Q4 Consolidated Net Revenues Up 11% to Record
$6.3 Billion
Q4 Comparable Store Sales Up 3% Globally Driven
by 4% Growth in the U.S.
China Comparable Store Sales Up 1% in Q4,
Improved from -2% Reported in Q3
GAAP EPS of $0.56; Non-GAAP EPS of $0.62, Up
13% Year-Over-Year
Active Starbucks RewardsTM Membership in the
U.S. Increases 15% Year-Over-Year to 15.3 Million
Returned $8.9 Billion to Shareholders in Fiscal
Year 2018, Consistent with Our 3-Year Target to Return $25
Billion
Starbucks Corporation (NASDAQ: SBUX) today reported financial
results for its 13-week fiscal fourth quarter and 52-week year
ended September 30, 2018. GAAP results in fiscal 2018 and
fiscal 2017 include items which are excluded from non-GAAP results.
Please refer to the reconciliation of GAAP measures to non-GAAP
measures at the end of this release for more information.
Q4 Fiscal 2018
Highlights
- Global comparable store sales increased
3%, driven by a 4% increase in average ticket
- Americas and U.S. comparable store
sales increased 4%
- CAP and China comparable store sales
increased 1%
- Consolidated net revenues of $6.3
billion, up 11% over the prior year
- Adjusted for an approximately 2% net
benefit from streamline-driven activities, and approximately 1%
headwind from unfavorable foreign currency translation,
consolidated net revenues grew 9% over the prior year
- Streamline-driven activities include
the consolidation of the acquired East China business, partially
offset by licensing our CPG and foodservice businesses to Nestlé
following the close of the deal on August 26, 2018, Teavana mall
store closures, and the conversion of certain international retail
operations from company-owned to licensed models
- GAAP operating margin, inclusive of
restructuring and impairment charges, declined 270 basis points
year-over-year to 15.2%
- Non-GAAP operating margin of 18.1%
declined 190 basis points compared to the prior year
- GAAP Earnings Per Share of $0.56, up 4%
over the prior year
- Non-GAAP EPS of $0.62, up 13% over the
prior year
- Starbucks RewardsTM loyalty program
grew to 15.3 million active members in the U.S., up 15%
year-over-year
- Mobile Order and Pay represented 14% of
U.S. company-operated transactions
- The company opened 604 net new stores
in Q4 and now operates 29,324 stores across 78 markets
- The company returned $3.6 billion to
shareholders through a combination of dividends and share
repurchases
Fiscal Year 2018
Highlights
- Global comparable store sales increased
2%, driven by a 3% increase in average ticket
- Americas and U.S. comparable store
sales increased 2%
- CAP comparable store sales increased 1%
- China comparable store sales increased
2%
- Consolidated net revenues of $24.7
billion, up 10% over the prior year
- Adjusted for an approximately 2% net
benefit from streamline-driven activities, and approximately 1%
benefit from favorable foreign currency translation, consolidated
net revenues grew 8% over the prior year
- Streamline-driven activities include
the consolidation of the acquired East China business, partially
offset by Teavana mall store closures, the conversion of certain
international retail operations from company-owned to licensed
models, licensing our CPG and foodservice businesses to Nestlé
following the close of the deal on August 26, 2018, and the sale of
our Tazo brand in Q1 FY18
- GAAP operating margin, inclusive of
restructuring and impairment charges, declined 280 basis points
year-over-year to 15.7%
- Non-GAAP operating margin of 18.0%
declined 170 basis points compared to the prior year
- GAAP Earnings Per Share of $3.24, up
64% over the prior year
- Non-GAAP EPS of $2.42, up 17% over the
prior year
- The company returned $8.9 billion to
shareholders through a combination of dividends and share
repurchases
“Starbucks record Q4 performance reflected meaningful
improvement in virtually every critical operating metric compared
to Q3,” said Kevin Johnson, ceo. “As we enter fiscal 2019, we are
executing against a clear growth agenda, with a focus on our
long-term growth markets of the U.S. and China. We are also excited
about the long-term growth potential of our new Global Coffee
Alliance with Nestlé. I’m incredibly proud of our 350,000 Starbucks
partners around the world and pleased with the continued progress
in our growth agenda.”
“In Q4, Starbucks delivered improved sequential results in both
our Americas and China/Asia Pacific segments. We also further set
the stage for increased benefits from our ongoing efforts to
streamline the company,” said Scott Maw, cfo. “Each of these
factors contributed to the record Q4 results we reported today and
position us well for fiscal 2019 and beyond. As always, credit for
Starbucks performance belongs to our store partners all around the
world who proudly wear the green apron and deliver an elevated
Starbucks Experience to our customers, every day.”
Fiscal 2018
Re-segmentation
In the fourth quarter of fiscal 2018, we realigned our
organizational and operating segment structures in support of a
newly established Global Coffee Alliance. The scope of the
arrangement converts the majority of our previously defined Channel
Development segment operations, as well as certain smaller
businesses previously reported in the Americas, EMEA and All Other
Segments, from company-owned to licensed operations with Nestlé.
Our reportable segments have been restated as if those smaller
businesses were previously within our Channel Development
segment.
In addition, we combined All Other Segments and Unallocated
Corporate into one non-reportable segment entitled Corporate and
Other.
Further, in an effort to report operating expenses in line with
the corresponding revenue-generating activities, we have changed
the classification of certain costs, primarily within our CAP
segment and mainly from other operating expenses to general and
administrative expenses.
Concurrent with the change in reportable segments and
realignment of certain operating expenses noted above, we revised
our prior period financial information to be consistent with the
current period presentation. There was no impact on consolidated
net revenues, total operating expenses, operating income, or net
earnings as a result of these changes.
We have posted additional details pertaining to these updates,
including restated GAAP and non-GAAP P&Ls for FY17 and FY18, on
the Supplemental Financial Data page of our Investor Relations
website (http://investor.starbucks.com).
Fourth Quarter
Fiscal 2018 Summary
Quarter Ended Sep 30, 2018 Comparable Store
Sales(1) Sales Growth
Change in Transactions Change in Ticket
Consolidated 3% (1)% 4% Americas 4%
(1)% 5% CAP 1% (1)% 2% EMEA(2) 2% 0%
2% (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. (2)
Company-operated stores represent 15% of the EMEA segment store
portfolio as of September 30, 2018.
