Comp Store Sales Up 7% in the U.S. and
Americas; 6% Globally
Revenues Up 9% to a Q2 Record $5.0 Billion; 5%
Transaction Growth and 18% Revenue Growth in China
Operating Margin Expands to a Q2 Record
17.3%
Company Adds 900,000 Starbucks Rewards Loyalty
Members in the U.S. since Q1; Now Has 12M Active U.S. Members
Company Reaffirms FY16 Growth Targets;
Announces Additional 100M Share Repurchase Authorization
Starbucks Corporation (NASDAQ: SBUX) today reported financial
results for its 13-week fiscal second quarter and 26-week fiscal
year to date ended March 27, 2016. Fiscal 2016 and fiscal 2015
GAAP results 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.
Q2 Fiscal 2016 Highlights:
- Global comparable store sales increased
6%, comprised of a 4% increase in ticket and 2% increase in
traffic
- Consolidated net revenues grew 9% to a
Q2 record $5.0 billion
- Consolidated GAAP operating income
increased 11% to a Q2 record $864 million
- Non-GAAP operating income increased 11%
over Q2 FY15 non-GAAP, to a Q2 record $878 million
- Consolidated GAAP operating margin
increased 30 basis points to a Q2 record 17.3%
- Non-GAAP operating margin expanded 30
basis points over Q2 FY15 non-GAAP, to a Q2 record 17.6%
- EPS increased 18% to a Q2 record $0.39
per share
- The company opened 350 net new stores
globally, bringing total stores to 23,921 worldwide at the end of
Q2
- Starbucks served nearly 16 million more
customer occasions from its global comp store base - and over 12
million more customer occasions in the U.S. - in Q2 FY16 compared
to Q2 FY15
- Membership in the company's Starbucks
Rewards loyalty program increased 16% year-over-year and 8% in Q2
versus Q1 FY16; company now has 12 million active loyalty members
in the U.S.
- Mobile Order and Pay usage doubled
year-over-year; company now processing 8 million Mobile Order and
Pay transactions per month
"Starbucks record Q2 financial and operating performance -
including a stunning 18% increase in revenues and a 5% increase in
transactions in China - underscores the strength of the Starbucks
brand and the resiliency of our global retail and CPG businesses,"
said Howard Schultz, chairman and ceo. "Loyalty, technology and
innovation are continuing to fuel our digital flywheel and propel
our business forward all around the world."
“Starbucks Q2 represented another quarter of solid growth, with
the highest revenues of any non-holiday quarter in our history and
excellent financial, operating and profit performance,” said Scott
Maw, cfo. “The record-setting performance we delivered in
the first half of fiscal 2016 ideally positions us to benefit
from the investments we are making in our partners, in our stores
and in groundbreaking innovation, and to continue delivering world
class returns to our shareholders into the future.”
Second Quarter Fiscal 2016
Summary
Quarter Ended Mar 27, 2016 Comparable Store
Sales(1) Sales Growth Change in
Transactions Change in Ticket Consolidated(2) 6 %
2 % 4 % Americas 7 % 3 % 5 % CAP(2) 3 % 2 % 2 % EMEA
1 % 0 % 1 %
(1) Includes only Starbucks company-operated stores open 13
months or longer.
(2) Beginning in December of fiscal 2016, comparable store sales
include the results of the 1,009 company-operated stores acquired
as part of the acquisition of Starbucks Japan in the first quarter
of fiscal 2015.
Operating Results Quarter Ended ($ in
millions, except per share amounts)
Mar 27, 2016
Mar 29, 2015 Change Net New Stores(1)
350 210 140 Revenues $ 4,993.2 $ 4,563.5 9 % Operating
Income $ 864.2 $ 777.5 11 % Operating Margin 17.3 % 17.0 % 30 bps
EPS $ 0.39 $ 0.33 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 $5.0 billion in Q2 FY16, an
increase of 9% over Q2 FY15. The increase was primarily driven by a
6% increase in global comparable store sales and the opening of
1,833 net new stores over the past 12 months.
Consolidated operating income grew 11% to $864.2 million in Q2
FY16, up from $777.5 million in Q2 FY15. Consolidated operating
margin expanded 30 basis points to 17.3%. The increase was
primarily due to sales leverage and was partially offset by
investments in our partners (employees) and digital platforms.
Q2 Americas Segment
Results
Quarter Ended ($ in millions)
Mar
27, 2016 Mar 29, 2015 Change Net
New Stores(1) 132 (2 ) 134 Revenues $ 3,455.6 $ 3,128.0 10 %
Operating Income $ 812.0 $ 709.6 14 % Operating Margin
23.5 % 22.7 % 80 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 $3.5 billion in Q2
FY16, an increase of 10% over Q2 FY15. The increase was driven by a
7% increase in comparable store sales and incremental revenues from
707 net new store openings over the past 12 months.
