Q2 Comp Store Sales Up 3% Globally, Up 3% in
U.S. and Up 7% in China
U.S. Comp Store Sales Accelerate Sequentially
Through Q2; Reach 4% in March and Accelerate Further in April
Consolidated Net Revenues Grow 6% to Q2 Record
$5.3 Billion; Operating Margin Expands to Q2 Record 17.7%
GAAP and Non-GAAP Earnings Per Share Up 15% to
Q2 Record $0.45
Starbucks Corporation (NASDAQ: SBUX) today reported financial
results for its 13-week fiscal second quarter and 26-week fiscal
year to date ended April 2, 2017. Fiscal 2017 and fiscal 2016
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 2017 Highlights:
- Global comparable store sales increased
3%
- Americas comp store sales increased 3%
- U.S. comp store sales increased 3%
comprised of a 4% increase in average ticket and a 2% decrease in
transactions. Adjusting for the estimated impact of order
consolidation related to the new Starbucks RewardsTM loyalty
program, average ticket grew 3% with transactions flat to prior
year.
- CAP comp store sales increased 3%
- China comp store sales increased 7%
driven by a 6% increase in transactions
- Consolidated net revenues grew 6% to a
Q2 record $5.3 billion
- Consolidated operating income increased
8% to a Q2 record $935 million
- Consolidated operating margin expanded
40 basis points to a Q2 record 17.7%
- GAAP and non-GAAP earnings per share
grew 15% to a Q2 record $0.45 per share
- Active U.S. membership in Starbucks
Rewards grew 11% year-over-year to 13.3 million members
- Starbucks Rewards represented 36% of
U.S. company-operated sales in the quarter, with Mobile Payment
reaching 29% of transactions and Mobile Order and Pay growing to 8%
of transactions
- Total stores reached 26,161 in 75
countries globally, with the opening of 427 net new stores in the
quarter
“With our U.S. business accelerating throughout the quarter and
strong performance in China, we are poised to deliver strong
revenue growth in the second half and into the future,” said
Kevin Johnson, Starbucks president and ceo. “Our success in opening
over 2,000 stores around the world annually, delivering record AUV
and profit, despite a very difficult period for many
brick-and-mortar retailers is a testament to the 330,000 partners
who proudly wear the green apron.”
“Starbucks U.S. comp sales accelerated sequentially through the
quarter - culminating with a 4% U.S. comp in March - and we’re
seeing further acceleration into April," said Scott Maw, Starbucks
cfo. “Investments we are making to increase throughput and further
premiumize the Starbucks brand are paying off. And increased
capacity combined with accelerating momentum and the beverage, food
and technology innovation we will be introducing in the months
ahead gives us great confidence in our ability to deliver strong
comp sales and revenue growth in the back half of fiscal 2017.”
“Starbucks Roasteries under design or construction in the
iconic, global cities of Shanghai, New York, Tokyo, Milan and
Chicago will join our Seattle Roastery in delivering an immersive,
ultra-premium, coffee-forward experience like none other anywhere
in the world - further elevating the Starbucks brand, enhancing our
customer experience and extending our global leadership around
all-things-coffee,” said Howard Schultz, Starbucks executive
chairman. “Together our Roasteries, Reserve stores and Reserve bars
will broaden - and deepen - the enduring emotional connection that
exists between our customers and the Starbucks brand
everywhere.”
Second Quarter
Fiscal 2017 Summary
Quarter Ended Apr 2, 2017 Comparable Store
Sales(1) Sales Growth Change in
Transactions Change in Ticket Consolidated 3%
(1)% 4% Americas 3% (1)% 4% CAP 3% 1% 1% EMEA
(1)% 0% (1)% (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.
Operating
Results Quarter Ended Change ($ in
millions, except per share amounts)
Apr 2, 2017
Mar 27, 2016 Net New Stores 427 350 77
Revenues $5,294.0 $4,993.2 6% Operating Income $935.4 $864.2 8%
Operating Margin 17.7% 17.3% 40 bps EPS $0.45 $0.39
15%
Consolidated net revenues were $5.3 billion in Q2 FY17, an
increase of 6% over Q2 FY16. The increase was primarily driven by
incremental revenues from the opening of 2,240 net new stores over
the past 12 months and 3% growth in global comparable store
sales.
