Washington | 0-20322 | 91-1325671 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
2401 Utah Avenue South, Seattle, Washington 98134 |
(Address of principal executive offices) (Zip Code) |
(206) 447-1575 |
(Registrant’s telephone number, including area code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01 | Financial Statements and Exhibits. |
Exhibit No. | Description | |
99.1 | Earnings release of Starbucks Corporation dated November 2, 2017 |
STARBUCKS CORPORATION | |||
Dated: November 2, 2017 | |||
By: | /s/ Scott Maw | ||
Scott Maw | |||
executive vice president, chief financial officer |
Exhibit No. | Description | |
• | Global comparable store sales increased 2%, driven by a 2% increase in average ticket and a 1% increase in transactions; up 3% excluding the impact from Hurricanes Harvey and Irma |
◦ | Americas comp store sales increased 3%, driven by a 2% increase in average ticket and a 1% increase in transactions |
◦ | U.S. comp store sales increased 2%; excluding the impact from Hurricanes Harvey and Irma, U.S. comp sales up 3%, driven by a 1% increase in transactions |
◦ | CAP comp store sales increased 2%; China comp store sales increased 8%, driven by a 7% increase in transactions |
• | Consolidated net revenues of $5.7 billion versus $5.7 billion in the prior year quarter. Excluding $412.4 million for the extra week in Q4 FY16, consolidated net revenues grew 8% |
• | GAAP operating income of $1.0 billion declined 16.7% compared to the prior year quarter. Non-GAAP operating income grew 2.8% to $1.1 billion |
• | GAAP operating margin of 17.9% declined 360 basis points compared to the prior year quarter. Non-GAAP operating margin of 20.0% declined 90 basis points primarily due to increased investments in our store partners |
• | GAAP Earnings Per Share of $0.54 was flat to the prior year quarter. Non-GAAP EPS grew 10.0% to $0.55 per share |
• | The company opened 603 net new stores globally, bringing total store count to 27,339 across 75 countries |
• | Membership in Starbucks Rewards grew 11% year-over-year to 13.3 million active members in the U.S., with member spend representing 36% of U.S. company-operated sales |
• | Mobile Order and Pay reached 10% of transactions in U.S. company-operated stores |
• | Global comparable store sales increased 3%, comprised of a 3% increase in the Americas segment and a 3% increase in the CAP segment |
◦ | U.S. comp store sales increased 3%; China comp store sales increased 7%, driven by a 5% increase in transactions |
• | Consolidated net revenues of $22.4 billion grew 5% versus the prior year. Excluding $412.4 million for the extra week in Q4 FY16, consolidated net revenues grew 7% year over year |
• | GAAP operating income of $4.1 billion declined 0.9% compared to the prior year. Non-GAAP operating income grew 7.8% to $4.4 billion |
• | GAAP operating margin of 18.5% declined 110 basis points compared to the prior year. Non-GAAP operating margin expanded 10 basis points to 19.7% |
• | GAAP Earnings Per Share of $1.97 grew 3.7% versus the prior year. Non-GAAP EPS grew 11.4% to $2.06 per share |
• | Annual global comparable store sales growth of 3% to 5% |
• | Annual consolidated net revenue growth in the high single digits |
• | Annual earnings per share growth of 12% or greater |
• | Annual ROIC of 25% or greater |
Quarter Ended Oct 1, 2017 | |||||