Operating Results Quarter Ended
Change ($ in millions, except per share amounts)
Sep 30, 2018 Oct 1, 2017
Net New Stores 604 603 1 Revenues $6,303.6 $5,698.3
11% Operating Income $956.6 $1,022.5 (6)% Operating Margin 15.2%
17.9% (270) bps EPS $0.56 $0.54
4%
Consolidated net revenues grew 11% over Q4 FY17 to $6.3 billion
in Q4 FY18, primarily driven by incremental revenues from the
impact of our ownership change in East China at the end of Q1 FY18,
incremental revenues from 1,997 net new Starbucks store openings
over the past 12 months, and 3% growth in global comparable store
sales, partially offset by licensing our CPG and foodservice
businesses to Nestlé following the close of the deal on August 26,
2018.
Consolidated operating income declined 6% to $956.6 million in
Q4 FY18, down from $1,022.5 million in Q4 FY17. Consolidated
operating margin declined 270 basis points to 15.2%, primarily
driven by streamline-driven activities, including licensing our CPG
and foodservice businesses to Nestlé following the close of the
deal on August 26, 2018, the impact of our ownership change in East
China at the end of Q1 FY18, and the sale of our Tazo brand in Q1
FY18. Additionally, operating margin was adversely impacted by
higher investments in our store partners (employees), and food and
beverage-related mix shifts, partially offset by sales
leverage.
Q4 Americas
Segment Results
Quarter
Ended Change ($ in millions)
Sep 30, 2018
Oct 1, 2017 Net New Stores 250
257 (7) Revenues $4,254.2 $3,941.3 8% Operating Income $928.5
$901.5 3% Operating Margin 21.8% 22.9%
(110) bps
Net revenues for the Americas segment grew 8% over Q4 FY17 to
$4.3 billion in Q4 FY18, primarily driven by incremental revenues
from 895 net new store openings over the past 12 months and 4%
growth in comparable store sales, partially offset by the absence
of revenue related to the sale of our Brazil retail operations to a
licensed partner in Q2 FY18.
Operating income grew 3% to $928.5 million in Q4 FY18, up from
$901.5 million in Q4 FY17. Operating margin of 21.8% declined 110
basis points, primarily due to higher investments in our store
partners (employees) and food and beverage-related mix shifts,
partially offset by sales leverage.
Q4 China/Asia
Pacific Segment Results
Quarter
Ended Change ($ in millions)
Sep 30, 2018
Oct 1, 2017 Net New Stores 278
296 (18) Revenues $1,214.6 $859.9 41% Operating Income $232.2
$201.7 15% Operating Margin 19.1% 23.5%
(440) bps
Net revenues for the China/Asia Pacific segment grew 41% over Q4
FY17 to $1,214.6 million in Q4 FY18, primarily driven by
incremental revenues from the impact of our ownership change in
East China at the end of Q1 FY18, incremental revenues from 756 net
new store openings over the past 12 months, and a 1% increase in
comparable store sales, partially offset by the absence of revenue
related to the sale of our Singapore retail operations to a
licensed partner in Q4 FY17.
Q4 FY18 operating income of $232.2 million grew 15% over Q4 FY17
operating income of $201.7 million. Operating margin declined 440
basis points to 19.1%, primarily due to the impact of our ownership
change in East China at the end of Q1 FY18.
Q4 EMEA Segment
Results
Quarter
Ended Change ($ in millions)
Sep 30, 2018
Oct 1, 2017 Net New Stores 83
104 (21) Revenues $267.3 $255.1 5% Operating Income $10.8 $29.0
(63)% Operating Margin 4.0% 11.4%
(740) bps
Net revenues for the EMEA segment grew 5% over Q4 FY17 to $267.3
million in Q4 FY18, primarily driven by incremental revenues from
the opening of 356 net new licensed stores over the past 12 months
and 2% growth in comparable store sales, partially offset by
unfavorable foreign currency translation.
Operating income of $10.8 million in Q4 FY18 declined 63% versus
operating income of $29.0 million in Q4 FY17. Operating margin
declined 740 basis points to 4.0%, primarily due to higher business
restructuring costs and impairment of the remaining goodwill
related to our Switzerland retail business, partially offset by
lapping a tax settlement expense in the prior year.
Q4 Channel
Development Segment Results
Quarter
Ended Change ($ in millions)
Sep 30, 2018
Oct 1, 2017 Revenues $539.3
$576.5 (6)% Operating Income $190.8 $265.4 (28)% Operating Margin
35.4% 46.0% (1,060) bps
Net revenues for the Channel Development segment of $539.3
million in Q4 FY18 decreased 6% versus the prior year quarter
primarily due to licensing our CPG and foodservice businesses to
Nestlé following the close of the deal on August 26, 2018 and the
net impact from the sale of our Tazo brand in Q1 FY18, partially
offset by an increase in sales of our packaged coffee and premium
single-serve products.
Operating income of $190.8 million in Q4 FY18 declined 28%
compared to Q4 FY17. Operating margin declined 1,060 basis points
to 35.4%, primarily driven by streamline-driven activities,
including licensing our CPG and foodservice businesses to Nestlé
following the close of the deal on August 26, 2018 and the sale of
our Tazo brand in Q1 FY18. Additionally, operating margin was
adversely impacted by higher marketing expenses.
Full Year
Financial Results
Year Ended Sep
30, 2018 Comparable Store Sales(1)
Sales Growth Change in Transactions
Change in Ticket Consolidated 2% (1)% 3%
Americas 2% (1)% 3% CAP 1% (1)% 2% EMEA(2) 0%
(3)% 3% (1) Includes only Starbucks company-operated
stores open 13 months or longer. Comparable store sales exclude the
effect of fluctuations in foreign currency exchange rates. (2)
Company-operated stores represent 15% of the EMEA segment store
portfolio as of September 30, 2018.
Operating Results Year
Ended Change ($ in millions, except per
share amounts)
Sep 30, 2018 Oct 1,
2017
Net New Stores(1)
1,985 2,254 (269) Revenues $24,719.5 $22,386.8 10%
Operating Income $3,883.3 $4,134.7 (6)% Operating Margin 15.7%
18.5% (280) bps EPS $3.24 $1.97
64% (1) Fiscal 2018 net new stores include the net closure of 313
Teavana-branded stores.