Consolidated operating income grew 8% to $935.4 million in Q2
FY17, up from $864.2 million in Q2 FY16. Consolidated operating
margin expanded 40 basis points to 17.7% primarily due to sales
leverage and was partially offset by higher investments in our
store partners (employees), primarily in the Americas segment.
Q2 Americas
Segment Results
Quarter Ended
Change ($ in millions)
Apr 2, 2017
Mar 27, 2016 Net New Stores 200 132 68
Revenues $3,720.4 $3,455.6 8% Operating Income $826.1 $812.0 2%
Operating Margin 22.2% 23.5% (130) bps
Net revenues for the Americas segment were $3.7 billion in Q2
FY17, an increase of 8% over Q2 FY16. The increase was driven by
incremental revenues from 952 net new store openings over the past
12 months and 3% growth in comparable store sales.
Operating income of $826.1 million in Q2 FY17 grew 2% versus
$812.0 million in Q2 FY16. Operating margin of 22.2% declined 130
basis points primarily due to higher investments in our store
partners (employees) and the impact of product sales mix. These
decreases were partially offset by sales leverage.
Q2 China/Asia
Pacific Segment Results
Quarter Ended
Change ($ in millions)
Apr 2, 2017
Mar 27, 2016 Net New Stores 187 175 12
Revenues $768.9 $677.9 13% Operating Income $175.9 $129.3 36%
Operating Margin 22.9% 19.1% 380 bps
Net revenues for the China/Asia Pacific segment grew 13% over Q2
FY16 to $768.9 million in Q2 FY17. The increase was primarily
driven by incremental revenues from 1,015 net new store openings
over the past 12 months and 3% growth in comparable store
sales.
Q2 FY17 operating income of $175.9 million grew 36% over Q2 FY16
operating income of $129.3 million. Operating margin expanded 380
basis points to 22.9% primarily driven by the transition to China's
value added tax structure in Q3 FY16 and sales leverage.
Q2 EMEA Segment
Results
Quarter Ended
Change ($ in millions)
Apr 2, 2017
Mar 27, 2016 Net New Stores 46 47 (1)
Revenues $231.7 $268.3 (14)% Operating Income $27.7 $27.6 0%
Operating Margin 12.0% 10.3% 170 bps
Net revenues for the EMEA segment were $231.7 million in Q2
FY17, a 14% decrease versus Q2 FY16. The decrease was primarily
driven by the absence of revenue related to the sale of our Germany
retail operations in Q3 FY16 as part of the ongoing shift to more
licensed stores in the region as well as unfavorable foreign
currency translation. Partially offsetting these decreases were
incremental revenues from the opening of 304 net new licensed
stores over the past 12 months.
Operating income of $27.7 million in Q2 FY17 was nearly flat to
operating income of $27.6 million in Q2 FY16. Operating margin
expanded 170 basis points to 12.0% primarily due to sales leverage
driven by the shift in the portfolio towards more licensed stores,
primarily related to the sale of our Germany retail operations in
Q3 FY16. Partially offsetting the margin expansion was unfavorable
foreign currency exchange and sales deleverage in certain
company-operated stores.
Q2 Channel
Development Segment Results
Quarter Ended
Change ($ in millions)
Apr 2, 2017
Mar 27, 2016 Revenues $461.3 $461.2 0%
Operating Income $193.6 $182.0 6% Operating Margin 42.0%
39.5% 250 bps
Net revenues for the Channel Development segment of $461.3
million in Q2 FY17 were flat to Q2 FY16. Increased sales of
packaged coffee as well as higher international and foodservice
sales were offset by an unfavorable revenue deduction adjustment
pertaining to prior periods of $20.6 million, an immaterial amount
of which pertained to Q2 FY16. When excluding this adjustment,
revenue growth was approximately 5%.
Operating income of $193.6 million in Q2 FY17 increased 6%
compared to Q2 FY16. Operating margin expanded 250 basis points to
42.0% primarily driven by lower coffee costs and leverage on cost
of sales as well as higher income from the North American Coffee
Partnership. The margin expansion was partially offset by the
unfavorable revenue deduction adjustment noted above.