Comparable Store Sales(1) | Sales Growth | Change in Transactions | Change in Ticket | ||
Consolidated | 2% | 1% | 2% | ||
Americas | 3% | 1% | 2% | ||
CAP | 2% | 1% | 1% | ||
EMEA(2) | 1% | (2)% | 3% | ||
(1) Includes only Starbucks company-operated stores open 13 months or longer. Comparable store sales exclude the effect of fluctuations in foreign currency exchange rates. For fiscal 2016, comparable store sales percentages were calculated excluding the 53rd week. | |||||
(2) Company-operated stores represent 17% of the EMEA segment store portfolio as of October 1, 2017. |
Operating Results | Quarter Ended | Change | |||
Oct 1, 2017 | Oct 2, 2016 | ||||
($ in millions, except per share amounts) | (13 Weeks Ended) | (14 Weeks Ended) | |||
Net New Stores (1) | 603 | 690 | (87) | ||
Revenues | $5,698.3 | $5,711.2 | 0% | ||
Operating Income | $1,022.5 | $1,227.5 | (17)% | ||
Operating Margin | 17.9% | 21.5% | (360) bps | ||
EPS | $0.54 | $0.54 | 0% | ||
(1) Q4 2017 net new stores include the closure of 54 Teavana-branded stores. |
Quarter Ended | Change | ||||
Oct 1, 2017 | Oct 2, 2016 | ||||
($ in millions) | (13 Weeks Ended) | (14 Weeks Ended) | |||
Net New Stores | 257 | 307 | (50) | ||
Revenues | $3,949.0 | $3,968.1 | 0% | ||
Operating Income | $903.7 | $1,096.9 | (18)% | ||
Operating Margin | 22.9% | 27.6% | (470) bps |
Quarter Ended | Change | ||||
Oct 1, 2017 | Oct 2, 2016 | ||||
($ in millions) | (13 Weeks Ended) | (14 Weeks Ended) | |||
Net New Stores | 296 | 316 | (20) | ||
Revenues | $859.9 | $839.2 | 2% | ||
Operating Income | $201.7 | $192.4 | 5% | ||
Operating Margin | 23.5% | 22.9% | 60 bps |
Quarter Ended | Change | ||||
Oct 1, 2017 | Oct 2, 2016 | ||||
($ in millions) | (13 Weeks Ended) | (14 Weeks Ended) | |||
Net New Stores | 104 | 77 | 27 | ||
Revenues | $269.9 | $270.2 | 0% | ||
Operating Income | $34.8 | $45.8 | (24)% | ||
Operating Margin | 12.9% | 17.0% | (410) bps |
Quarter Ended | Change | ||||
Oct 1, 2017 | Oct 2, 2016 | ||||
($ in millions) | (13 Weeks Ended) | (14 Weeks Ended) | |||
Revenues | $514.9 | $518.5 | (1)% | ||
Operating Income | $246.7 | $244.3 | 1% | ||
Operating Margin | 47.9% | 47.1% | 80 bps |
Quarter Ended | Change | ||||
Oct 1, 2017 | Oct 2, 2016 | ||||
($ in millions) | (13 Weeks Ended) | (14 Weeks Ended) | |||
Net New Stores | (54) | (10) | (44) | ||
Revenues | $104.6 | $115.2 | (9)% | ||
Operating Loss | $(46.0) | $(10.1) | 355% |
Year Ended October 1, 2017 | |||||
Comparable Store Sales(1) | Sales Growth | Change in Transactions | Change in Ticket | ||
Consolidated | 3% | 0% | 3% | ||
Americas | 3% | 0% | 4% | ||
CAP | 3% | 1% | 1% | ||
EMEA(2) | 1% | (1)% | 1% | ||
(1) Includes only Starbucks company-operated stores open 13 months or longer. Comparable store sales exclude the effect of fluctuations in foreign currency exchange rates. For fiscal 2016, comparable store sales percentages were calculated excluding the 53rd week. | |||||
(2) Company-operated stores represent 17% of the EMEA segment store portfolio as of October 1, 2017. |
Operating Results | Year Ended | Change | |||
Oct 1, 2017 | Oct 2, 2016 | ||||
($ in millions, except per share amounts) | (52 Weeks Ended) | (53 Weeks Ended) | |||
Net New Stores (1) | 2,254 | 2,042 | 212 | ||
Revenues | $22,386.8 | $21,315.9 | 5% | ||
Operating Income | $4,134.7 | $4,171.9 | (1)% | ||