Operating income of $812.0 million in Q2 FY16 grew 14% versus
$709.6 million in Q2 FY15. Operating margin of 23.5% expanded 80
basis points due to sales leverage and was partially offset by
investments in our partners (employees) and digital platforms.
Q2 China/Asia Pacific Segment
Results
Quarter Ended ($ in millions)
Mar
27, 2016 Mar 29, 2015 Change Net
New Stores 175 176 (1 ) Revenues $ 677.9 $ 595.2 14 %
Operating Income $ 129.3 $ 112.4 15 % Operating Margin
19.1 % 18.9 % 20 bps
Net revenues for the China/Asia Pacific segment grew 14% over Q2
FY15 to $677.9 million in Q2 FY16. The increase was primarily
driven by incremental revenues from 884 net new store openings over
the past 12 months. A 3% increase in comparable store sales also
contributed.
Operating income grew 15% over Q2 FY15 to $129.3 million in Q2
FY16. Operating margin expanded 20 basis points to 19.1% primarily
due to sales leverage and higher income from our joint venture
operations. The expansion was partially offset by the impact of
foreign currency and increased store operating expenses related to
higher compensation and benefits.
Q2 EMEA Segment Results
Quarter Ended ($ in millions)
Mar
27, 2016 Mar 29, 2015 Change Net
New Stores 47 35 12 Revenues $ 268.3 $ 280.3 (4 )% Operating
Income $ 27.6 $ 29.2 (5 )% Operating Margin 10.3 %
10.4 % (10) bps
Net revenues for the EMEA segment were $268.3 million in Q2
FY16, a 4% decrease versus Q2 FY15. The decrease was primarily due
to the shift in the portfolio towards more licensed stores and
unfavorable foreign currency translation. Partially offsetting the
decrease were incremental revenues from the opening of 273 net new
licensed stores over the past 12 months.
Operating income decreased 5% to $27.6 million in Q2 FY16, down
from $29.2 million in Q2 FY15. Operating margin declined 10 basis
points to 10.3%, primarily driven by gains on the sale of certain
store assets in the prior year.
Q2 Channel Development Segment
Results
Quarter Ended ($ in millions)
Mar
27, 2016 Mar 29, 2015 Change
Revenues $ 461.2 $ 428.0 8 % Operating Income $ 182.0 $
156.1 17 % Operating Margin 39.5 % 36.5
% 300 bps
Net revenues for the Channel Development segment grew 8% over Q2
FY15 to $461.2 million in Q2 FY16, primarily driven by increased
sales of premium single-serve products. Also contributing to the
increase were higher foodservice sales.
Operating income of $182.0 million in Q2 FY16 increased 17%
compared to Q2 FY15. Operating margin increased 300 basis points to
39.5%, primarily driven by leverage on cost of sales and lower
coffee costs. Higher income from the North American Coffee
Partnership also contributed to the increase.
Q2 All Other Segments
Results
Quarter Ended ($ in millions)
Mar
27, 2016 Mar 29, 2015 Change Net
New Stores (4 ) 1 (5 ) Revenues $ 130.2 $ 132.0 (1 )%
Operating Loss $ (19.2 ) $ (4.1 ) 368 %
Year to Date Financial
Results
Two Quarters Ended Mar 27, 2016 Comparable Store
Sales(1) Sales Growth Change in
Transactions Change in Ticket Consolidated(2) 7 %
3 % 4 % Americas 8 % 3 % 5 % CAP(2) 4 % 2 % 2 % EMEA
1 % 1 % 0 %
(1) Includes only Starbucks company-operated stores open 13
months or longer.
(2) Beginning in December of fiscal 2016, comparable store sales
include the results of the 1,009 company-operated stores acquired
as part of the acquisition of Starbucks Japan in the first quarter
of fiscal 2015.
Operating Results Two Quarters Ended ($
in millions, except per share amounts)
Mar 27, 2016
Mar 29, 2015 Change Net New Stores (1)
878 722 156 Revenues $ 10,366.8 $ 9,366.8 11 % Operating
Income $ 1,922.3 $ 1,693.1 14 % Operating Margin 18.5 % 18.1 % 40
bps EPS $ 0.84 $ 0.97 (13 )%
(1) Net new stores include the closure of 132 Target Canada
licensed stores in the second quarter of fiscal 2015.
Fiscal 2016 Targets
Starbucks fiscal year 2016 will include an extra week in the
fourth quarter, because it is a 53-week year for the company.