Q2 All Other
Segments Results
Quarter Ended
Change ($ in millions)
Apr 2, 2017
Mar 27, 2016 Net New Stores (6) (4) (2)
Revenues $111.7 $130.2 (14)% Operating Loss $(25.5)
$(19.2) 33%
Year to Date
Financial Results
Two Quarters Ended
Comparable Store Sales(1) Sales Growth
Change in Transactions Change in Ticket
Consolidated 3% (1)% 4% Americas 3% (1)% 4% CAP 4% 2%
2% EMEA (1)% (1)% 0% (1) Includes only
Starbucks company-operated stores open 13 months or longer.
Comparable store sales exclude the effect of fluctuations in
foreign currency exchange rates.
Operating Results Two Quarters Ended
Change ($ in millions, except per share amounts)
Apr 2, 2017 Mar 27, 2016 Net New Stores
1,076 878 198 Revenues $11,027.0 $10,366.8 6% Operating
Income $2,068.3 $1,922.3 8% Operating Margin 18.8% 18.5% 30 bps EPS
$0.96 $0.84 14%
Targets
The company's earnings press release will no longer contain
forward looking targets. The company will continue its practice of
providing detail regarding its business outlook during its
regularly scheduled quarterly earnings conference calls.
Company Updates
- Starbucks held its 2017 Annual Meeting
of Shareholders on March 22. The company reiterated its intent to
open 12,000 new stores globally and 3,400 net new stores in the
U.S. by Fiscal 2021. In addition, Starbucks shareholders elected
Rosalind Brewer, former President and Chief Executive Officer of
Sam's Club; Jørgen Vig Knudstorp, Executive Chairman of the LEGO
Brand Group; and Satya Nadella, CEO of Microsoft Corporation, to
the Starbucks Board of Directors, along with returning
directors.
- In February, the company announced its
fifth Starbucks Reserve™ Roastery location on Piazza Cordusio in
Milan, Italy. Set to open in late 2018, the Milan Roastery will be
the first Starbucks Reserve Roastery to open in the Europe, Middle
East and Africa region.
- In April, Starbucks announced plans to
open its sixth Roastery in an iconic building on Chicago’s
Magnificent Mile in 2019, and confirmed one of the first Starbucks
Reserve® stores will be on the West Loop, opening in 2018. In
addition to new store experiences, Starbucks launched the new
Mercato lunch menu earlier this month, which includes a selection
of grab-and-go salads, hearty sandwiches and sides, in more than
100 Starbucks stores in downtown Chicago.
- Starbucks announced the offering of a
critical illness insurance plan for the parents of its eligible
full-time partners (employees) in company-operated stores across
Mainland China beginning June 1. This industry-leading investment
will benefit over 10,000 parents of its Chinese partners.
- In February, Starbucks launched a new
social gifting feature in partnership with China’s leading mobile
social communications service, Weixin. “用星说” (Say it with
Starbucks) is a pioneering online-to-offline social gifting
innovation that enables users to instantly gift a Starbucks
beverage or digital gift card. Starbucks is the first retail brand
to bring a locally-relevant social gifting experience in
China.
- The company announced that it had
closed an underwritten public offering of senior notes, comprising
the first global yen-denominated Corporate Sustainability Bond
issued in the Japanese market. The company will use the net
proceeds from the offering of 85 billion Japanese Yen in 0.372%
Senior Notes due 2024 to enhance its sustainability programs around
coffee supply chain management through Eligible Sustainability
Projects.
- The company repurchased 11.3 million
shares of common stock in Q2 FY17; 99 million shares remain
available for purchase under current authorizations.
- The Board of Directors declared a cash
dividend of $0.25 per share, payable on May 26, 2017 to
shareholders of record as May 11, 2017.
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;
Belinda Wong, ceo, Starbucks China; Scott Maw, cfo; and Howard
Schultz, executive chairman. 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 27, 2017.