Operating Margin | 18.5% | 19.6% | (110) bps | ||
EPS | $1.97 | $1.90 | 4% | ||
(1) Fiscal 2017 net new stores include the net closure of 64 Teavana-branded stores. |
• | Starbucks appointed Rosalind Brewer as group president, Americas and chief operating officer, effective October 2nd. Brewer reports to Kevin Johnson and serves as a member of the Starbucks senior leadership team. She also continues to serve on the Starbucks board of directors. As group president, Americas and chief operating officer, Brewer leads the company’s operating businesses across the Americas (U.S., Canada, and Latin America), as well as the global functions of supply chain, product innovation, and store development organizations. |
• | Unilever and Starbucks today announced entry into a definitive agreement for Unilever to acquire the assets of the TAZO® brand including TAZO®’s signature recipes, intellectual property and inventory for $384 million. In turn, Starbucks will drive a single tea brand strategy and focus with its super premium tea brand, Teavana. |
• | The company announced in September that it had entered into an agreement with its long-time strategic partner Maxim’s Caterers Limited – a leading restaurant operator of multiple brands across Asia – to fully license Starbucks operations in Singapore, including transitioning the more than 130 company-operated Starbucks stores open in the market today. The partnership between Starbucks and Maxim’s started in 2000 in Hong Kong. Currently, they operate more than 210 Starbucks stores across Cambodia, Hong Kong, Macau and Vietnam. |
• | On September 20th the company launched Starbucks Rewards™ in Japan, a loyalty program which offers members exclusive and personalized benefits. Alongside the launch of the program, the company launched a redesigned mobile app for iPhone® and Android™, with updates that make it easier to track stars earned and to redeem rewards. Additionally, the new digital Starbucks Card feature allows users to instantly receive a digital card, makes joining Starbucks Rewards™ quick and convenient, and provides a fast and convenient way for customers to pay at the more than 1,200 stores across the country. |
• | In the wake of unprecedented storms impacting Texas, Florida and Puerto Rico, Starbucks granted more than 2,100 Caring Unites Partners (CUP) Fund grants to impacted partners. And Starbucks customers engaged in the overall relief effort as well, donating nearly $900,000 to the American Red Cross, Center for Disaster Philanthropy and Music City Cares Fund through the Starbucks mobile app and in its stores. |
• | The company repurchased 15.1 million shares of common stock in Q4 FY17; approximately 80 million shares remain available for purchase under current authorizations. |
• | The Board of Directors declared a cash dividend of $0.30 per share, an increase of 20%, payable on December 1, 2017, to shareholders of record as of November 16, 2017. |
• | The company announced a new commitment of returning $15 billion to shareholders over the next 3 years through dividends and share repurchases. |
Starbucks Contact, Investor Relations: | Starbucks Contact, Media: | |
Tom Shaw | Alisha Damodaran | |
206-318-7118 | 206-318-7100 | |
investorrelations@starbucks.com | press@starbucks.com |
Quarter Ended | Quarter Ended | ||||||||||||||||