Fiscal 2019 Targets
The company introduces the following fiscal year 2019
targets:
- Expects to add approximately 2,100 net
new Starbucks stores globally
- Expects global comparable store sales
growth near the lower end of our current 3% to 5% range
- Expects consolidated revenue growth of
5% to 7%
- Includes approximately 2% net negative
impact related to streamline-driven activities
- Expects GAAP EPS in the range of $2.32
to $2.37 and non-GAAP EPS in the range of $2.61 to $2.66
Please refer to the reconciliation of GAAP measures to non-GAAP
measures at the end of this release.
The company will provide additional information regarding its
business outlook during its regularly scheduled quarterly earnings
conference calls; this information will also be available following
the call on the company’s website at http://investor.starbucks.com.
Company Updates
- In August, Starbucks began licensing
its consumer packaged goods and foodservice businesses to Nestlé.
The two companies will work closely together on the existing
Starbucks range of roast and ground coffee, whole beans,
single-serve, and instant coffee offerings. The Alliance will also
capitalize on the experience and capabilities of both companies to
bring new product offerings for coffee lovers globally.
- In August, the company announced a
strategic partnership with Alibaba Group Holding Ltd. that will
enable a seamless Starbucks Experience and transform the
coffee industry in China. Collaborating across key businesses
within the Alibaba ecosystem, including Ele.me, Hema, Tmall, Taobao
and Alipay, Starbucks announced plans to pilot delivery services
beginning September 2018, establish “Starbucks Delivery Kitchens”
for delivery order fulfillment and integrate multiple platforms to
co-create an unprecedented virtual Starbucks store – an
unparalleled and even more personalized online Starbucks Experience
for Chinese customers.
- In October, Starbucks announced Patrick
Grismer has been appointed executive vice president and chief
financial officer (cfo) effective November 30. Reporting to
Kevin Johnson, Starbucks president and chief executive officer,
Grismer succeeds Scott Maw, who will retire on November
30. Grismer joins Starbucks from his current position as cfo
of Hyatt Hotels Corporation, which he has held since joining the
company in March 2016. In this role, he was responsible for all
facets of the global finance function, as well as corporate
strategy, asset management, construction, procurement, and shared
services.
- In October, the company
announced its intention to fully license Starbucks
operations in France, the Netherlands, Belgium, and Luxembourg
to its longstanding strategic partner Alsea, S.A.B. de C.V., the
largest independent chain restaurant operator in Latin America.
Under the proposal, which is subject to relevant local laws, Alsea
will have the rights to operate and develop Starbucks stores in
these markets, building on Starbucks regional growth agenda that
drives value through strategic licensed relationships. Starbucks
also announced plans to introduce a new support structure in its
head office in London to better serve an increasingly licensed
strategy.
- In response to critically low coffee
prices in Central America, Starbucks announced a commitment of up
to $20 million to temporarily relieve impacted smallholder farmers
with whom Starbucks does business, until the coffee market
self-corrects and rises above the cost of production. These funds
will go directly to smallholder farmers in Nicaragua, Guatemala,
Mexico and El Salvador to subsidize farmer income during the
upcoming harvest season in Central America.
- In September, Starbucks celebrated its
expansion into Italy - the company’s 78th market - by opening the
Starbucks Reserve Roastery in Milan. Milan marks the first time
Starbucks has established its retail presence in a new market with
the Roastery format, of which only two others exist in the world:
the Seattle Roastery, which opened in 2014, and the Roastery in
Shanghai, which debuted in 2017. Following the opening of the
Roastery, Starbucks will bring additional cafés to Milan with
licensed partner Percassi beginning in late 2018.
- The company’s Board of Directors
authorized an additional 120 million shares for repurchase under
its ongoing share repurchase program.
- As part of the company’s previously
announced plan to return $25 billion to shareholders in the form of
share buybacks and dividends through fiscal 2020, Starbucks
announced that it is currently executing a $5 billion accelerated
share repurchase program (ASR) of the Company’s common stock with
the assistance of two financial institutions. The Company used
proceeds from the recently completed transaction with Nestlé S.A.
to execute the ASR, effective October 1, 2018.
- The company repurchased 58.5 million
shares of common stock in Q4 FY18.
- The Board of Directors declared a cash
dividend of $0.36 per share, payable on November 30, 2018, to
shareholders of record as of November 15, 2018.
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, Roz
Brewer, group president and coo, John Culver, group president,
International, Channel Development and Global Coffee & Tea, 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 1, 2018.
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
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 include statements relating to
certain company initiatives, strategies and plans, as well as
trends in or expectations regarding our diversified business model,
the strength, resilience, and potential of our business,