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, resilience, momentum and potential of our business,
operations and brand, our customer base, our innovation, growth and
growth opportunities and related investments, our Starbucks
Reserve® Roasteries and Starbucks Reserve® stores, return to
shareholders, our strategic, operational and digital moves,
revenues, operating margins, comparable store sales and
transactions and net new stores and their performance. 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,
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, 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 October 2, 2016. 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
Apr 2, 2017 Mar 27, 2016
%Change
Apr 2, 2017 Mar 27, 2016
As a % of totalnet revenues Net revenues:
Company-operated stores $ 4,195.4 $ 3,944.2 6.4 % 79.2 %
79.0 % Licensed stores 546.7 493.1 10.9 10.3 9.9 CPG, foodservice
and other(1) 551.9 555.9 (0.7 ) 10.4 11.1
Total net revenues 5,294.0 4,993.2
6.0 100.0 100.0 Cost of sales including
occupancy costs 2,141.2 2,010.3 6.5 40.4 40.3 Store operating
expenses 1,586.4 1,466.4 8.2 30.0 29.4 Other operating expenses
134.7 139.6 (3.5 ) 2.5 2.8 Depreciation and amortization expenses
253.6 247.8 2.3 4.8 5.0 General and administrative expenses 326.8
330.5 (1.1 ) 6.2 6.6 Total operating
expenses 4,442.7 4,194.6 5.9 83.9 84.0 Income from equity investees
84.1 65.6 28.2 1.6 1.3
Operating
income 935.4 864.2 8.2 17.7
17.3 Interest income and other, net(2) 67.9 14.5 368.3 1.3
0.3 Interest expense (22.9 ) (18.3 ) 25.1 (0.4 ) (0.4 ) Earnings
before income taxes 980.4 860.4 13.9 18.5 17.2 Income tax expense
327.6 285.4 14.8 6.2 5.7 Net earnings
including noncontrolling interests 652.8 575.0 13.5 12.3 11.5 Net
loss attributable to noncontrolling interests — (0.1 )
(100.0 ) — —
Net earnings attributable to
Starbucks $ 652.8 $ 575.1
13.5 12.3 % 11.5 %
Net earnings per common share - diluted $ 0.45
$ 0.39 15.4 % Weighted
avg. shares outstanding - diluted 1,464.8 1,486.6 Cash
dividends declared per share $ 0.25 $ 0.20
Supplemental
Ratios: Store operating expenses as a % of company-operated
store revenues 37.8 % 37.2 % Other operating expenses as a % of
non-company-operated store revenues 12.3 % 13.3 % Effective tax
rate including noncontrolling interests 33.4 % 33.2 % (1)
CPG revenues in Q2 FY17 included an
unfavorable revenue deduction adjustment pertaining to prior
periods of $20.6 million.
(2) Included in interest income and other, net is the gain on the
sale of our investment in Square, Inc. warrants of $40.5 million in
Q2 FY17.
Two Quarters
Ended Two Quarters Ended Apr 2, 2017
Mar 27, 2016
%Change
Apr 2, 2017 Mar 27, 2016 As a
% of totalnet revenues Net revenues: Company-operated
stores $ 8,664.7 $ 8,154.8 6.3 % 78.6 % 78.7 % Licensed stores
1,149.1 1,033.8 11.2 10.4 10.0 CPG, foodservice and other(1)
1,213.2 1,178.2 3.0 11.0 11.4
Total
net revenues 11,027.0 10,366.8 6.4
100.0 100.0 Cost of sales including occupancy costs
4,436.2 4,196.5 5.7 40.2 40.5 Store operating expenses 3,224.6
2,972.6 8.5 29.2 28.7 Other operating expenses 280.1 285.8 (2.0 )
2.5 2.8 Depreciation and amortization expenses 503.3 483.3 4.1 4.6
4.7 General and administrative expenses 683.1 636.0
7.4 6.2 6.1 Total operating expenses 9,127.3 8,574.2
6.5 82.8 82.7 Income from equity investees 168.6 129.7
30.0 1.5 1.3
Operating income
2,068.3 1,922.3 7.6 18.8 18.5
Interest income and other, net(2) 92.0 22.5 308.9 0.8 0.2 Interest
expense (46.7 ) (34.8 ) 34.2 (0.4 ) (0.3 ) Earnings before income
taxes 2,113.6 1,910.0 10.7 19.2 18.4 Income tax expense 709.0
647.4 9.5 6.4 6.2 Net earnings
including noncontrolling interests 1,404.6 1,262.6 11.2 12.7 12.2
Net loss attributable to noncontrolling
interests
(0.3
)
—
nm
—
—
Net earnings attributable to Starbucks $
1,404.9 $ 1,262.6 11.3
% 12.7 % 12.2 % Net
earnings per common share - diluted $ 0.96
$ 0.84 14.3 % Weighted avg.
