- Reinforces Ongoing Investments in Starbucks
200,000 Partners (Employees), including $250 Million in Healthcare
Benefits and $234 Million in Bean Stock in Fiscal 2013
- Reaffirms Long-Term Growth Targets, Aiming to
Double Market Cap to $100 Billion
- Announces Plans to Reinvent $90 Billion
Global Tea Category Ripe for Innovation
Howard Schultz, chairman, president and ceo of Starbucks Coffee
Company (NASDAQ:SBUX), opened the company’s Annual Meeting of
Shareholders by showcasing how Starbucks 200,000 partners
(employees) are leveraging the company’s unique combination of
physical and digital assets to deliver long-term global growth
through the lens of humanity.
“We’re still in the early stages of the growth and development
of Starbucks, we’re delivering record profits and revenue, sharing
our success with our partners and heading towards and past a $100
billion market cap,” said Schultz. “No other brick-and-mortar
retailer matches our size and growth profile nor the relevancy and
strength of the Starbucks brand. Together we’re building one of the
world’s most trusted, admired and enduring brands, and redefining
the role of a public company while we do it. There has never been a
more exciting time to be a Starbucks partner and shareholder.”
Delivering Record Performance through the Lens of
Humanity
Legendary American television writer and producer Norman Lear
kicked-off the meeting by introducing the Playing For Change Band,
whose third album will be available in select Starbucks® stores in
June. Schultz then highlighted the company’s significant
achievements over the six years since Starbucks returned from the
height of the cataclysmic financial crisis in November 2008
following the implementation of the company’s 2008 Transformation
Agenda and 2011 Blueprint for Profitable Growth, including:
- Stock price growth of 948 percent;
- Market cap expansion from $5 billion to
$57 billion;
- A more than ten-fold increase in total
shareholder return; and
- Serving more than 70 million customers
per week in more than 20,000 stores in 64 countries.
Schultz and Starbucks chief operating officer Troy Alstead also
highlighted the company’s significant accomplishments since last
year’s meeting, including:
- Record revenues of $14.9 billion (12
percent growth) and record earnings per share of $2.261 (26 percent
growth) in fiscal 2013;
- $2.5 billion2 in net operating income
(23 percent growth) in fiscal 2013;
- 55 percent total shareholder return in
fiscal 2013, following a 38 percent return in fiscal 2012 and a 46
percent return in fiscal 2011;
- Four years of seven percent or greater
global comp growth; and
- $1.2 billion in cash returned to
shareholders in the form of dividends and share repurchases.
With $15 billion in revenue and an average sale of $5, Schultz
emphasized the importance of the unique relationship Starbucks
partners have built with customers around the world, and attributed
the company’s success to partners’ contributions.
“The equity of the Starbucks brand has been built by the
experience, which comes to life through our partners and the
relationships they have with our customers,” Schultz said. “At a
time when many companies are cutting benefits, we are continuing to
invest in our most important assets: our people.”
Last year Starbucks invested $250 million in healthcare benefits
for eligible full and part-timers, shared $234 million in pre-tax
stock gains with partners, and matched $50 million in 401(k)
contributions. Since the company started offering equity to
partners in 1991, it has shared more than $1 billion in value in
the form of stock with partners at every level of the company.
Schultz also highlighted how the company is redefining the role
and responsibility of a public company in response to critical
societal challenges, citing several examples:
- Create Jobs for USA: In 2011
amid greater than nine percent unemployment rate, Starbucks
collaborated with the non-profit Opportunity Finance Network to
launch the Create Jobs for USA program, which funds loans to small
businesses who face challenges getting credit. The effort has
raised $15 million, which has been leveraged to deliver $105
million in loans and create or retain more than 5,000 jobs over the
past several years.
- Come Together: Last October in
the middle of the 16-day federal government shutdown which cost the
country $2 billion in lost productivity and more than 120,000
private sector jobs, Starbucks launched a nationwide petition in
its more than 7,000 company-operated U.S. stores urging the
government to re-open, pay its debts on time and reach a long-term,
bipartisan budget deal by the end of the year. In less than a week,
the company collected and delivered nearly two million signatures
to the U.S. Congress and the White House.
- Veterans and Military Families:
More than one million service members will transition back to
civilian life after a decade of war over the next several years,
facing an unemployment rate that is more than double the national
average despite having valuable skills and directly transferable
experience that can benefit many of the nation’s top-performing
companies and non-profit organizations. Schultz reiterated
Starbucks commitment to hire 10,000 veterans and military spouses
by the end of 2018 and to open five community stores that will make
a contribution for every transaction to non-profit organizations
that support veterans entering the civilian workforce and spouses
of active-duty military personnel. He also announced that the
company is making good on its commitment by hiring hundreds of
veterans already, investing in the company’s recruitment and
retention programs for veterans and military spouses, and by
opening two community stores serving military communities in
Lakewood, Washington and San Antonio, Texas.