operations, and brand, the impacts, benefits, goals and
expectations of our streamline initiatives, the execution of our
growth agenda, with a focus on our long-term growth markets of the
U.S. and China, the long-term growth potential of our Alliance with
Nestlé, our focus on shareholder value creation, factors that
position us well for fiscal 2019, statements regarding the
estimated impact of the changes in U.S. tax law, net new stores,
revenues, earnings per share, operating margins, comparable store
sales and tax rates, our plans to return $25 billion to
shareholders in the form of stock repurchases and dividends,
including our accelerated share repurchase program, our fiscal 2019
financial targets, and our strategic, operational, and digital
initiatives, including the East China acquisition, our Global
Coffee Alliance with Nestlé, our intention to fully license certain
European operations and other streamlining activities. 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,
adulteration, 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 and the East China
business and successful execution of our Global Coffee Alliance
with Nestlé, the acceptance of the company’s products by our
customers, our ability to obtain financing on acceptable terms, the
impact of competition, the prices and availability of coffee, dairy
and other raw materials, the effect of legal proceedings, the
effects of changes in U.S. tax law and related guidance and
regulations that may be implemented, 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 1, 2017. 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 Sep 30,
2018 Oct 1, 2017
%Change
Sep 30, 2018 Oct 1, 2017
As a % of totalnet
revenues
Net revenues: Company-operated stores $ 5,060.1 $ 4,477.0 13.0 %
80.3 % 78.6 % Licensed stores 683.6 617.6 10.7 10.8 10.8 Other
559.9 603.7 (7.3 ) 8.9 10.6
Total
net revenues 6,303.6 5,698.3 10.6
100.0 100.0 Cost of sales including occupancy costs
2,604.6 2,352.1 10.7 41.3 41.3 Store operating expenses 1,841.6
1,639.8 12.3 29.2 28.8 Other operating expenses 156.7 114.4 37.0
2.5 2.0 Depreciation and amortization expenses 326.6 255.4 27.9 5.2
4.5 General and administrative expenses 460.0 402.7 14.2 7.3 7.1
Restructuring and impairments 45.2 33.3 35.7 0.7
0.6 Total operating expenses 5,434.7 4,797.7 13.3
86.2 84.2 Income from equity investees 87.7 121.9
(28.1 ) 1.4 2.1
Operating income 956.6
1,022.5 (6.4 ) 15.2 17.9 Net
gain resulting from divestiture of certain operations 2.9 83.9
(96.5 ) — 1.5 Interest income and other, net 36.2 67.7 (46.5 ) 0.6
1.2 Interest expense (63.8 ) (22.3 ) 186.1 (1.0 ) (0.4 ) Earnings
before income taxes 931.9 1,151.8 (19.1 ) 14.8 20.2 Income tax
expense 175.5 362.5 (51.6 ) 2.8 6.4 Net
earnings including noncontrolling interests 756.4 789.3 (4.2 ) 12.0
13.9 Net earnings/(loss) attributable to noncontrolling interests
0.6 0.8 (25.0 ) — —
Net earnings
attributable to Starbucks $ 755.8 $
788.5 (4.1 ) 12.0 %
13.8 % Net earnings per common share - diluted
$ 0.56 $ 0.54 3.7
% Weighted avg. shares outstanding - diluted 1,348.7 1,451.2
Cash dividends declared per share $ 0.36 $ 0.30
Supplemental
Ratios: Store operating expenses as a % of company-operated
store revenues 36.4 % 36.6 % Other operating expenses as a % of
non-company-operated store revenues 12.6 % 9.4 % Effective tax rate
including noncontrolling interests 18.8 % 31.5 %
Year Ended Year Ended Sep 30,
2018 Oct 1, 2017
%Change
Sep 30, 2018 Oct 1, 2017
As a % of totalnet revenues Net
revenues: Company-operated stores $ 19,690.3 $ 17,650.7 11.6
% 79.7 % 78.8 % Licensed stores 2,652.2 2,355.0 12.6 10.7 10.5
Other 2,377.0 2,381.1 (0.2 ) 9.6 10.6
Total net revenues 24,719.5 22,386.8
10.4 100.0 100.0 Cost of sales including
occupancy costs 10,174.5 9,034.3 12.6 41.2 40.4 Store operating
expenses 7,193.2 6,493.3 10.8 29.1 29.0 Other operating expenses
539.3 500.3 7.8 2.2 2.2 Depreciation and amortization expenses
1,247.0 1,011.4 23.3 5.0 4.5 General and administrative expenses
1,759.0 1,450.7 21.3 7.1 6.5 Restructuring and impairments 224.4
153.5 46.2 0.9 0.7 Total operating
expenses 21,137.4 18,643.5 13.4 85.5 83.3 Income from equity
investees 301.2 391.4 (23.0 ) 1.2 1.7
Operating income 3,883.3 4,134.7 (6.1
) 15.7 18.5 Gain resulting from acquisition of
joint venture (1) 1,376.4 — nm 5.6 — Net gain resulting from
divestiture of certain operations (2) 499.2 93.5 nm 2.0 0.4
Interest income and other, net 191.4 181.8 5.3 0.8 0.8 Interest
expense (170.3 ) (92.5 ) 84.1 (0.7 ) (0.4 ) Earnings before income
taxes 5,780.0 4,317.5 33.9 23.4 19.3 Income tax expense 1,262.0
1,432.6 (11.9 ) 5.1 6.4 Net earnings
including noncontrolling interests 4,518.0 2,884.9 56.6 18.3 12.9
Net earnings/(loss) attributable to noncontrolling interests (0.3 )
0.2 nm — —
Net earnings attributable to
Starbucks $ 4,518.3 $
2,884.7 56.6 18.3 % 12.9
% Net earnings per common share - diluted $
3.24 $ 1.97 64.5 %
Weighted avg. shares outstanding - diluted 1,394.6 1,461.5 Cash
dividends declared per share $ 1.32 $ 1.05
Supplemental
Ratios: Store operating expenses as a % of company-operated
store revenues 36.5 % 36.8 % Other operating expenses as a % of
non-company-operated store revenues 10.7 % 10.6 % Effective tax
rate including noncontrolling interests 21.8 % 33.2 %
(1)
Represents the gain resulting from the acquisition of our
East China joint venture.
(2)
Primarily includes the gains on the sales
of our Tazo brand and Taiwan joint venture for $347.9 million and
$156.6 million, respectively, in FY18. FY17 primarily represents
the gain on the sale of our Singapore retail operations of $83.9
million.