shares outstanding - diluted 1,467.7 1,495.0 Cash dividends
declared per share $ 0.50 $ 0.40
Supplemental Ratios:
Store operating expenses as a % of company-operated store revenues
37.2 % 36.5 % Other operating expenses as a % of
non-company-operated store revenues 11.9 % 12.9 % Effective tax
rate including noncontrolling interests 33.5 % 33.9 % (1)
CPG revenues in Q2 FY17 included an
unfavorable revenue deduction adjustment pertaining to prior
periods of $20.6 million.
(2) Included in interest income and other, net is the gain on the
sale of our investment in Square, Inc. warrants of $40.5 million in
Q2 FY17.
Segment Results (in
millions)
Americas
Apr 2, 2017
Mar 27, 2016
%Change
Apr 2, 2017
Mar 27, 2016
Quarter
Ended
As a % of Americas
total net revenues
Net revenues: Company-operated stores $ 3,334.9 $ 3,097.5 7.7 %
89.6 % 89.6 % Licensed stores 376.7 351.8 7.1 10.1 10.2 Foodservice
and other 8.8 6.3 39.7 0.2 0.2
Total
net revenues 3,720.4 3,455.6 7.7
100.0 100.0 Cost of sales including occupancy costs
1,354.9 1,230.0 10.2 36.4 35.6 Store operating expenses 1,299.1
1,186.7 9.5 34.9 34.3 Other operating expenses 31.5 27.7 13.7 0.8
0.8 Depreciation and amortization expenses 155.4 151.7 2.4 4.2 4.4
General and administrative expenses 53.4 47.5 12.4
1.4 1.4 Total operating expenses 2,894.3
2,643.6 9.5 77.8 76.5
Operating income
$ 826.1 $ 812.0
1.7 % 22.2 % 23.5 %
Supplemental Ratios: Store operating expenses as a % of
company-operated store revenues 39.0 % 38.3 % Other operating
expenses as a % of non-company-operated store revenues 8.2 % 7.7 %
Two Quarters
Ended
Net revenues: Company-operated stores $ 6,895.9 $ 6,428.2 7.3 %
89.4 % 89.5 % Licensed stores 798.0 739.4 7.9 10.3 10.3 Foodservice
and other 17.9 14.2 26.1 0.2 0.2
Total net revenues 7,711.8 7,181.8 7.4
100.0 100.0 Cost of sales including occupancy costs
2,795.2 2,576.9 8.5 36.2 35.9 Store operating expenses 2,655.5
2,413.5 10.0 34.4 33.6 Other operating expenses 63.4 60.4 5.0 0.8
0.8 Depreciation and amortization expenses 307.8 292.5 5.2 4.0 4.1
General and administrative expenses 105.3 92.0 14.5
1.4 1.3 Total operating expenses 5,927.2
5,435.3 9.1 76.9 75.7
Operating income
$ 1,784.6 $ 1,746.5
2.2 % 23.1 % 24.3 %
Supplemental Ratios: Store operating expenses as a % of
company-operated store revenues 38.5 % 37.5 % Other operating
expenses as a % of non-company-operated store revenues 7.8 % 8.0 %
China/Asia Pacific (CAP)
Apr 2, 2017
Mar 27, 2016
%Change
Apr 2, 2017
Mar 27, 2016
Quarter
Ended
As a % of CAP
total net revenues
Net revenues: Company-operated stores $ 687.8 $ 608.5 13.0 % 89.5 %
89.8 % Licensed stores 78.4 67.0 17.0 10.2 9.9 Foodservice and
other 2.7 2.4 12.5 0.4 0.4
Total net
revenues 768.9 677.9 13.4 100.0
100.0 Cost of sales including occupancy costs 333.5 307.2
8.6 43.4 45.3 Store operating expenses 202.5 182.3 11.1 26.3 26.9
