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Starbucks Reports Record Q1 Results And Reaffirms FY14 Growth Targets

Stocks in this article: SBUX

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 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, business momentum, the benefits to our business from the shift to online shopping, growth and growth opportunities, earnings per share, revenues, operating margins, profits, capital expenditures, tax rates, comparable store sales and store openings and closings. 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, coffee, dairy and other raw material prices and availability, costs associated with, and the successful execution of, the company's initiatives, strategies and plans, the acceptance of the company's products by our customers, fluctuations in U.S. and international economies and currencies, the impact of competition, 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 29, 2013. 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

Dec 29,

Dec 30,

%

Dec 29,

Dec 30,

2013

   

2012

   

Change

2013

   

2012

As a % of total

net revenues (1)

Net revenues:
Company-operated stores $ 3,343.8 $ 2,989.6 11.8 % 78.9 % 78.8 %
Licensed stores 401.8 350.2 14.7 9.5 9.2
CPG, foodservice and other (1) 494.0   453.4   9.0 11.7   12.0  
Total net revenues 4,239.6 3,793.2 11.8 100.0 100.0
Cost of sales including occupancy costs 1,795.1 1,620.7 10.8 42.3 42.7
Store operating expenses 1,175.1 1,089.5 7.9 27.7 28.7
Other operating expenses (1) 114.9 126.1 (8.9 ) 2.7

 

3.3
Depreciation and amortization expenses 169.7 148.9 14.0 4.0 3.9
General and administrative expenses 242.6 231.9 4.6 5.7 6.1
Litigation charge/(credit) (20.2 )   nm (0.5 )  
Total operating expenses 3,477.2 3,217.1 8.1 82.0 84.8
Income from equity investees 51.1   54.5   (6.2 ) 1.2   1.4  
Operating income 813.5 630.6 29.0 19.2 16.6
Interest income and other, net 19.8 (2.9 )

nm

0.5 (0.1 )
Interest expense (14.5 ) (6.6 ) 119.7 (0.3 ) (0.2 )
Earnings before income taxes 818.8 621.1 31.8 19.3 16.4
Income taxes 278.1   188.7   47.4 6.6   5.0  
Net earnings including noncontrolling interest 540.7 432.4 25.0 12.8 11.4
Net earnings attributable to noncontrolling interest   0.2   (100.0 )    
Net earnings attributable to Starbucks $ 540.7   $ 432.2   25.1 % 12.8 % 11.4 %
 
Net earnings per common share - diluted $ 0.71   $ 0.57   24.6 %
Weighted avg. shares outstanding - diluted 766.2 761.3
 
Cash dividends declared per share $ 0.26 $ 0.21
 
Supplemental Ratios:
Store operating expenses as a percentage of company-operated stores revenue 35.1 % 36.4 %
Effective tax rate including noncontrolling interest 34.0 % 30.4 %
 

(1) Prior period results have been corrected to reflect an immaterial reclassification of certain fees related to our foodservice operations; for full revised FY12 and FY13 results, refer to http://investor.starbucks.com.

 
                 

Segment Results (in millions)

 

Americas

 

                     

 

Dec 29, Dec 30, % Dec 29, Dec 30,
2013     2012     Change   2013     2012

Quarter Ended

As a % of Americas

 

total net revenues
Net revenues:
Company-operated stores $

2,787.0

$

2,586.4

7.8 % 90.7 % 91 %
Licensed stores 274.3 239.2 14.7 8.9 8.4
CPG, foodservice and other   11.7     15.1   (22.5 ) 0.4   0.5  
Total net revenues

3,073.0

2,840.7

8.2

100.0

100.0

Cost of sales including occupancy costs

1,164.2

1,092.5

6.6 37.9 38.5
Store operating expenses 999.6 959.8 4.1 32.5 33.8
Other operating expenses 25.3

30.0

(15.7 ) 0.8 1.1
Depreciation and amortization expenses 112.3 105.4 6.5 3.7 3.7
General and administrative expenses   39.5     62.7   (37.0 ) 1.3   2.2  
Total operating expenses  

2,340.9

   

2,250.4

 

4.0

76.2   79.2  
Operating income $ 732.1   $ 590.3  

24.0

% 23.8 % 20.8 %
Supplemental Ratios:
Store operating expenses as a percentage of company-operated stores revenue 35.9 % 37.1 %
 
                 
EMEA
                         
Dec 29, Dec 30, % Dec 29, Dec 30,
2013     2012     Change   2013   2012

Quarter Ended

As a % of EMEA
total net revenues
Net revenues:
Company-operated stores $ 269.0 $ 252.7 6.5 % 79.2 % 82.6 %
Licensed stores 60.6 43.9 38.0 17.8 14.3
CPG, foodservice and other   9.9     9.5   4.2 2.9   3.1  
Total net revenues 339.5 306.1 10.9 100.0 100.0
Cost of sales including occupancy costs 168.2 152.5 10.3 49.5 49.8
Store operating expenses 96.4 90.3 6.8 28.4 29.5
Other operating expenses 11.6 8.4 38.1 3.4 2.7
Depreciation and amortization expenses 14.6 14.2 2.8 4.3 4.6
General and administrative expenses   16.0     18.4   (13.0 ) 4.7   6.0  
Total operating expenses 306.8 283.8 8.1 90.4 92.7
Income from equity investees   0.8       nm 0.2    
Operating income $ 33.5   $ 22.3   50.2 % 9.9 % 7.3 %
Supplemental Ratios:
Store operating expenses as a percentage of company-operated stores revenue 35.8 % 35.7 %
 
