $2,842.1
$2,520.4 13% Comparable Store Sales Growth(1) 7% 6% Change in
Transactions 2% 2% Change in Ticket 5%
3% (1) Includes only
Starbucks company-operated stores open 13 months or longer
Store Data:
Net stores opened (closed) during the period
Quarter Ended Two
Quarters Ended Stores open as of Mar 29,
2015 Mar 30, 2014 Mar 29,
2015 Mar 30, 2014 Mar 29,
2015 Mar 30, 2014 Americas(1)
Company-operated stores 52 59 119 86 8,514 8,164 Licensed stores
(54 ) 69 89 184 5,885 5,599 (2 ) 128
208 270 14,399 13,763 EMEA(2)
Company-operated stores (17 ) 1 (24 ) 4 793 830 Licensed stores 52
31 117 92 1,440 1,235 35
32 93 96 2,233 2,065
CAP(3,4)
Company-operated stores 66 53 1,137 114 2,269 996 Licensed stores
110 121 (727 ) 269 2,765 3,269 176
174 410 383 5,034 4,265 All
Other Segments Company-operated stores 1 4 10 11 379 368 Licensed
stores — (3 ) 1 (8 ) 43 58 1 1
11 3 422 426
Total Company 210 335
722 752 22,088
20,519 (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) CAP 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) CAP 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 Q2 fiscal 2015, China/Asia Pacific (“CAP”) segment non-GAAP
operating income and non-GAAP operating margin for Q2 fiscal 2015,
and projected consolidated non-GAAP EPS for Q3, 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 Q2 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 Q2 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 Q3, 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. The
projected consolidated non-GAAP EPS for full year fiscal 2015 also
excludes the fair value gain in Q1. Management is excluding these
items from our projected non-GAAP measures for the same reasons
described above.
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 Mar 29, 2015
Mar 30, 2014 Change
Consolidated
Operating income, as reported (GAAP) $ 777.5 $ 644.1 20.7 %
Starbucks Japan acquisition-related items - other(1) 11.9 —
Non-GAAP operating income $ 789.4 $ 644.1 22.6
% Operating margin, as reported (GAAP) 17.0 % 16.6 % 40 bps
Starbucks Japan acquisition-related items - other(1) 0.3 —
Non-GAAP operating margin 17.3 % 16.6 % 70 bps
Diluted net earnings per share, as reported (GAAP) $ 0.33 $ 0.28
17.9 % Starbucks Japan acquisition-related items - other(1) 0.01
— Non-GAAP net earnings per share $ 0.33 $
0.28 17.9 %
China/Asia
Pacific (CAP)
Operating income, as reported (GAAP) $ 112.4 $ 87.0 29.2 %
Starbucks Japan amortization expense of acquired intangibles 11.3
— Non-GAAP operating income $ 123.7 $ 87.0
42.2 % Operating margin, as reported (GAAP) 18.9 %
32.8 % (1,390 ) bps Starbucks Japan amortization expense of
acquired intangibles 1.9 — Non-GAAP operating margin
20.8 % 32.8 % (1,200 ) bps (1) Includes
ongoing amortization expense of acquired intangible assets and
transaction and integration costs.
Quarter Ended
Jun 28, 2015 Jun 29,
2014
Consolidated
(Projected) (As Reported)
Change Diluted net earnings per
share (GAAP) $0.39 - $0.40 $ 0.34
15% - 18%
Starbucks Japan acquisition-related items - other(1) 0.01 —
Non-GAAP net earnings per share $0.40 - $0.41 $ 0.34
18% - 21%
Quarter Ended Sep 27, 2015 Sep 28,
2014
Consolidated
(Projected) (As Reported)
Change Diluted net earnings per
share (GAAP) $0.40 - $0.41 $ 0.39
3% - 5%
Net benefit from transactions in Q4 2014(2) — (0.02 ) Starbucks
Japan acquisition-related items - other(1) 0.01 — 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 - $1.79 $ 1.35 31% - 33% Litigation credit —
(0.01 ) Net benefit from transactions in Q4 2014(2) — (0.02 )
Starbucks Japan acquisition-related items - gain(3) (0.26 ) —
Starbucks Japan acquisition-related items - other(1) 0.03 —
Non-GAAP net earnings per share $1.55 - $1.57 $ 1.33
17% - 18% (1) Includes ongoing amortization
expense of acquired intangible assets and transaction and
integration costs. (2) 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 FY14 related to the acquisition of Starbucks Japan. (3) Gain
represents the fair value adjustment of Starbucks preexisting 39.5%
ownership interest in Starbucks Japan upon acquisition.
Starbucks Contact, Investor Relations:JoAnn
DeGrande206-318-7118investorrelations@starbucks.comorStarbucks
Contact, Media:Alisha
Damodaran206-318-7100press@starbucks.com
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