Other operating expenses 17.6 17.2 2.3 2.3 2.5 Depreciation and
amortization expenses 49.3 44.0 12.0 6.4 6.5 General and
administrative expenses 34.2 30.6 11.8 4.4 4.5
Total operating expenses 637.1 581.3 9.6 82.9 85.8 Income
from equity investees 44.1 32.7 34.9 5.7 4.8
Operating income $ 175.9
$ 129.3 36.0 % 22.9
% 19.1 % Supplemental Ratios: Store
operating expenses as a % of company-operated store revenues 29.4 %
30.0 % Other operating expenses as a % of non-company-operated
store revenues 21.7 % 24.8 %
Two Quarters
Ended
Net revenues: Company-operated stores $ 1,379.2 $ 1,188.6 16.0 %
89.6 % 89.3 % Licensed stores 156.4 139.1 12.4 10.2 10.4
Foodservice and other 4.0 3.7 8.1 0.3 0.3
Total net revenues 1,539.6 1,331.4
15.6 100.0 100.0 Cost of sales including
occupancy costs 670.8 602.3 11.4 43.6 45.2 Store operating expenses
406.8 357.6 13.8 26.4 26.9 Other operating expenses 36.7 32.1 14.3
2.4 2.4 Depreciation and amortization expenses 98.0 86.1 13.8 6.4
6.5 General and administrative expenses 74.8 61.1
22.4 4.9 4.6 Total operating expenses 1,287.1 1,139.2
13.0 83.6 85.6 Income from equity investees 86.6 63.9
35.5 5.6 4.8
Operating income $
339.1 $ 256.1 32.4
% 22.0 % 19.2 % Supplemental
Ratios: Store operating expenses as a % of company-operated
store revenues 29.5 % 30.1 % Other operating expenses as a % of
non-company-operated store revenues 22.9 % 22.5 %
EMEA
Apr 2, 2017
Mar 27, 2016
%Change
Apr 2, 2017
Mar 27, 2016
Quarter
Ended
As a % of EMEA
total net revenues
Net revenues: Company-operated stores $ 127.5 $ 182.8 (30.3 )% 55.0
% 68.1 % Licensed stores 90.9 73.3 24.0 39.2 27.3 Foodservice 13.3
12.2 9.0 5.7 4.5
Total net
revenues 231.7 268.3 (13.6 )
100.0 100.0 Cost of sales including occupancy costs
122.6 136.6 (10.2 ) 52.9 50.9 Store operating expenses 50.3 66.5
(24.4 ) 21.7 24.8 Other operating expenses 14.1 13.9 1.4 6.1 5.2
Depreciation and amortization expenses 7.6 10.7 (29.0 ) 3.3 4.0
General and administrative expenses 9.4 13.3 (29.3 )
4.1 5.0 Total operating expenses 204.0 241.0 (15.4 )
88.0 89.8 Income from equity investees — 0.3 (100.0 )
— 0.1
Operating income $ 27.7
$ 27.6 0.4 % 12.0
% 10.3 % Supplemental Ratios: Store
operating expenses as a % of company-operated store revenues 39.5 %
36.4 % Other operating expenses as a % of non-company-operated
store revenues 13.5 % 16.3 %
Two Quarters
Ended
Net revenues: Company-operated stores $ 273.4 $ 401.7 (31.9 )% 55.4
% 69.1 % Licensed stores 193.0 153.1 26.1 39.1 26.3 Foodservice
27.5 26.6 3.4 5.6 4.6
Total net
revenues 493.9 581.4 (15.0 )
100.0 100.0 Cost of sales including occupancy costs
258.7 288.0 (10.2 ) 52.4 49.5 Store operating expenses 97.1 140.4
(30.8 ) 19.7 24.1 Other operating expenses 30.2 28.7 5.2 6.1 4.9
Depreciation and amortization expenses 15.2 22.2 (31.5 ) 3.1 3.8
General and administrative expenses 21.1 27.8 (24.1 )
4.3 4.8 Total operating expenses 422.3 507.1 (16.7 )