Segment Results
(in millions)
Americas
Sep 30, 2018 Oct 1, 2017
%Change
Sep 30, 2018 Oct 1, 2017
Quarter
Ended
As a % of Americastotal net
revenues
Net revenues: Company-operated stores $ 3,784.7 $ 3,524.1 7.4 %
89.0 % 89.4 % Licensed stores 466.0 414.7 12.4 11.0 10.5 Other 3.5
2.5 40.0 0.1 0.1
Total net
revenues 4,254.2 3,941.3 7.9 100.0
100.0 Cost of sales including occupancy costs 1,606.3
1,477.4 8.7 37.8 37.5 Store operating expenses 1,455.0 1,326.0 9.7
34.2 33.6 Other operating expenses 40.8 32.6 25.2 1.0 0.8
Depreciation and amortization expenses 160.6 154.3 4.1 3.8 3.9
General and administrative expenses 50.6 45.4 11.5 1.2 1.2
Restructuring and impairments 12.4 4.1 nm 0.3
0.1 Total operating expenses 3,325.7 3,039.8
9.4 78.2 77.1
Operating income $
928.5 $ 901.5 3.0
% 21.8 % 22.9 % Supplemental
Ratios: Store operating expenses as a % of company-operated
store revenues 38.4 % 37.6 % Other operating expenses as a % of
non-company-operated store revenues 8.7 % 7.8 %
Year
Ended
Net revenues: Company-operated stores $ 14,905.1 $ 13,996.4 6.5 %
89.1 % 89.6 % Licensed stores 1,814.0 1,617.3 12.2 10.8 10.4 Other
13.1 6.3 107.9 0.1 —
Total net
revenues 16,732.2 15,620.0 7.1
100.0 100.0 Cost of sales including occupancy costs
6,301.2 5,695.0 10.6 37.7 36.5 Store operating expenses 5,747.9
5,320.2 8.0 34.4 34.1 Other operating expenses 150.0 130.8 14.7 0.9
0.8 Depreciation and amortization expenses 638.3 614.9 3.8 3.8 3.9
General and administrative expenses 247.0 201.4 22.6 1.5 1.3
Restructuring and impairments 33.4 4.1 nm 0.2
— Total operating expenses 13,117.8 11,966.4
9.6 78.4 76.6
Operating income $
3,614.4 $ 3,653.6 (1.1
)% 21.6 % 23.4 % Supplemental
Ratios: Store operating expenses as a % of company-operated
store revenues 38.6 % 38.0 % Other operating expenses as a % of
non-company-operated store revenues 8.2 % 8.1 %
China/Asia Pacific (CAP)
Sep 30, 2018 Oct 1,
2017
%Change
Sep 30, 2018 Oct 1, 2017
Quarter
Ended
As a % of CAPtotal net
revenues
Net revenues: Company-operated stores $ 1,119.3 $ 770.0 45.4 % 92.2
% 89.5 % Licensed stores 93.0 88.7 4.8 7.7 10.3 Other 2.3
1.2 91.7 0.2 0.1
Total net revenues
1,214.6 859.9 41.2 100.0 100.0
Cost of sales including occupancy costs 509.3 370.2 37.6 41.9 43.1
Store operating expenses 313.4 226.6 38.3 25.8 26.4 Other operating
expenses 4.3 3.8 13.2 0.4 0.4 Depreciation and amortization
expenses 116.1 53.3 117.8 9.6 6.2 General and administrative
expenses 65.8 62.9 4.6 5.4 7.3 Total
operating expenses 1,008.9 716.8 40.8 83.1 83.4 Income from equity
investees 26.5 58.6 (54.8 ) 2.2 6.8
Operating income $ 232.2 $
201.7 15.1 % 19.1 %
23.5 % Supplemental Ratios: Store operating
expenses as a % of company-operated store revenues 28.0 % 29.4 %
Other operating expenses as a % of non-company-operated store
revenues 4.5 % 4.2 %
Year
Ended
Net revenues: Company-operated stores $ 4,096.9 $ 2,906.0 41.0 %
91.6 % 89.7 % Licensed stores 365.7 327.4 11.7 8.2 10.1 Other 11.0
6.8 61.8 0.2 0.2
Total net
revenues 4,473.6 3,240.2 38.1 100.0
100.0 Cost of sales including occupancy costs 1,898.3
1,396.2 36.0 42.4 43.1 Store operating expenses 1,148.7 845.5 35.9
25.7 26.1 Other operating expenses 22.9 21.2 8.0 0.5 0.7
Depreciation and amortization expenses 412.1 202.2 103.8 9.2 6.2
General and administrative expenses 241.6 207.1 16.7
5.4 6.4 Total operating expenses 3,723.6 2,672.2 39.3
83.2 82.5 Income from equity investees 117.4 197.0
(40.4 ) 2.6 6.1
Operating income $
867.4 $ 765.0 13.4
% 19.4 % 23.6 % Supplemental
Ratios: Store operating expenses as a % of company-operated
store revenues 28.0 % 29.1 % Other operating expenses as a % of
non-company-operated store revenues 6.1 % 6.3 %
EMEA
Sep 30, 2018 Oct 1,
2017
%Change
Sep 30, 2018 Oct 1, 2017
Quarter
Ended
As a % of EMEAtotal net
revenues
Net revenues: Company-operated stores $ 142.5 $ 141.4 0.8 % 53.3 %
55.4 % Licensed stores 124.6 113.7 9.6 46.6 44.6 Other 0.2 —
nm 0.1 —
Total net revenues
267.3 255.1 4.8 100.0 100.0 Cost
of sales including occupancy costs 138.5 134.0 3.4 51.8 52.5 Store
operating expenses 55.7 63.1 (11.7 ) 20.8 24.7 Other operating
expenses 15.8 11.8 33.9 5.9 4.6 Depreciation and amortization
expenses 8.2 8.2 — 3.1 3.2 General and administrative expenses 11.7
9.0 30.0 4.4 3.5 Restructuring and impairments 26.6 —
nm 10.0 — Total operating expenses 256.5 226.1
13.4 96.0 88.6
Operating income
$ 10.8 $ 29.0
(62.8 )% 4.0 % 11.4 %
Supplemental Ratios: Store operating expenses as a % of
company-operated store revenues 39.1 % 44.6 % Other operating
expenses as a % of non-company-operated store revenues 12.7 % 10.4
%
Year
Ended
Net revenues: Company-operated stores $ 575.6 $ 551.0 4.5 % 54.9 %
57.5 % Licensed stores 471.3 407.7 15.6 45.0 42.5 Other 1.1
— nm 0.1 —
Total net revenues
1,048.0 958.7 9.3 100.0 100.0
Cost of sales including occupancy costs 559.2 508.6 9.9 53.4 53.1
Store operating expenses 226.0 214.1 5.6 21.6 22.3 Other operating
expenses 62.8 51.3 22.4 6.0 5.4 Depreciation and amortization
expenses 31.7 30.6 3.6 3.0 3.2 General and administrative expenses
51.7 41.7 24.0 4.9 4.3 Restructuring and impairments 55.1
17.9 207.8 5.3 1.9 Total operating expenses
986.5 864.2 14.2 94.1 90.1
Operating
income $ 61.5 $ 94.5
(34.9 )% 5.9 % 9.9 %
Supplemental Ratios: Store operating expenses as a % of
company-operated store revenues 39.3 % 38.9 % Other operating
expenses as a % of non-company-operated store revenues 13.3 % 12.6
%
Channel Development
Sep 30, 2018 Oct 1,
2017
%Change
Sep 30, 2018 Oct 1, 2017
Quarter
Ended
As a % ofChannel
Developmentnet revenues
Net revenues
$
539.3
$
576.5
(6.5 )% Cost of sales 314.3 311.9 0.8 58.3 54.1 Other operating
expenses 92.0 58.9 56.2 17.1 10.2 Depreciation and amortization
expenses 0.1 0.7 (85.7 ) — 0.1 General and administrative expenses
3.3 2.9 13.8 0.6 0.5
Total operating expenses 409.7 374.4 9.4 76.0 64.9 Income from
equity investees 61.2 63.3 (3.3 ) 11.3
11.0
Operating income $ 190.8
$ 265.4 (28.1 )%
35.4 % 46.0 %
Year
Ended
Net revenues
$
2,297.3
$
2,256.6