     

 

           

China / Asia Pacific (CAP)

                         
Dec 29, Dec 30, % Dec 29, Dec 30,
2013     2012     Change   2013     2012

Quarter Ended

As a % of CAP
total net revenues
Net revenues:
Company-operated stores $ 201.6 $ 150.5 34.0 % 75.5 % 70.3 %
Licensed stores   65.3     63.6   2.7 24.5   29.7  
Total net revenues 266.9 214.1 24.7 100.0 100.0
Cost of sales including occupancy costs 132.7 106.5 24.6 49.7 49.7
Store operating expenses 51.3 39.4 30.2 19.2 18.4
Other operating expenses 10.6 10.2 3.9 4.0 4.8
Depreciation and amortization expenses 10.3 7.4 39.2 3.9 3.5
General and administrative expenses   14.0     12.6   11.1 5.2   5.9  
Total operating expenses 218.9 176.1 24.3 82.0 82.3
Income from equity investees   33.1     34.1   (2.9 ) 12.4   15.9  
Operating income $ 81.1   $ 72.1   12.5 % 30.4 % 33.7 %
Supplemental Ratios:
Store operating expenses as a percentage of company-operated stores revenue 25.4 % 26.2 %
 
                 
Channel Development
                         
Dec 29, Dec 30, % Dec 29, Dec 30,
2013     2012     Change   2013     2012

Quarter Ended

As a % of
Channel Development
total net revenues (1)
Net revenues:
CPG $ 306.4 $ 288.3 6.3 % 76.4 % 77.0 %
Foodservice (1)   94.6     86.0   10.0 23.6   23.0  
Total net revenues 401.0 374.3 7.1 100.0 100.0
Cost of sales 245.6 235.2 4.4 61.2 62.8
Other operating expenses (1) 48.0 57.6 (16.7 ) 12.0 15.4
Depreciation and amortization expenses 0.4 0.3 33.3 0.1 0.1
General and administrative expenses   5.4     4.8   12.5 1.3   1.3  
Total operating expenses 299.4 297.9 0.5 74.7 79.6
Income from equity investees   17.2     20.4   (15.7 ) 4.3   5.5  
Operating income $ 118.8   $ 96.8   22.7 % 29.6 % 25.9 %
 

(1) Prior period results have been corrected to reflect an immaterial reclassification of certain fees related to our foodservice operations; for full revised FY12 and FY13 results, refer to http://investor.starbucks.com.

 
           
All Other Segments
               
Dec 29, Dec 30, %
2013     2012     Change

Quarter Ended

Net revenues:
Company-operated stores $ 86.2 $ nm
Licensed stores 1.6 3.5 (54.3 )
CPG, foodservice and other (1)   71.4     54.5   31.0
Total net revenues 159.2 58.0 174.5
Cost of sales including occupancy costs 82.8 36.3 128.1
Store operating expenses 27.8 nm
Other operating expenses (1) 19.6 19.9 (1.5 )
Depreciation and amortization expenses 3.7 1.0 270.0
General and administrative expenses   11.7     5.0   134.0
Total operating expenses   145.6     62.2   134.1

Operating income/(loss)

$ 13.6   $ (4.2 ) nm
 

(1) Prior period results have been corrected to reflect an immaterial reclassification of certain fees related to our foodservice operations; for full revised FY12 and FY13 results, refer to http://investor.starbucks.com.

 

Supplemental Information

The following supplemental information is provided for historical and comparative purposes.

             

Fiscal First Quarter 2014 U.S. Supplemental Data

             
Quarter Ended
($ in millions)       Dec 29, 2013     Dec 30, 2012     Change
Revenues $2,722.8 $2,503.9 9%
Comparable Store Sales Growth (1) 5% 7%

 

Change in Transactions 4% 4%

 

Change in Ticket       1%     2%    

 

(1) Includes only Starbucks company-operated stores open 13 months or longer
 
             

Store Data:

Net stores opened
(closed) during the period        
Quarter Ended Stores open as of
Dec 29,     Dec 30, Dec 29, Dec 30,
2013 2012 2013 2012
Americas

Company-operated stores

27 26 8,105 7,828

Licensed stores

115   61   5,530 5,072
142   87   13,635 12,900
EMEA
Company-operated stores 3 (20 ) 856 862
Licensed stores 61   27   1,177 1,014
64   7   2,033 1,876
CAP
Company-operated stores 61 47 967 713
Licensed stores 148   78   3,124 2,706
209   125   4,091 3,419
All Other Segments
Company-operated stores 7 3 364 17
Licensed stores (5 ) (10 ) 61 66
2   (7 ) 425 83
       
Total Company 417   212   20,184 18,278
 




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