Oct 1, 2017 | Oct 2, 2016 | % Change | Oct 1, 2017 | Oct 2, 2016 | |||||||||||||
(13 Weeks Ended) | (14 Weeks Ended) | As a % of total net revenues | |||||||||||||||
Net revenues: | |||||||||||||||||
Company-operated stores | $ | 4,477.0 | $ | 4,507.8 | (0.7 | )% | 78.6 | % | 78.9 | % | |||||||
Licensed stores | 617.6 | 593.2 | 4.1 | 10.8 | 10.4 | ||||||||||||
CPG, foodservice and other | 603.7 | 610.2 | (1.1 | ) | 10.6 | 10.7 | |||||||||||
Total net revenues | 5,698.3 | 5,711.2 | (0.2 | ) | 100.0 | 100.0 | |||||||||||
Cost of sales including occupancy costs(1) | 2,352.9 | 2,254.2 | 4.4 | 41.3 | 39.5 | ||||||||||||
Store operating expenses | 1,639.8 | 1,562.3 | 5.0 | 28.8 | 27.4 | ||||||||||||
Other operating expenses | 131.1 | 122.1 | 7.4 | 2.3 | 2.1 | ||||||||||||
Depreciation and amortization expenses | 255.4 | 249.9 | 2.2 | 4.5 | 4.4 | ||||||||||||
General and administrative expenses | 385.2 | 401.2 | (4.0 | ) | 6.8 | 7.0 | |||||||||||
Restructuring and impairments(2) | 33.3 | — | nm | 0.6 | — | ||||||||||||
Total operating expenses | 4,797.7 | 4,589.7 | 4.5 | 84.2 | 80.4 | ||||||||||||
Income from equity investees | 121.9 | 106.0 | 15.0 | 2.1 | 1.9 | ||||||||||||
Operating income | 1,022.5 | 1,227.5 | (16.7 | ) | 17.9 | 21.5 | |||||||||||
Interest income and other, net(3) | 151.6 | 12.5 | 1,112.8 | 2.7 | 0.2 | ||||||||||||
Interest expense | (22.3 | ) | (24.7 | ) | (9.7 | ) | (0.4 | ) | (0.4 | ) | |||||||
Earnings before income taxes | 1,151.8 | 1,215.3 | (5.2 | ) | 20.2 | 21.3 | |||||||||||
Income tax expense | 362.5 | 413.5 | (12.3 | ) | 6.4 | 7.2 | |||||||||||
Net earnings including noncontrolling interests | 789.3 | 801.8 | (1.6 | ) | 13.9 | 14.0 | |||||||||||
Net earnings/(loss) attributable to noncontrolling interests | 0.8 | 0.8 | — | — | — | ||||||||||||
Net earnings attributable to Starbucks | $ | 788.5 | $ | 801.0 | (1.6 | ) | 13.8 | % | 14.0 | % | |||||||
Net earnings per common share - diluted | $ | 0.54 | $ | 0.54 | — | % | |||||||||||
Weighted avg. shares outstanding - diluted | 1,451.2 | 1,478.4 | |||||||||||||||
Cash dividends declared per share | $ | 0.30 | $ | 0.25 | |||||||||||||
Supplemental Ratios: | |||||||||||||||||
Store operating expenses as a % of company-operated store revenues | 36.6 | % | 34.7 | % | |||||||||||||
Other operating expenses as a % of non-company-operated store revenues | 10.7 | % | 10.1 | % | |||||||||||||
Effective tax rate including noncontrolling interests | 31.5 | % | 34.0 | % |
(1) | As a result of our restructuring efforts, $11.3 million was recorded in cost of sales including occupancy cost related to inventory write-offs. |
(2) | Represents restructuring charges of $27.3 million associated with our Teavana-branded stores, $4.1 million related to our Starbucks Canada retail business and $1.9 million related to our e-commerce business. |
(3) | Included in interest income and other, net is the Q4 FY17 gain on the sale of our Singapore retail operations of $83.9 million. |
Year Ended | Year Ended | ||||||||||||||||
Oct 1, 2017 | Oct 2, 2016 | % Change | Oct 1, 2017 | Oct 2, 2016 | |||||||||||||
(52 Weeks Ended) | (53 Weeks Ended) | As a % of total net revenues | |||||||||||||||
Net revenues: | |||||||||||||||||
Company-operated stores | $ | 17,650.7 | $ | 16,844.1 | 4.8 | % | 78.8 | % | 79.0 | % | |||||||
Licensed stores | 2,355.0 | 2,154.2 | 9.3 | 10.5 | 10.1 | ||||||||||||