The company reiterates the following FY16 targets, unless
otherwise noted. FY16 targets are based on actual FY15 non-GAAP
results and projected FY16 non-GAAP results as noted. Projected
FY16 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.
- Approximately 1,800 net new store
openings in the fiscal year:
- Americas: approximately 700, half
licensed
- China/Asia Pacific: approximately 900,
two-thirds licensed
- EMEA: approximately 200, primarily
licensed
- Full year consolidated revenue growth
of 10%+ on a 52 week basis, the 53rd week expected to add
approximately 2%
- Global comparable store sales growth
somewhat above mid-single digits
- FY16 operating margin is expected to
increase slightly versus prior year:
- Americas: expect moderate improvement
over prior year
- China/Asia Pacific: now expected to be
roughly flat to prior year
- EMEA: expected to approach 15%
- Channel Development: expect moderate
improvement versus prior year
- Consolidated tax rate now expected to
be approximately 34% (from a range of 34% - 35%)
- Full year FY16 earnings per share,
including the 53rd week in Q4 FY16:
- GAAP EPS now expected to be in the
range of $1.85 to $1.86 (from a range of $1.84 to $1.86)
- Non-GAAP EPS now expected to be in the
range of $1.88 to $1.89 (from a range of $1.87 to $1.89)
- Introduced - Q3 FY16 earnings
per share:
- GAAP EPS in the range of $0.47 to
$0.48
- Non-GAAP EPS in the range of $0.48 to
$0.49
- Capital expenditures of approximately
$1.4 billion
Company Updates
- On April 20th, Starbucks announced an
agreement with AmRest Holdings SE in which AmRest will acquire
Starbucks company-operated retail stores in Germany. The deal is
expected to close during Q3 FY16. AmRest currently operates
multiple businesses in several central and eastern European
markets, including over 100 licensed Starbucks locations in the
Czech Republic, Poland, Hungary, Bulgaria and Romania.
- Starbucks announced a new licensed
partnership with Percassi in February, to own and operate Starbucks
stores in Italy. The first store is expected to open in Milan in
2017. Also in February, the company announced plans to open its
first location in Trinidad and Tabago in 2016, its fifth market in
the Caribbean region, in exclusive partnership with Prestige
Holdings Limited.
- In February, the company announced an
update to its loyalty program, which levels the playing field for
customers who now earn 2 stars for every $1 spent, no matter how
often they visit or what they purchase. The new Starbucks Rewards
program became effective April 12th.
- On April 5th, the company announced
that its second Roastery location will be in New York City, in the
heart of the Meatpacking District at 61 Ninth Avenue. Scheduled to
open in 2018, this location will be inspired by the first Starbucks
Reserve® Roastery and Tasting Room, which debuted in December 2014
in the company's hometown of Seattle, Washington.
- Starbucks hosted its 24th Annual
Meeting of Shareholders on March 23rd, where it highlighted the
company’s record FY15 financial achievements and introduced the
company’s next level of social impact initiatives - which include
commitments in support of coffee farming communities, feeding the
hungry, and increasing participation in U.S. local and national
elections.
- On February 4th, Starbucks completed a
public offering of $500 million in aggregate principal amount of
2.100% Senior Notes due 2021; as previously disclosed, the company
intends to use the proceeds from the offering for general corporate
purposes.
- The company repurchased 23 million
shares of common stock in Q2 FY16; the company's Board of Directors
has authorized an additional 100 million shares for repurchase
under its ongoing share repurchase program. With the additional 100
million shares, the company now has 125 million shares available
for repurchase.
- The Board of Directors declared a cash
dividend of $0.20 per share, payable on May 20, 2016 to
shareholders of record as of May 5, 2016.
Conference Call
Starbucks will hold 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 until end of day Saturday, May 21,
2016.