1.8 % Cost of sales 1,252.3 1,209.3 3.6 54.5 53.6 Other operating
expenses 286.5 260.4 10.0 12.5 11.5 Depreciation and amortization
expenses 1.3 3.0 (56.7 ) 0.1 0.1 General and administrative
expenses 13.9 11.3 23.0 0.6 0.5
Total operating expenses 1,554.0 1,484.0 4.7 67.6 65.8
Income from equity investees 183.8 194.4
(5.5 ) 8.0 8.6
Operating income
$ 927.1 $ 967.0
(4.1 )% 40.4 % 42.9 %
Corporate and Other
Quarter
Ended
Sep 30, 2018
Oct 1, 2017
%Change
Net revenues: Company-operated stores $ 13.6 $ 41.5 (67.2 )%
Licensed stores — 0.5 nm Other 14.6 23.5 (37.9 )
Total net revenues 28.2 65.5 (56.9
) Cost of sales including occupancy costs 36.2 58.6 (38.2 )
Store operating expenses 17.5 24.1 (27.4 ) Other operating expenses
3.8 7.3 (47.9 ) Depreciation and amortization expenses 41.6 38.9
6.9 General and administrative expenses 328.6 282.5 16.3
Restructuring and impairments 6.2 29.2 (78.8 ) Total
operating expenses 433.9 440.6 (1.5 )
Operating
loss $ (405.7 ) $ (375.1
) 8.2 %
Year
Ended
Net revenues: Company-operated stores $ 112.7 $ 197.3 (42.9 )%
Licensed stores 1.2 2.6 (53.8 ) Other 54.5 111.4
(51.1 )
Total net revenues 168.4 311.3
(45.9 ) Cost of sales including occupancy costs 163.5
225.2 (27.4 ) Store operating expenses 70.6 113.5 (37.8 ) Other
operating expenses 17.1 36.6 (53.3 ) Depreciation and amortization
expenses 163.6 160.7 1.8 General and administrative expenses
1,204.8 989.2 21.8 Restructuring and impairments 135.9 131.5
3.3 Total operating expenses 1,755.5 1,656.7
6.0
Operating loss $ (1,587.1 )
$ (1,345.4 ) 18.0 %
Corporate and Other primarily consists of our unallocated
corporate operating expenses, the results from Starbucks ReserveTM
Roastery & Tasting Rooms, Starbucks Reserve brand and products
and Princi operations, Evolution Fresh and formerly, the Teavana
retail business.
STARBUCKS CORPORATION CONSOLIDATED
BALANCE SHEETS
(unaudited, in millions, except per share
data)
Sep 30, 2018
Oct 1, 2017
ASSETS Current assets: Cash and cash equivalents $ 8,756.3 $
2,462.3 Short-term investments 181.5 228.6 Accounts receivable, net
693.1 870.4 Inventories 1,400.5 1,364.0 Prepaid expenses and other
current assets 1,462.8 358.1 Total current assets
12,494.2 5,283.4 Long-term investments 267.7 542.3 Equity and cost
investments 334.7 481.6 Property, plant and equipment, net 5,929.1
4,919.5 Deferred income taxes, net 134.7 795.4 Other long-term
assets 412.2 362.8 Other intangible assets 1,042.2 441.4 Goodwill
3,541.6 1,539.2 TOTAL ASSETS $ 24,156.4 $
14,365.6
LIABILITIES AND EQUITY Current liabilities:
Accounts payable $ 1,179.3 $ 782.5 Accrued liabilities 2,298.4
1,934.5 Insurance reserves 213.7 215.2 Stored value card liability
and current portion of deferred revenue 1,642.9 1,288.5 Current
portion of long-term debt 349.9 — Total current
liabilities 5,684.2 4,220.7 Long-term debt 9,090.2 3,932.6 Deferred
revenue 6,775.7 4.4 Other long-term liabilities 1,430.5
750.9 Total liabilities 22,980.6 8,908.6 Shareholders’
equity: Common stock ($0.001 par value) — authorized, 2,400.0
shares; issued and outstanding, 1,309.1 and 1,431.6 shares,
respectively 1.3 1.4 Additional paid-in capital 41.1 41.1 Retained
earnings 1,457.4 5,563.2 Accumulated other comprehensive loss
(330.3 ) (155.6 ) Total shareholders’ equity 1,169.5 5,450.1
Noncontrolling interests 6.3 6.9 Total equity 1,175.8
5,457.0 TOTAL LIABILITIES AND EQUITY $ 24,156.4
$ 14,365.6
STARBUCKS CORPORATION CONSOLIDATED STATEMENTS OF CASH
FLOWS
(unaudited and in millions)
Fiscal Year
Ended
Sep 30, 2018 Oct 1, 2017 Oct 2,
2016 OPERATING ACTIVITIES: Net earnings including
noncontrolling interests $ 4,518.3 $ 2,884.9 $ 2,818.9 Adjustments
to reconcile net earnings to net cash provided by operating
activities: Depreciation and amortization 1,305.9 1,067.1 1,030.1
Deferred income taxes, net 714.9 95.1 265.7 Income earned from
equity method investees (242.8 ) (310.2 ) (250.2 ) Distributions
received from equity method investees 226.8 186.6 223.3 Gain
resulting from acquisition of joint venture (1,376.4 ) — — Net gain
resulting from divestiture of certain retail operations (499.2 )
(93.5 ) (6.1 ) Stock-based compensation 250.3 176.0 218.1 Goodwill
impairments 37.6 87.2 — Other 89.0 68.9 45.1 Cash provided by
changes in operating assets and liabilities: Accounts receivable
131.0 (96.8 ) (55.6 ) Inventories (41.2 ) 14.0 (67.5 ) Accounts
payable 391.6 46.4 46.9 Deferred Revenue 7,109.4 130.8 180.4 Other
operating assets and liabilities (677.4 ) (4.7 ) 248.8 Net
cash provided by operating activities 11,937.8 4,251.8 4,697.9
INVESTING ACTIVITIES: Purchases of investments (191.9 ) (674.4 )
(1,585.7 ) Sales of investments 459.0 1,054.5 680.7 Maturities and
calls of investments 45.3 149.6 27.9 Acquisitions, net of cash
acquired (1,311.3 ) — — Additions to property, plant and equipment
(1,976.4 ) (1,519.4 ) (1,440.3 ) Net proceeds from the divestiture
of certain operations 608.2 85.4 69.6 Other 5.6 54.3
24.9 Net cash used by investing activities (2,361.5 ) (850.0
) (2,222.9 ) FINANCING ACTIVITIES: Proceeds from issuance of
long-term debt 5,584.1 750.2 1,254.5 Repayments of long-term debt —
(400.0 ) — Proceeds from issuance of common stock 153.9 150.8 160.7
Cash dividends paid (1,743.4 ) (1,450.4 ) (1,178.0 ) Repurchase of
common stock (7,133.5 ) (2,042.5 ) (1,995.6 ) Minimum tax
withholdings on share-based awards (62.7 ) (82.8 ) (106.0 ) Other
(41.2 ) (4.4 ) (8.4 ) Net cash used by financing activities
(3,242.8 ) (3,079.1 ) (1,872.8 ) Effect of exchange rate changes on
cash and cash equivalents (39.5 ) 10.8 (3.5 ) Net
increase/(decrease) in cash and cash equivalents 6,294.0 333.5
598.7 CASH AND CASH EQUIVALENTS: Beginning of period 2,462.3
2,128.8 1,530.1 End of period $ 8,756.3 $
2,462.3 $ 2,128.8 SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION: Cash paid during the period for: Interest, net of
capitalized interest $ 137.1 $ 96.6 $ 74.7 Income taxes, net of
refunds $ 1,176.9 $ 1,389.1 $ 878.7
Supplemental
Information
The following supplemental information is provided for
historical and comparative purposes.