CPG, foodservice and other(1) | 2,381.1 | 2,317.6 | 2.7 | 10.6 | 10.9 | ||||||||||||
Total net revenues | 22,386.8 | 21,315.9 | 5.0 | 100.0 | 100.0 | ||||||||||||
Cost of sales including occupancy costs(2) | 9,038.2 | 8,511.1 | 6.2 | 40.4 | 39.9 | ||||||||||||
Store operating expenses | 6,493.3 | 6,064.3 | 7.1 | 29.0 | 28.4 | ||||||||||||
Other operating expenses | 553.8 | 545.4 | 1.5 | 2.5 | 2.6 | ||||||||||||
Depreciation and amortization expenses | 1,011.4 | 980.8 | 3.1 | 4.5 | 4.6 | ||||||||||||
General and administrative expenses | 1,393.3 | 1,360.6 | 2.4 | 6.2 | 6.4 | ||||||||||||
Restructuring and impairments(3) | 153.5 | — | nm | 0.7 | — | ||||||||||||
Total operating expenses | 18,643.5 | 17,462.2 | 6.8 | 83.3 | 81.9 | ||||||||||||
Income from equity investees | 391.4 | 318.2 | 23.0 | 1.7 | 1.5 | ||||||||||||
Operating income | 4,134.7 | 4,171.9 | (0.9 | ) | 18.5 | 19.6 | |||||||||||
Interest income and other, net(4) | 275.3 | 108.0 | 154.9 | 1.2 | 0.5 | ||||||||||||
Interest expense | (92.5 | ) | (81.3 | ) | 13.8 | (0.4 | ) | (0.4 | ) | ||||||||
Earnings before income taxes | 4,317.5 | 4,198.6 | 2.8 | 19.3 | 19.7 | ||||||||||||
Income tax expense | 1,432.6 | 1,379.7 | 3.8 | 6.4 | 6.5 | ||||||||||||
Net earnings including noncontrolling interests | 2,884.9 | 2,818.9 | 2.3 | 12.9 | 13.2 | ||||||||||||
Net earnings/(loss) attributable to noncontrolling interests | 0.2 | 1.2 | (83.3 | ) | — | — | |||||||||||
Net earnings attributable to Starbucks | $ | 2,884.7 | $ | 2,817.7 | 2.4 | % | 12.9 | % | 13.2 | % | |||||||
Net earnings per common share - diluted | $ | 1.97 | $ | 1.90 | 3.7 | % | |||||||||||
Weighted avg. shares outstanding - diluted | 1,461.5 | 1,486.7 | |||||||||||||||
Cash dividends declared per share | $ | 1.05 | $ | 0.85 | |||||||||||||
Supplemental Ratios: | |||||||||||||||||
Store operating expenses as a % of company-operated store revenues | 36.8 | % | 36.0 | % | |||||||||||||
Other operating expenses as a % of non-company-operated store revenues | 11.7 | % | 12.2 | % | |||||||||||||
Effective tax rate including noncontrolling interests | 33.2 | % | 32.9 | % |
(1) | CPG revenues included an unfavorable revenue deduction adjustment pertaining to periods prior to FY17 of $13.2 million, as recorded in Q2 FY17. |
(2) | As a result of our restructuring efforts, $11.3 million was recorded in cost of sales including occupancy cost related to inventory write-offs. |
(3) | Represents restructuring and impairment charges of $129.6 million associated with our Teavana-branded stores, goodwill impairment of $17.9 million related to our Switzerland retail business, and restructuring charges associated with Starbucks Canada retail and e-commerce businesses of $4.1 million and $1.9 million, respectively. |
(4) | Included in interest income and other, net is the Q4 FY17 gain on the sale of our Singapore retail operations of $83.9 million and the Q2 FY17 gain on the sale of our investment in Square, Inc. warrants of $41 million. |
Oct 1, 2017 | Oct 2, 2016 | % Change | Oct 1, 2017 | Oct 2, 2016 | |||||||||||||
Quarter Ended | (13 Weeks Ended) | (14 Weeks Ended) | As a % of Americas total net revenues | ||||||||||||||
Net revenues: | |||||||||||||||||
Company-operated stores | $ | 3,524.1 | $ | 3,550.1 | (0.7 | )% | 89.2 | % | 89.5 | % | |||||||
Licensed stores | 414.7 | 410.5 | 1.0 | 10.5 | 10.3 | ||||||||||||