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, momentum, health and potential of our business,
operations and brand, our innovation, growth and growth
opportunities and related investments, shareholder value,
shareholder returns, earnings per share, revenues, operating
margins, profitability, capital expenditures, tax rate, anticipated
costs related to the integration 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 to the extent we experience a material breach,
potential negative effects of incidents involving food-borne
illnesses, food tampering, food contamination or mislabeling,
material failures of our information technology systems, costs
associated with, and the successful execution of, the company’s
initiatives and plans, including the integration of Starbucks
Japan, the acceptance of the company’s products by our customers,
the impact of competition, coffee, dairy and other raw materials
prices and availability, the effect of legal proceedings, and other
risks detailed in the company filings with the Securities and
Exchange Commission, including the “Risk Factors” section of
Starbucks Annual Report on Form 10-K for the fiscal year ended
September 27, 2015. 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 27, 2016 Mar 29, 2015
%
Change
Mar 27, 2016 Mar 29, 2015
As a % of totalnet revenues Net revenues:
Company-operated stores $ 3,944.2 $ 3,622.9 8.9 % 79.0 %
79.4 % Licensed stores 493.1 421.3 17.0 9.9 9.2 CPG, foodservice
and other 555.9 519.3 7.0 11.1 11.4
Total net revenues 4,993.2 4,563.5 9.4
100.0 100.0 Cost of sales including occupancy costs
2,010.3 1,859.8 8.1 40.3 40.8 Store operating expenses 1,466.4
1,324.6 10.7 29.4 29.0 Other operating expenses 139.6 133.5 4.6 2.8
2.9 Depreciation and amortization expenses 247.8 217.1 14.1 5.0 4.8
General and administrative expenses 330.5 305.9 8.0
6.6 6.7 Total operating expenses 4,194.6 3,840.9 9.2
84.0 84.2 Income from equity investees 65.6 54.9 19.5
1.3 1.2
Operating income 864.2
777.5 11.2 17.3 17.0 Interest income
and other, net 14.5 1.3 1,015.4 0.3 — Interest expense (18.3 )
(16.9 ) 8.3 (0.4 ) (0.4 ) Earnings before income taxes 860.4 761.9
12.9 17.2 16.7 Income taxes 285.4 266.3 7.2 5.7
5.8 Net earnings including noncontrolling interests
575.0 495.6 16.0 11.5 10.9 Net earnings/(loss) attributable to
noncontrolling interests (0.1 ) 0.7 nm — —
Net earnings attributable to Starbucks $ 575.1
$ 494.9 16.2 11.5
% 10.8 % Net earnings per common
share - diluted $ 0.39 $
0.33 18.2 % Weighted avg. shares
outstanding - diluted 1,486.6 1,516.5 Cash dividends
declared per share $ 0.20 $ 0.16
Supplemental Ratios:
Store operating expenses as a percentage of company-operated store
revenues 37.2 % 36.6 % Effective tax rate including noncontrolling
interests 33.2 % 35.0 %
Two Quarters Ended Two Quarters Ended Mar 27,
2016 Mar 29, 2015 %
Change
Mar 27, 2016 Mar 29, 2015 As
a % of totalnet revenues Net revenues: Company-operated
stores $ 8,154.8 $ 7,395.7 10.3 % 78.7 % 79.0 % Licensed stores
1,033.8 905.3 14.2 10.0 9.7 CPG, foodservice and other 1,178.2
1,065.8 10.5 11.4 11.4
Total net
revenues 10,366.8 9,366.8 10.7
100.0 100.0 Cost of sales including occupancy costs
4,196.5 3,851.0 9.0 40.5 41.1 Store operating expenses 2,972.6
2,640.1 12.6 28.7 28.2 Other operating expenses 285.8 262.9 8.7 2.8
2.8 Depreciation and amortization expenses 483.3 423.1 14.2 4.7 4.5
General and administrative expenses 636.0 604.3 5.2
6.1 6.5 Total operating expenses 8,574.2 7,781.4 10.2
82.7 83.1 Income from equity investees 129.7 107.7
20.4 1.3 1.1
Operating income 1,922.3
1,693.1 13.5 18.5 18.1 Gain resulting
from acquisition of joint venture — 390.6 (100.0 ) — 4.2 Interest
income and other, net 22.5 11.1 102.7 0.2 0.1 Interest expense
(34.8 ) (33.2 ) 4.8 (0.3 ) (0.4 ) Earnings before income taxes
1,910.0 2,061.6 (7.4 ) 18.4 22.0 Income taxes 647.4 581.2
11.4 6.2 6.2 Net earnings including
noncontrolling interests 1,262.6 1,480.4 (14.7 ) 12.2 15.8 Net