U.S. Supplemental
Data
Quarter Ended ($ in millions)
Sep 30, 2018 Oct 1, 2017
Change Revenues $3,903.0 $3,585.9 9%
Comparable Store Sales Growth(1) 4% 2% Change in Transactions (1)%
0% Change in Ticket 5% 2%
(1) Includes only Starbucks company-operated stores open 13 months
or longer.
Store
Data
Net stores opened/(closed) and transferred during the period
Quarter Ended Year
Ended Stores open as of Sep 30, 2018
Oct 1, 2017 Sep 30, 2018
Oct 1, 2017 Sep 30, 2018 Oct 1,
2017 Americas: Company-operated stores 94 112 271 394 9,684
9,413 Licensed stores 156 145 624 558
7,770 7,146 Total Americas 250 257 895
952 17,454 16,559 China/Asia Pacific(1):
Company-operated stores 180 (28 ) 2,089 259 5,159 3,070 Licensed
stores 98 324 (1,038 ) 777 3,371 4,409
Total China/Asia Pacific 278 296 1,051 1,036
8,530 7,479 EMEA: Company-operated stores (6 ) (4 )
(12 ) (21 ) 490 502 Licensed stores 89 108 358
353 2,830 2,472 Total EMEA 83 104 346
332 3,320 2,974 Corporate and Other(2):
Company-operated stores 3 (54 ) (282 ) (68 ) 8 290 Licensed stores
(10 ) — (25 ) 2 12 37 Total Corporate and
Other (7 ) (54 ) (307 ) (66 ) 20 327
Total Company 604
603 1,985 2,254
29,324 27,339 (1) China/Asia Pacific store
data includes the transfer of 1,477 licensed stores in East China
to company-operated retail stores as a result of the purchase of
our East China joint venture in the first quarter of fiscal 2018.
(2) As of September 30, 2018, Corporate and Other included 12
licensed Teavana-branded stores.
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, as they do not
contribute to a meaningful evaluation of the company’s future
operating performance or comparisons to the company’s past
operating performance. 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 East China acquisition-related gain
Management excludes the gain on the purchase of our East
China joint venture as this incremental gain is specific to the
purchase activity and for reasons discussed above. Sale of Taiwan
joint venture operations Management excludes the gain
related to the sale of our Taiwan joint venture operations as this
incremental gain is specific to the sale activity and for reasons
discussed above. Sale of Tazo brand Management excludes the
net gain on the sale of our assets associated with our Tazo brand
and associated transaction costs as these items do not reflect
future gains, losses, costs or tax benefits and for reasons
discussed above. Sale of Brazil retail operations Management
excludes the net loss related to the sale of our Brazil retail
operations and associated transaction costs as these items do not
reflect future losses, expenses or tax impacts and for reasons
discussed above. Restructuring, impairment and optimization costs
Management excludes restructuring charges and business
process optimization costs related to strategic shifts in its
Teavana, EMEA, U.S., e-commerce and other business units.
Additionally, management excludes expenses related to divesting
certain lower margin businesses and assets, such as closure of
certain company-operated stores and Switzerland goodwill
impairment. Management excludes these items for reasons discussed
above. These expenses are anticipated to be completed within a
finite period of time. CAP transaction and integration-related
costs Management excludes transaction and integration costs
and amortization of the acquired intangible assets for reasons
discussed above. Additionally, the majority of these costs will be
recognized over a finite period of time. Sale of Singapore retail
operations Management excludes the net gain related to the
sale of our Singapore retail operations as these items do not
reflect future gains, losses or tax impacts and for reasons
discussed above. 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 for reasons discussed above. The
Starbucks Foundation donation Management excludes the
company's largest donation to a non-profit organization for reasons
discussed above. 2018 U.S. stock award Management excludes
the announced incremental 2018 stock-based compensation award for
reasons discussed above. Nestlé transaction related costs
Management excludes the transaction related costs associated with
Nestlé for reasons discussed above. Other tax matters On
December 22, 2017, the Tax Cuts and Jobs Act was signed into U.S.
law. Management excludes the estimated transition tax on
undistributed foreign earnings and the re–measurement of deferred
tax assets and liabilities due to the reduction of the U.S. federal
corporate income tax rate for reasons discussed above.