Foodservice and other | 10.2 | 7.5 | 36.0 | 0.3 | 0.2 | ||||||||||||
Total net revenues | 3,949.0 | 3,968.1 | (0.5 | ) | 100.0 | 100.0 | |||||||||||
Cost of sales including occupancy costs | 1,483.5 | 1,406.0 | 5.5 | 37.6 | 35.4 | ||||||||||||
Store operating expenses | 1,326.0 | 1,259.7 | 5.3 | 33.6 | 31.7 | ||||||||||||
Other operating expenses | 32.0 | 10.2 | 213.7 | 0.8 | 0.3 | ||||||||||||
Depreciation and amortization expenses | 154.3 | 148.5 | 3.9 | 3.9 | 3.7 | ||||||||||||
General and administrative expenses | 45.4 | 46.8 | (3.0 | ) | 1.1 | 1.2 | |||||||||||
Restructuring and impairments(1) | 4.1 | — | nm | 0.1 | — | ||||||||||||
Total operating expenses | 3,045.3 | 2,871.2 | 6.1 | 77.1 | 72.4 | ||||||||||||
Operating income | $ | 903.7 | $ | 1,096.9 | (17.6 | )% | 22.9 | % | 27.6 | % | |||||||
Supplemental Ratios: | |||||||||||||||||
Store operating expenses as a % of company-operated store revenues | 37.6 | % | 35.5 | % | |||||||||||||
Other operating expenses as a % of non-company-operated store revenues | 7.5 | % | 2.4 | % | |||||||||||||
Oct 1, 2017 | Oct 2, 2016 | % Change | Oct 1, 2017 | Oct 2, 2016 | |||||||||||||
Year Ended | (52 Weeks Ended) | (53 Weeks Ended) | As a % of Americas total net revenues | ||||||||||||||
Net revenues: | |||||||||||||||||
Company-operated stores | $ | 13,996.4 | $ | 13,247.4 | 5.7 | % | 89.4 | % | 89.5 | % | |||||||
Licensed stores | 1,617.3 | 1,518.5 | 6.5 | 10.3 | 10.3 | ||||||||||||
Foodservice and other | 39.0 | 29.5 | 32.2 | 0.2 | 0.2 | ||||||||||||
Total net revenues | 15,652.7 | 14,795.4 | 5.8 | 100.0 | 100.0 | ||||||||||||
Cost of sales including occupancy costs | 5,720.3 | 5,271.9 | 8.5 | 36.5 | 35.6 | ||||||||||||
Store operating expenses | 5,320.2 | 4,909.3 | 8.4 | 34.0 | 33.2 | ||||||||||||
Other operating expenses | 128.5 | 96.0 | 33.9 | 0.8 | 0.6 | ||||||||||||
Depreciation and amortization expenses | 615.0 | 590.1 | 4.2 | 3.9 | 4.0 | ||||||||||||
General and administrative expenses | 201.4 | 186.1 | 8.2 | 1.3 | 1.3 | ||||||||||||
Restructuring and impairments(1) | 4.1 | — | nm | — | — | ||||||||||||
Total operating expenses | 11,989.5 | 11,053.4 | 8.5 | 76.6 | 74.7 | ||||||||||||
Operating income | $ | 3,663.2 | $ | 3,742.0 | (2.1 | )% | 23.4 | % | 25.3 | % | |||||||
Supplemental Ratios: | |||||||||||||||||
Store operating expenses as a % of company-operated store revenues | 38.0 | % | 37.1 | % | |||||||||||||
Other operating expenses as a % of non-company-operated store revenues | 7.8 | % | 6.2 | % |
(1) | Represents restructuring charges of $4.1 million related to our Starbucks Canada retail business. |
Oct 1, 2017 | Oct 2, 2016 | % Change | Oct 1, 2017 | Oct 2, 2016 | |||||||||||||
Quarter Ended | (13 Weeks Ended) | (14 Weeks Ended) | As a % of CAP total net revenues | ||||||||||||||
Net revenues: | |||||||||||||||||
Company-operated stores | $ | 770.0 | $ | 756.4 | 1.8 | % | 89.5 | % | 90.1 | % | |||||||
Licensed stores | 88.7 | 81.6 | 8.7 | 10.3 | 9.7 | ||||||||||||
Foodservice and other | 1.2 | 1.2 | — | 0.1 | 0.1 | ||||||||||||
Total net revenues | 859.9 | 839.2 | 2.5 | 100.0 | 100.0 | ||||||||||||
Cost of sales including occupancy costs | 369.6 | 363.2 | 1.8 | 43.0 | 43.3 | ||||||||||||
Store operating expenses | 226.6 | 221.4 | 2.3 | 26.4 | 26.4 | ||||||||||||
Other operating expenses | 20.5 | 22.1 | (7.2 | ) | 2.4 | 2.6 | |||||||||||