earnings/(loss) attributable to noncontrolling interests —
2.1 (100.0 ) — —
Net earnings attributable
to Starbucks $ 1,262.6 $
1,478.3 (14.6 )% 12.2 %
15.8 % Net earnings per common share -
diluted $ 0.84 $ 0.97
(13.4 )% Weighted avg. shares outstanding - diluted
1,495.0 1,516.7 Cash dividends declared per share $ 0.40 $
0.32
Supplemental Ratios: Store operating expenses as
a percentage of company-operated store revenues 36.5 % 35.7 %
Effective tax rate including noncontrolling interests 33.9 % 28.2 %
Segment Results (in
millions)
Americas
Mar 27, 2016 Mar 29, 2015
%
Change
Mar 27, 2016 Mar 29, 2015
Quarter
Ended
As a % of Americas
total net revenues
Net revenues: Company-operated stores $ 3,097.5 $ 2,818.6
9.9 % 89.6 % 90.1 % Licensed stores 351.8 301.9 16.5 10.2 9.7
Foodservice and other 6.3 7.5 (16.0 ) 0.2 0.2
Total net revenues 3,455.6 3,128.0
10.5 100.0 100.0 Cost of sales including
occupancy costs 1,230.0 1,135.8 8.3 35.6 36.3 Store operating
expenses 1,186.7 1,065.0 11.4 34.3 34.0 Other operating expenses
27.7 36.4 (23.9 ) 0.8 1.2 Depreciation and amortization expenses
151.7 128.6 18.0 4.4 4.1 General and administrative expenses 47.5
52.6 (9.7 ) 1.4 1.7 Total operating
expenses 2,643.6 2,418.4 9.3 76.5 77.3
Operating income $ 812.0 $
709.6 14.4 % 23.5 %
22.7 % Supplemental Ratios: Store operating
expenses as a percentage of company-operated store revenues 38.3 %
37.8 %
Two Quarters
Ended
Net revenues: Company-operated stores $ 6,428.2 $ 5,829.2 10.3 %
89.5 % 89.8 % Licensed stores 739.4 648.1 14.1 10.3 10.0
Foodservice and other 14.2 17.6 (19.3 ) 0.2
0.3
Total net revenues 7,181.8 6,494.9
10.6 100.0 100.0 Cost of sales including
occupancy costs 2,576.9 2,396.8 7.5 35.9 36.9 Store operating
expenses 2,413.5 2,149.4 12.3 33.6 33.1 Other operating expenses
60.4 66.6 (9.3 ) 0.8 1.0 Depreciation and amortization expenses
292.5 255.7 14.4 4.1 3.9 General and administrative expenses 92.0
99.3 (7.4 ) 1.3 1.5 Total operating
expenses 5,435.3 4,967.8 9.4 75.7 76.5
Operating income $ 1,746.5 $
1,527.1 14.4 % 24.3 %
23.5 % Supplemental Ratios: Store operating
expenses as a percentage of company-operated store revenues 37.5 %
36.9 %
China/Asia Pacific (CAP)
Mar 27, 2016 Mar 29, 2015
%
Change
Mar 27, 2016 Mar 29, 2015
Quarter
Ended
As a % of CAP
total net revenues
Net revenues: Company-operated stores $ 608.5 $ 532.3 14.3 %
89.8 % 89.4 % Licensed stores 67.0 61.4 9.1 9.9 10.3 Foodservice
and other 2.4 1.5 60.0 0.4 0.3
Total
net revenues 677.9 595.2 13.9 100.0
100.0 Cost of sales including occupancy costs 307.2 269.4
14.0 45.3 45.3 Store operating expenses 182.3 157.0 16.1 26.9 26.4
Other operating expenses 17.2 12.5 37.6 2.5 2.1 Depreciation and
amortization expenses 44.0 37.0 18.9 6.5 6.2 General and
administrative expenses 30.6 32.4 (5.6 ) 4.5
5.4 Total operating expenses 581.3 508.3 14.4 85.8 85.4
Income from equity investees 32.7 25.5 28.2 4.8
4.3
Operating income $ 129.3
$ 112.4 15.0 %
19.1 % 18.9 % Supplemental
Ratios: Store operating expenses as a percentage of
company-operated store revenues 30.0 % 29.5 %
Two Quarters
Ended
Net revenues: Company-operated stores $ 1,188.6 $ 954.1 24.6 % 89.3
% 87.5 % Licensed stores 139.1 134.6 3.3 10.4 12.3 Foodservice and
other 3.7 2.3 60.9 0.3 0.2
Total net
revenues 1,331.4 1,091.0 22.0 100.0
100.0 Cost of sales including occupancy costs 602.3 503.0
19.7 45.2 46.1 Store operating expenses 357.6 274.8 30.1 26.9 25.2
Other operating expenses 32.1 27.6 16.3 2.4 2.5 Depreciation and
amortization expenses 86.1 65.1 32.3 6.5 6.0 General and
administrative expenses 61.1 58.1 5.2 4.6 5.3
Total operating expenses 1,139.2 928.6 22.7 85.6 85.1 Income
from equity investees 63.9 58.2 9.8 4.8 5.3
Operating income $ 256.1
$ 220.6 16.1 % 19.2
% 20.2 % Supplemental Ratios: Store
operating expenses as a percentage of company-operated store
revenues 30.1 % 28.8 %
EMEA
Mar 27, 2016 Mar 29, 2015
%
Change
Mar 27, 2016 Mar 29, 2015
Quarter
Ended