Record Starbucks Card and Loyalty Growth, New Mobile
App
Starbucks chief digital officer Adam Brotman announced the
release of an updated Starbucks mobile app for iPhone®, which will
extend the company’s leadership in mobile payment and allow
customers to recognize Starbucks partners with a tip directly from
the Starbucks app for iPhone® starting today in the U.S. Mobile
payment now represents 14 percent of all in-store transactions in
the U.S. More than 25 percent of all transactions are made by My
Starbucks RewardsTM loyalty members.
Brotman also emphasized record Starbucks Card growth with an
estimated 1 in 8 American adults receiving a Starbucks Card this
past holiday season, which translated to 1.5 million new customers
registering their Starbucks Card and joining the My Starbucks
RewardsTM loyalty program for the first time. Starbucks now has
more than 8 million My Starbucks RewardsTM members in the North
America alone. Globally, Starbucks Cards are available in more than
28 countries, and more than $18 billion has been loaded onto
Starbucks Cards since the start of the program in 2001.
Brand Continues to Resonate Around the Globe
Avani Davda, ceo, Tata Starbucks Limited for India, and Belinda
Wong, president, Starbucks China, shared how their respective
markets continue to represent significant long-term growth
potential for the company.
Wong shared that China today has more than 1,100 stores, across
68 cities and nearly 20,000 partners. Continuing on pace to reach
1,500 stores in 2015, the team is focused on elevating the
Starbucks Experience through unique, market-level innovation, while
building the brand holistically.
Davda highlighted that India today has 40 stores in 4 cities,
with nearly 1,000 partners. The fastest growing market in Starbucks
history, the team is focused on delivering a Starbucks Experience
that resonates with India customers and engages partners.
Building a different kind of company, both are focused on
developing future leaders for their markets through training and
education investments for partners and defining unique, locally
relevant ways to invest in their coffee growing communities of
Yunnan, China and Coorg, South India.
Celebrating Coffee at Our Core, Hacienda Alsacia and the
Evolution of Starbucks Reserve® Coffees
Last year, Starbucks announced the acquisition of Hacienda
Alsacia, a 240-hectare coffee farm in Costa Rica that is now acting
as a global agronomy and research center. The work on this farm is
expanding the company’s comprehensive approach to ethical sourcing
as part of its commitment and investment in supporting long-term,
sustainable approaches to farming that will benefit the broader
specialty coffee industry.
Schultz recounted his experience visiting the farm during its
first harvest earlier this year. The working farm is actively
refining Starbucks Coffee and Farmer Equity (C.A.F.E.) Practices
model and responsible growing practices, housing a nursery of more
than 160,000 hybrid seedlings. Its research represents an extension
of Starbucks more than ten year history of agronomy in
collaboration with leading industry organizations to help farmers
improve productivity and coffee quality around the world. All of
this insight is supporting the diverse, complex ecosystem of
farmers, helping to support their livelihoods and to produce
high-quality arabica coffee for the specialty market.
Schultz celebrated this rich diversity by recognizing the
Starbucks Reserve® program, which makes some of Starbucks® rarest
small batch coffee available to customers by the half-pound or cup
with the company’s patented Clover® brewing system. In the coming
year, Schultz announced the company will further evolve the
Starbucks Reserve® program with new packaging and offerings,
bringing the purest expression of an exquisite cup of coffee to
customers around the world.
Doing for Tea What Starbucks Did for Coffee by Reinventing
the $90 Billion Global Tea Category
Schultz called the $90 billion global tea category “ripe for
innovation” and showcased the company’s ambition to do with tea
what it has done with coffee. One year following Starbucks largest
acquisition to date, Schultz highlighted how the company is
growing, expanding, and reinventing the Teavana brand and customer
experience. Since the acquisition, Starbucks has opened nearly 40
new mall-based stores and announced plans to open more than 20
additional stores through the rest of fiscal 2014. Schultz also
announced plans to expand the company’s reimagined Teavana® Fine
Teas + Tea Bar concepts to Chicago, Los Angeles and additional
locations in New York City later this year. The company opened two
of the concepts last fall in New York and Seattle, featuring
handcrafted tea beverages, premium loose leaf teas, tea-inspired
food offerings and beautiful tea merchandise.
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.
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 growth and growth
opportunities, market capitalization, store openings, tea
innovation and the strength, health and potential of our business,
operations and brand. 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.
1 Non-GAAP. FY13 GAAP EPS of $0.01 includes a $2.25 per share
litigation charge resulting from the conclusion of the arbitration
with Kraft Foods Global, Inc.
2 Non-GAAP. FY13 GAAP operating loss of $325 million includes a
pre-tax charge of $2,784.1 million resulting from the conclusion of
the arbitration with Kraft Foods Global, Inc.
Starbucks Coffee CompanyMedia:Jim Olson,
206-318-7100press@starbucks.comorInvestor Relations:JoAnn
DeGrande / Greg Smith,
206-318-7118investorrelations@starbucks.com
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