85.5 87.2 Income from equity investees — 1.5 (100.0 )
— 0.3
Operating income $ 71.6
$ 75.8 (5.5 )%
14.5 % 13.0 % Supplemental
Ratios: Store operating expenses as a % of company-operated
store revenues 35.5 % 35.0 % Other operating expenses as a % of
non-company-operated store revenues 13.7 % 16.0 %
Channel Development
Apr 2, 2017
Mar 27, 2016
%Change
Apr 2, 2017
Mar 27, 2016
Quarter
Ended
As a % ofChannel Development total net
revenues Net revenues: CPG(1) $ 346.3 $ 354.4 (2.3 )% 75.1 %
76.8 % Foodservice 115.0 106.8 7.7 24.9 23.2
Total net revenues 461.3 461.2 —
100.0 100.0 Cost of sales 254.5 252.9 0.6 55.2 54.8
Other operating expenses 50.5 53.5 (5.6 ) 10.9 11.6 Depreciation
and amortization expenses 0.6 0.7 (14.3 ) 0.1 0.2 General and
administrative expenses 2.1 4.7 (55.3 ) 0.5
1.0 Total operating expenses 307.7 311.8 (1.3 ) 66.7 67.6
Income from equity investees 40.0 32.6 22.7 8.7
7.1
Operating income $ 193.6
$ 182.0 6.4 % 42.0
% 39.5 %
Two Quarters
Ended
Net revenues: CPG(1) $ 783.3 $ 753.6 3.9 % 77.2 % 77.4 %
Foodservice 231.6 219.7 5.4 22.8 22.6
Total net revenues 1,014.9 973.3 4.3
100.0 100.0 Cost of sales 543.0 538.4 0.9 53.5 55.3
Other operating expenses 110.9 113.8 (2.5 ) 10.9 11.7 Depreciation
and amortization expenses 1.2 1.4 (14.3 ) 0.1 0.1 General and
administrative expenses 5.4 8.8 (38.6 ) 0.5
0.9 Total operating expenses 660.5 662.4 (0.3 ) 65.1 68.1
Income from equity investees 82.0 64.3 27.5 8.1
6.6
Operating income $ 436.4
$ 375.2 16.3 %
43.0 % 38.5 %
(1) CPG revenues in Q2 FY17 included an
unfavorable revenue deduction adjustment pertaining to prior
periods of $20.6 million.
All Other Segments
Apr 2, 2017
Mar 27, 2016
%Change
Quarter
Ended
Net revenues: Company-operated stores $ 45.2 $ 55.4 (18.4 )%
Licensed stores 0.7 1.0 (30.0 ) CPG, foodservice and other 65.8
73.8 (10.8 )
Total net revenues 111.7
130.2 (14.2 ) Cost of sales including
occupancy costs 74.1 83.0 (10.7 ) Store operating expenses 34.5
30.9 11.7 Other operating expenses 20.7 27.2 (23.9 ) Depreciation
and amortization expenses 3.5 3.4 2.9 General and administrative
expenses 4.4 4.9 (10.2 ) Total operating expenses
137.2 149.4 (8.2 )
Operating loss $
(25.5 ) $ (19.2 ) 32.8
%
Two Quarters
Ended
Net revenues: Company-operated stores $ 116.2 $ 136.3 (14.7 )%
Licensed stores 1.7 2.2 (22.7 ) CPG, foodservice and other 148.9
160.4 (7.2 )
Total net revenues 266.8
298.9 (10.7 ) Cost of sales including
occupancy costs 164.5 178.3 (7.7 ) Store operating expenses 65.2
61.1 6.7 Other operating expenses 38.2 50.8 (24.8 ) Depreciation
and amortization expenses 6.3 7.0 (10.0 ) General and
administrative expenses 8.0 14.8 (45.9 ) Total
operating expenses 282.2 312.0 (9.6 )
Operating
loss $ (15.4 ) $ (13.1
) 17.6 %
Supplemental
Information
The following supplemental information is provided for
historical and comparative purposes.