As a % of EMEA
total net revenues
Net revenues: Company-operated stores $ 182.8 $ 212.5 (14.0
)% 68.1 % 75.8 % Licensed stores 73.3 56.6 29.5 27.3 20.2
Foodservice 12.2 11.2 8.9 4.5 4.0
Total net revenues 268.3 280.3 (4.3
) 100.0 100.0 Cost of sales including
occupancy costs 136.6 135.0 1.2 50.9 48.2 Store operating expenses
66.5 76.2 (12.7 ) 24.8 27.2 Other operating expenses 13.9 13.5 3.0
5.2 4.8 Depreciation and amortization expenses 10.7 12.7 (15.7 )
4.0 4.5 General and administrative expenses 13.3 14.7
(9.5 ) 5.0 5.2 Total operating expenses 241.0 252.1
(4.4 ) 89.8 89.9 Income from equity investees 0.3 1.0
(70.0 ) 0.1 0.4
Operating income $
27.6 $ 29.2 (5.5
)% 10.3 % 10.4 % Supplemental
Ratios: Store operating expenses as a percentage of
company-operated store revenues 36.4 % 35.9 %
Two Quarters
Ended
Net revenues: Company-operated stores $ 401.7 $ 470.2 (14.6 )% 69.1
% 76.6 % Licensed stores 153.1 119.9 27.7 26.3 19.5 Foodservice
26.6 23.6 12.7 4.6 3.8
Total net
revenues 581.4 613.7 (5.3 )
100.0 100.0 Cost of sales including occupancy costs
288.0 291.4 (1.2 ) 49.5 47.5 Store operating expenses 140.4 162.0
(13.3 ) 24.1 26.4 Other operating expenses 28.7 27.2 5.5 4.9 4.4
Depreciation and amortization expenses 22.2 26.5 (16.2 ) 3.8 4.3
General and administrative expenses 27.8 28.7 (3.1 )
4.8 4.7 Total operating expenses 507.1 535.8 (5.4 )
87.2 87.3 Income from equity investees 1.5 1.2 25.0
0.3 0.2
Operating income $ 75.8
$ 79.1 (4.2 )%
13.0 % 12.9 % Supplemental
Ratios: Store operating expenses as a percentage of
company-operated store revenues 35.0 % 34.5 %
Channel Development
Mar 27, 2016 Mar 29, 2015
%
Change
Mar 27, 2016 Mar 29, 2015
Quarter
Ended
As a % ofChannel Development total
net revenues Net revenues: CPG $ 354.4 $ 329.8 7.5 %
76.8 % 77.1 % Foodservice 106.8 98.2 8.8 23.2
22.9
Total net revenues 461.2 428.0
7.8 100.0 100.0 Cost of sales 252.9 244.5 3.4
54.8 57.1 Other operating expenses 53.5 50.9 5.1 11.6 11.9
Depreciation and amortization expenses 0.7 0.6 16.7 0.2 0.1 General
and administrative expenses 4.7 4.3 9.3 1.0
1.0 Total operating expenses 311.8 300.3 3.8 67.6 70.2
Income from equity investees 32.6 28.4 14.8 7.1
6.6
Operating income $ 182.0
$ 156.1 16.6 %
39.5 % 36.5 %
Two Quarters
Ended
Net revenues: CPG $ 753.6 $ 673.5 11.9 % 77.4 % 77.4 % Foodservice
219.7 197.0 11.5 22.6 22.6
Total net
revenues 973.3 870.5 11.8 100.0
100.0 Cost of sales 538.4 493.8 9.0 55.3 56.7 Other
operating expenses 113.8 102.0 11.6 11.7 11.7 Depreciation and
amortization expenses 1.4 1.3 7.7 0.1 0.1 General and
administrative expenses 8.8 8.4 4.8 0.9 1.0
Total operating expenses 662.4 605.5 9.4 68.1 69.6 Income
from equity investees 64.3 48.3 33.1 6.6 5.5
Operating income $ 375.2
$ 313.3 19.8 % 38.5
% 36.0 %
All Other Segments
Mar 27, 2016 Mar 29, 2015
%
Change
Quarter
Ended
Net revenues: Company-operated stores $ 55.4 $ 59.5
(6.9 )% Licensed stores 1.0 1.4 (28.6 ) CPG, foodservice and other
73.8 71.1 3.8
Total net revenues 130.2
132.0 (1.4 ) Cost of sales including occupancy
costs 83.0 76.6 8.4 Store operating expenses 30.9 26.4 17.0 Other
operating expenses 27.2 20.3 34.0 Depreciation and amortization
expenses 3.4 3.9 (12.8 ) General and administrative expenses 4.9
8.9 (44.9 ) Total operating expenses 149.4
136.1 9.8
Operating loss
$ (19.2 ) $ (4.1 )
368.3 %
Two Quarters
Ended
Net revenues: Company-operated stores $ 136.3 $ 142.2 (4.1 )%
Licensed stores 2.2 2.7 (18.5 ) CPG, foodservice and other 160.4
151.8 5.7
Total net revenues 298.9
296.7 0.7 Cost of sales including occupancy costs
178.3 169.8 5.0 Store operating expenses 61.1 53.9 13.4 Other
operating expenses 50.8 39.8 27.6 Depreciation and amortization
expenses 7.0 7.9 (11.4 ) General and administrative expenses 14.8
18.9 (21.7 ) Total operating expenses 312.0
290.3 7.5
Operating income/(loss) $
(13.1 ) $ 6.4 nm
Supplemental
Information
The following supplemental information is provided for
historical and comparative purposes.