Depreciation and amortization expenses | 53.3 | 48.9 | 9.0 | 6.2 | 5.8 | ||||||||||||
General and administrative expenses | 46.8 | 37.2 | 25.8 | 5.4 | 4.4 | ||||||||||||
Total operating expenses | 716.8 | 692.8 | 3.5 | 83.4 | 82.6 | ||||||||||||
Income from equity investees | 58.6 | 46.0 | 27.4 | 6.8 | 5.5 | ||||||||||||
Operating income | $ | 201.7 | $ | 192.4 | 4.8 | % | 23.5 | % | 22.9 | % | |||||||
Supplemental Ratios: | |||||||||||||||||
Store operating expenses as a % of company-operated store revenues | 29.4 | % | 29.3 | % | |||||||||||||
Other operating expenses as a % of non-company-operated store revenues | 22.8 | % | 26.7 | % | |||||||||||||
Oct 1, 2017 | Oct 2, 2016 | % Change | Oct 1, 2017 | Oct 2, 2016 | |||||||||||||
Year Ended | (52 Weeks Ended) | (53 Weeks Ended) | As a % of CAP total net revenues | ||||||||||||||
Net revenues: | |||||||||||||||||
Company-operated stores | $ | 2,906.0 | $ | 2,640.4 | 10.1 | % | 89.7 | % | 89.8 | % | |||||||
Licensed stores | 327.4 | 292.3 | 12.0 | 10.1 | 9.9 | ||||||||||||
Foodservice and other | 6.8 | 6.1 | 11.5 | 0.2 | 0.2 | ||||||||||||
Total net revenues | 3,240.2 | 2,938.8 | 10.3 | 100.0 | 100.0 | ||||||||||||
Cost of sales including occupancy costs | 1,393.9 | 1,296.7 | 7.5 | 43.0 | 44.1 | ||||||||||||
Store operating expenses | 845.5 | 779.4 | 8.5 | 26.1 | 26.5 | ||||||||||||
Other operating expenses | 74.6 | 70.3 | 6.1 | 2.3 | 2.4 | ||||||||||||
Depreciation and amortization expenses | 202.2 | 180.6 | 12.0 | 6.2 | 6.1 | ||||||||||||
General and administrative expenses | 156.0 | 130.3 | 19.7 | 4.8 | 4.4 | ||||||||||||
Total operating expenses | 2,672.2 | 2,457.3 | 8.7 | 82.5 | 83.6 | ||||||||||||
Income from equity investees | 197.0 | 150.1 | 31.2 | 6.1 | 5.1 | ||||||||||||
Operating income | $ | 765.0 | $ | 631.6 | 21.1 | % | 23.6 | % | 21.5 | % | |||||||
Supplemental Ratios: | |||||||||||||||||
Store operating expenses as a % of company-operated store revenues | 29.1 | % | 29.5 | % | |||||||||||||
Other operating expenses as a % of non-company-operated store revenues | 22.3 | % | 23.6 | % |
Oct 1, 2017 | Oct 2, 2016 | % Change | Oct 1, 2017 | Oct 2, 2016 | |||||||||||||
Quarter Ended | (13 Weeks Ended) | (14 Weeks Ended) | As a % of EMEA total net revenues | ||||||||||||||
Net revenues: | |||||||||||||||||
Company-operated stores | $ | 141.4 | $ | 156.0 | (9.4 | )% | 52.4 | % | 57.7 | % | |||||||
Licensed stores | 113.7 | 100.2 | 13.5 | 42.1 | 37.1 | ||||||||||||
Foodservice | 14.8 | 14.0 | 5.7 | 5.5 | 5.2 | ||||||||||||
Total net revenues | 269.9 | 270.2 | (0.1 | ) | 100.0 | 100.0 | |||||||||||
Cost of sales including occupancy costs | 140.8 | 137.7 | 2.3 | 52.2 | 51.0 | ||||||||||||
Store operating expenses | 63.1 | 51.2 | 23.2 | 23.4 | 18.9 | ||||||||||||
Other operating expenses | 13.8 | 15.0 | (8.0 | ) | 5.1 | 5.6 | |||||||||||
Depreciation and amortization expenses | 8.4 | 8.4 | — | 3.1 | 3.1 | ||||||||||||
General and administrative expenses | 9.0 | 12.1 | (25.6 | ) | 3.3 | 4.5 | |||||||||||
Total operating expenses | 235.1 | 224.4 | 4.8 | 87.1 | 83.0 | ||||||||||||
Operating income | $ | 34.8 | $ | 45.8 | (24.0 | )% | 12.9 | % | 17.0 | % | |||||||
Supplemental Ratios: | |||||||||||||||||
Store operating expenses as a % of company-operated store revenues | 44.6 | % | 32.8 | % | |||||||||||||