U.S. Supplemental
Data
Quarter Ended ($ in
millions)
Apr 2, 2017 Mar 27, 2016
Change Revenues $3,417.0 $3,186.5 7%
Comparable Store Sales Growth(1) 3% 7% Change in Transactions (2)%
3% Change in Ticket 4% 5% (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.
Store
Data
Net stores opened/(closed) and transferred during the
period Quarter Ended
Two Quarters Ended Stores open as of Apr 2,
2017 Mar 27, 2016 Apr 2,
2017 Mar 27, 2016 Apr 2,
2017 Mar 27, 2016 Americas:
Company-operated stores 82 38 157 119 9,176 8,790 Licensed stores
118 94 294 184 6,882 6,316 Total
Americas 200 132 451 303 16,058
15,106 China/Asia Pacific: Company-operated stores 67 54 171 144
2,982 2,596 Licensed stores 120 121 319 312
3,951 3,322 Total China/Asia Pacific 187 175
490 456 6,933 5,918 EMEA:
Company-operated stores — (10 ) (18 ) (49 ) 505 688 Licensed stores
46 57 159 175 2,278 1,800 Total
EMEA 46 47 141 126 2,783 2,488
All Other Segments: Company-operated stores (7 ) (4 ) (9 ) (5 ) 349
370 Licensed stores 1 — 3 (2 ) 38 39
Total All Other Segments (6 ) (4 ) (6 ) (7 ) 387 409
Total Company 427
350 1,076 878
26,161 23,921
Non-GAAP Disclosure
In addition to the GAAP results provided in this release, the
company provides certain non-GAAP financial measures. Non-GAAP
financial measures 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.
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 Starbucks Japan acquisition-related
items Management excludes Starbucks Japan
acquisition-related transaction costs as 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 excludes Starbucks Japan integration costs and
amortization of the acquired intangible assets when evaluating
performance because these expenses 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 future amortization was fixed at the time of
acquisition and generally cannot subsequently be changed or
influenced by management. 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 do not contribute to a meaningful
evaluation of the company's past or future operating performance.
Other tax matters Management excludes incremental tax
benefits in the U.S. as these tax benefits do not contribute to a
meaningful evaluation of the company's past or future operating
performance.
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)
Quarter Ended Apr 2, 2017
Mar 27, 2016 Change
Consolidated
Operating income, as reported (GAAP) $ 935.4 $ 864.2 8.2% Starbucks
Japan acquisition-related items - other(1) 13.8 13.9
Non-GAAP operating income $ 949.2 $ 878.1 8.1%
Operating margin, as reported (GAAP) 17.7 % 17.3 % 40 bps Starbucks
Japan acquisition-related items - other(1) 0.3 0.3
Non-GAAP operating margin 17.9 % 17.6 % 30 bps Diluted net
earnings per share, as reported (GAAP) $ 0.45 $ 0.39 15.4%
Starbucks Japan acquisition-related items - other(1) 0.01 0.01 Sale
of Germany retail operations(2) (0.01 ) — Income tax effect on
Non-GAAP adjustments(3) — — Non-GAAP net earnings per
share $ 0.45 $ 0.39 15.4%
China/Asia
Pacific (CAP)
Operating income, as reported (GAAP) $ 175.9 $ 129.3 36.0%
Starbucks Japan acquisition-related items(1) 13.7 13.1
Non-GAAP operating income $ 189.6 $ 142.4
33.1% Operating margin, as reported (GAAP) 22.9 % 19.1 % 380
bps Starbucks Japan acquisition-related items(1) 1.8 1.9
Non-GAAP operating margin 24.7 % 21.0 % 370 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) Represents a Q2 FY17
adjustment associated with estimated indemnifications related to
the sale of our Germany retail operations, which occurred in FY16.
(3) 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: http://www.businesswire.com/news/home/20170427006662/en/
Starbucks Contact, Investor Relations:Tom Shaw,
206-318-7118investorrelations@starbucks.comorStarbucks Contact,
Media:Alisha Damodaran, 206-318-7100press@starbucks.com
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