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
Sep 30, 2018 Oct 1, 2017
Change Operating income, as reported (GAAP) $ 956.6 $
1,022.5 (6.4)% Restructuring, impairment and optimization costs (1)
50.0 44.6 CAP transaction and integration-related items (2) 63.1
21.2 2018 U.S. stock award (3) 24.1 — Nestlé transaction related
costs 49.3 — The Starbucks Foundation donation — 50.0
Non-GAAP operating income $ 1,143.1 $ 1,138.3 0.4%
Operating margin, as reported (GAAP) 15.2 % 17.9 % (270) bps
Restructuring, impairment and optimization costs (1) 0.8 0.8 CAP
transaction and integration-related items (2) 1.0 0.4 2018 U.S.
stock award (3) 0.4 — Nestlé transaction related costs 0.8 — The
Starbucks Foundation donation — 0.9 Non-GAAP
operating margin 18.1 % 20.0 % (190) bps Diluted net
earnings per share, as reported (GAAP) $ 0.56 $ 0.54 3.7%
Restructuring, impairment and optimization costs (1) 0.04 0.03 CAP
transaction and integration-related items (2) 0.05 0.01 2018 U.S.
stock award (3) 0.02 — Sale of Singapore retail operations — (0.06
) Nestlé transaction related costs 0.04 — The Starbucks Foundation
donation — 0.03 Other tax matters (4) 0.01 — Income tax effect on
Non-GAAP adjustments (5) (0.09 ) (0.02 ) Non-GAAP net earnings per
share $ 0.62 $ 0.55 12.7%
(1)
Represents costs associated with our restructuring efforts,
primarily asset impairments related to certain company-operated
store closures in the U.S. and Canada, as well as business process
optimization costs, largely consulting fees in FY18. FY17
represents goodwill and other asset impairment charges associated
with our Teavana-branded stores and goodwill impairment related to
our Switzerland retail business.
(2)
Includes transaction costs for the acquisition of our East China
joint venture and the divestiture of our Taiwan joint venture;
ongoing amortization expense of acquired intangible assets
associated with the acquisition of East China and Starbucks Japan;
and the related post-acquisition integration costs, such as
incremental information technology and compensation-related costs.
(3)
Represents incremental stock-based
compensation award for U.S. partners (employees).
(4)
Represents the estimated impact of the U.S. Tax Cuts and Jobs Act,
specifically the transition tax on undistributed foreign earnings
and re-measurement of deferred taxes.
(5)
Income tax effect on non-GAAP adjustments was determined based on
the nature of the underlying items and their relevant
jurisdictional tax rates.
Year
Ended
Consolidated
Sep 30, 2018 Oct 1, 2017
Change Operating income, as reported (GAAP) $ 3,883.3 $
4,134.7 (6.1%) Restructuring, impairment and optimization costs (1)
239.0 164.8 CAP transaction and integration-related items (2) 224.2
61.6 2018 U.S. stock award (3) 45.8 — Sale of Brazil retail
operations 1.6 — Sale of Singapore retail operations — 1.4 Nestlé
transaction related costs 61.3 — The Starbucks Foundation donation
— 50.0 Sale of Tazo brand 2.2 —
Non-GAAP operating income $ 4,457.4 $ 4,412.5 1.0%
Operating margin, as reported (GAAP) 15.7 % 18.5 % (280) bps
Restructuring, impairment and optimization costs (1) 1.0 0.7 CAP
transaction and integration-related items (2) 0.9 0.3 2018 U.S.
stock award (3) 0.2 — Sale of Brazil retail operations — — Nestlé
transaction related costs 0.3 — The Starbucks Foundation donation —
0.2 Sale of Tazo brand — — Non-GAAP
operating margin 18.0 % 19.7 % (170) bps
Diluted net earnings per share (GAAP) $ 3.24 $ 1.97 64.5% East
China acquisition gain (0.99 ) — Sale of Taiwan joint venture
operations (0.11 ) — Sale of Tazo brand (0.25 ) — Restructuring,
impairment and optimization costs (1) 0.17 0.11 CAP transaction and
integration-related items (2) 0.16 0.04 Sale of Brazil retail
operations 0.01 — Sale of Singapore retail operations — (0.06 )
Sale of Germany retail operations — (0.01 ) The Starbucks
Foundation donation — 0.03
2018 U.S. stock award (3)
0.03 — Nestlé transaction related costs 0.04 —
Other tax matters (4)
0.13 — Income tax effect on Non-GAAP adjustments (5) (0.02 )
(0.04 ) Non-GAAP net earnings per share $ 2.42 $ 2.06
17%
(1)
Represents restructuring, impairment and business
optimization costs and inventory write-offs related to these
efforts recorded within cost of sales including occupancy costs.
(2)
Includes transaction costs for the acquisition of our East China
joint venture and the divestiture of our Taiwan joint venture;
ongoing amortization expense of acquired intangible assets
associated with the acquisition of our East China joint venture and
Starbucks Japan; and the related post-acquisition integration
costs, such as incremental information technology and
compensation-related costs.
(3)
Represents incremental stock-based
compensation award for U.S. partners (employees).
(4)
Represents the estimated impact of the
U.S. Tax Cuts and Jobs Act, specifically the transition tax on
undistributed foreign earnings and re-measurement of deferred
taxes.
(5)
Income tax effect on non-GAAP adjustments was determined based on
the nature of the underlying items and their relevant
jurisdictional tax rates.
Year Ended
Consolidated
Sep 29, 2019 (Projected) Diluted net earnings
per share (GAAP) $ 2.32 - 2.37 Restructuring, impairment and
optimization costs (1) 0.09 CAP transaction and integration-related
items (2) 0.23 2018 U.S. stock award (3) 0.05 Nestlé transaction
related costs — Other 0.01 Income tax effect on Non-GAAP
adjustments (4) (0.09) Non-GAAP net earnings per share $ 2.61 -
2.66
(1)
Represents restructuring, impairment and business
optimization costs and inventory write-offs related to these
efforts recorded within cost of sales including occupancy costs.
(2)
Includes transaction costs for the acquisition of our East China
joint venture and the divestiture of our Taiwan joint venture;
ongoing amortization expense of acquired intangible assets
associated with the acquisition of our East China joint venture and
Starbucks Japan; and the related post-acquisition integration
costs, such as incremental information technology and
compensation-related costs.
(3)
Represents incremental stock-based compensation award for U.S.
partners (employees).
(4)
Income tax effect on non-GAAP adjustments was determined based on
the nature of the underlying items and their relevant
jurisdictional tax rates.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181101006066/en/
StarbucksInvestor Relations:Tom Shaw,
206-318-7118investorrelations@starbucks.comorMedia:Reggie
Borges, 206-318-7100press@starbucks.com
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