U.S. Supplemental Data
Quarter Ended ($ in millions)
Mar
27, 2016 Mar 29, 2015 Change
Revenues $ 3,186.5 $ 2,842.1 12 % Comparable Store Sales
Growth(1) 7 % 7 % Change in Transactions 3 % 2 % Change in Ticket
5 % 5 %
(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
Two Quarters Ended Stores open as of Mar 27,
2016 Mar 29, 2015 Mar 27,
2016 Mar 29, 2015 Mar 27,
2016 Mar 29, 2015 Americas(1):
Company-operated stores 38 52 119 119 8,790 8,514 Licensed stores
94 (54 ) 184 89 6,316 5,885 Total
Americas 132 (2 ) 303 208 15,106 14,399
China/Asia Pacific(2): Company-operated stores 54 66 144 1,137
2,596 2,269 Licensed stores 121 110 312 (727 )
3,322 2,765 Total China/Asia Pacific 175 176
456 410 5,918 5,034 EMEA: Company-operated
stores (10 ) (17 ) (49 ) (24 ) 688 793 Licensed stores 57 52
175 117 1,800 1,440 Total EMEA 47
35 126 93 2,488 2,233 All Other
Segments: Company-operated stores (4 ) 1 (5 ) 10 370 379 Licensed
stores — — (2 ) 1 39 43 Total All Other
Segments (4 ) 1 (7 ) 11 409 422
Total Company 350
210 878 722 23,921
22,088
(1) Net new stores include the closure of 132 Target Canada
licensed stores in the second quarter of fiscal 2015.
(2) China/Asia Pacific 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.
Non-GAAP Disclosure
In addition to the GAAP results provided in this release, the
company provides consolidated non-GAAP operating income,
consolidated non-GAAP operating margin and consolidated non-GAAP
earnings per share ("non-GAAP EPS") for Q2 fiscal 2016 and fiscal
2015; China/Asia Pacific (“CAP”) segment non-GAAP operating income
and non-GAAP operating margin for Q2 fiscal 2016 and fiscal 2015;
and consolidated non-GAAP EPS for Q3 and full year fiscal 2015, as
well as projected consolidated non-GAAP EPS for Q3 and full year
fiscal 2016. 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 Q2 fiscal 2016 as well as the consolidated Q2
and Q3 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 2016 and fiscal
2015 CAP segment non-GAAP financial measures exclude the
amortization expense from acquired intangible assets related to the
acquisition of Starbucks Japan. The Q2 fiscal 2016 CAP segment
non-GAAP financial measures also exclude integration costs,
including incremental information technology and
compensation-related costs associated with the acquisition. The
consolidated full year fiscal 2015 non-GAAP EPS financial measures
exclude the Starbucks Japan acquisition-related items as well as a
gain resulting from a fair value adjustment of Starbucks
preexisting 39.5% ownership interest in Starbucks Japan prior to
the acquisition. The consolidated full year fiscal 2015 non-GAAP
EPS financial measure also excludes losses and costs related to the
redemption of the company's $550 million of 6.250% 2017 Senior
Notes and an incremental tax benefit related to a U.S.
manufacturing deduction. Losses and costs related to the redemption
are included as debt extinguishment-related items. 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 the current fiscal year, the majority of these costs
will be recognized over a finite period of time. More specifically,
integration costs are expected to be concentrated in the first
several years post-acquisition. Additionally, 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. Management excludes the fair value
gain, debt extinguishment-related items and the incremental tax
benefit because they believe these items do not reflect future
gains, losses, costs or tax benefits and 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 or future operating
performance.
The projected consolidated non-GAAP EPS for Q3 and full year
fiscal 2016 financial measures exclude certain Starbucks Japan
acquisition-related items comprised of projected amortization
expense from acquired intangible assets and transaction and
integration costs. 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 27, 2016
Mar 29, 2015 Change
Consolidated
Operating income, as reported (GAAP) $ 864.2 $ 777.5 11.2 %
Starbucks Japan acquisition-related items - other(1) 13.9
11.9 Non-GAAP operating income $ 878.1 $ 789.4
11.2 % Operating margin, as reported (GAAP) 17.3 % 17.0 % 30
bps Starbucks Japan acquisition-related items - other(1) 0.3
0.3 Non-GAAP operating margin 17.6 % 17.3 % 30 bps
Diluted net earnings per share, as reported (GAAP) $ 0.39 $ 0.33
18.2 % Starbucks Japan acquisition-related items - other(1)(2) 0.01
0.01 Non-GAAP net earnings per share $ 0.39 $
0.33 18.2 %
China/Asia
Pacific (CAP)
Operating income, as reported (GAAP) $ 129.3 $ 112.4 15.0 %
Starbucks Japan acquisition-related items(3) 13.1 11.3
Non-GAAP operating income $ 142.4 $ 123.7 15.1
% Operating margin, as reported (GAAP) 19.1 % 18.9 % 20 bps
Starbucks Japan acquisition-related items(3) 1.9 1.9
Non-GAAP operating margin 21.0 % 20.8 % 20 bps
(1) Includes ongoing amortization expense of acquired intangible
assets and transaction and integration costs, such as incremental
information technology ("IT") and compensation-related costs
associated with the acquisition.
(2) The Q2 FY16 and FY15 adjustments to non-GAAP net earnings
per share are net of tax expense of $4.6 million and $3.6 million,
respectively. These tax impacts were determined based on the nature
of the underlying items and their relevant jurisdictional tax
rates.
(3) Includes ongoing amortization expense of acquired intangible
assets associated with the acquisition; the second quarter of FY16
also includes post-acquisition integration costs, including
incremental IT and compensation-related costs.
Quarter Ended Jun 26,
2016 Jun 28, 2015
Consolidated
(Projected) (As Reported)
Change Diluted net earnings per
share (GAAP) $0.47 - $0.48 $ 0.41 15 % - 17% Starbucks Japan
acquisition-related items - other(1)(2) 0.01 0.01
Non-GAAP net earnings per share $0.48 - $0.49 $ 0.42 14 % -
17%
Year Ended Oct 2,
2016 Sep 27, 2015
Consolidated
(Projected
53-weeks)
(As Reported
52-weeks)
Change Diluted net earnings per share (GAAP) $1.85 - $1.86 $
1.82
2%
Starbucks Japan acquisition-related items - gain(2)(3) — (0.26 )
Starbucks Japan acquisition-related items - other(1)(2) 0.03 0.03
Debt extinguishment-related items(2)(4) — 0.03 Tax benefit from
domestic manufacturing deduction(2)(5) — (0.04 )
Non-GAAP net earnings per share $1.88 - $1.89 $ 1.58 19 % -
20%
(1) Includes ongoing amortization expense of acquired intangible
assets and transaction and integration costs, such as incremental
information technology ("IT") and compensation-related costs
associated with the acquisition.
(2) The Q3 FY16 and FY15 adjustments to non-GAAP net earnings
per share are net of tax expense of $5.5 million and $2.8 million,
respectively. The full year FY16 and FY15 adjustments to non-GAAP
net earnings per share are net of tax expense of $22.0 million and
a net tax benefit of $37.0 million, respectively. These tax impacts
were determined based on the nature of the underlying items and
their relevant jurisdictional tax rates.
(3) Gain represents the fair value adjustment of Starbucks
preexisting 39.5% ownership interest in Starbucks Japan upon
acquisition, which was almost entirely non-taxable.
(4) Represents the loss on extinguishment of debt ($61.1M),
which is comprised of the cost of the optional redemption
provision, unamortized debt issuance costs, and unamortized
discount associated with the $550 million of 6.250% 2017 Senior
Notes redeemed in Q4 FY15, as well as the related unamortized
interest rate hedge loss ($2.0M), which was recorded in interest
expense.
(5) Represents the incremental benefit related to additional
domestic manufacturing deductions to be claimed in our U.S.
consolidated tax returns for FY10 through FY14 and through Q3
FY15.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160421006511/en/
Starbucks Contact, Investor Relations:Durga Doraisamy,
206-318-7118investorrelations@starbucks.comorStarbucks Contact,
Media:Alisha Damodaran, 206-318-7100press@starbucks.com
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