Other operating expenses as a % of non-company-operated store revenues | 10.7 | % | 13.1 | % | |||||||||||||
Oct 1, 2017 | Oct 2, 2016 | % Change | Oct 1, 2017 | Oct 2, 2016 | |||||||||||||
Year Ended | (52 Weeks Ended) | (53 Weeks Ended) | As a % of EMEA total net revenues | ||||||||||||||
Net revenues: | |||||||||||||||||
Company-operated stores | $ | 551.0 | $ | 732.0 | (24.7 | )% | 54.4 | % | 65.1 | % | |||||||
Licensed stores | 407.7 | 339.5 | 20.1 | 40.2 | 30.2 | ||||||||||||
Foodservice | 55.0 | 53.4 | 3.0 | 5.4 | 4.7 | ||||||||||||
Total net revenues | 1,013.7 | 1,124.9 | (9.9 | ) | 100.0 | 100.0 | |||||||||||
Cost of sales including occupancy costs | 533.5 | 565.0 | (5.6 | ) | 52.6 | 50.2 | |||||||||||
Store operating expenses | 214.1 | 260.6 | (17.8 | ) | 21.1 | 23.2 | |||||||||||
Other operating expenses | 59.1 | 57.0 | 3.7 | 5.8 | 5.1 | ||||||||||||
Depreciation and amortization expenses | 31.3 | 40.8 | (23.3 | ) | 3.1 | 3.6 | |||||||||||
General and administrative expenses | 41.7 | 51.4 | (18.9 | ) | 4.1 | 4.6 | |||||||||||
Restructuring and impairments(1) | 17.9 | — | nm | 1.8 | — | ||||||||||||
Total operating expenses | 897.6 | 974.8 | (7.9 | ) | 88.5 | 86.7 | |||||||||||
Income from equity investees | — | 1.5 | (100.0 | ) | — | 0.1 | |||||||||||
Operating income | $ | 116.1 | $ | 151.6 | (23.4 | )% | 11.5 | % | 13.5 | % | |||||||
Supplemental Ratios: | |||||||||||||||||
Store operating expenses as a % of company-operated store revenues | 38.9 | % | 35.6 | % | |||||||||||||
Other operating expenses as a % of non-company-operated store revenues | 12.8 | % | 14.5 | % |
(1) | Represents goodwill impairment related to our Switzerland retail business recorded in Q3 FY17. |
Oct 1, 2017 | Oct 2, 2016 | % Change | Oct 1, 2017 | Oct 2, 2016 | |||||||||||||
Quarter Ended | (13 Weeks Ended) | (14 Weeks Ended) | As a % of Channel Development total net revenues | ||||||||||||||
Net revenues: | |||||||||||||||||
CPG | $ | 396.0 | $ | 401.7 | (1.4 | )% | 76.9 | % | 77.5 | % | |||||||
Foodservice | 118.9 | 116.8 | 1.8 | 23.1 | 22.5 | ||||||||||||
Total net revenues | 514.9 | 518.5 | (0.7 | ) | 100.0 | 100.0 | |||||||||||
Cost of sales | 278.9 | 271.9 | 2.6 | 54.2 | 52.4 | ||||||||||||
Other operating expenses | 49.3 | 56.7 | (13.1 | ) | 9.6 | 10.9 | |||||||||||
Depreciation and amortization expenses | 0.5 | 0.7 | (28.6 | ) | 0.1 | 0.1 | |||||||||||
General and administrative expenses | 2.8 | 4.9 | (42.9 | ) | 0.5 | 0.9 | |||||||||||
Total operating expenses | 331.5 | 334.2 | (0.8 | ) | 64.4 | 64.5 | |||||||||||
Income from equity investees | 63.3 | 60.0 | 5.5 | 12.3 | 11.6 | ||||||||||||
Operating income | $ | 246.7 | $ | 244.3 | 1.0 | % | 47.9 | % | 47.1 | % | |||||||
Oct 1, 2017 | Oct 2, 2016 | % Change | Oct 1, 2017 | Oct 2, 2016 | |||||||||||||
Year Ended | (52 Weeks Ended) | (53 Weeks Ended) | As a % of Channel Development total net revenues | ||||||||||||||
Net revenues: | |||||||||||||||||
CPG(1) | $ | 1,543.7 | $ | 1,488.2 | 3.7 | % | 76.9 | % | 77.0 | % | |||||||
Foodservice | 464.9 | 444.3 | 4.6 | 23.1 | 23.0 | ||||||||||||
Total net revenues | 2,008.6 | 1,932.5 | 3.9 | 100.0 | 100.0 | ||||||||||||
Cost of sales | 1,074.3 | 1,042.6 | 3.0 | 53.5 | 54.0 | ||||||||||||
Other operating expenses | 222.2 | 228.5 | (2.8 | ) | 11.1 | 11.8 | |||||||||||
Depreciation and amortization expenses | 2.2 | 2.8 | (21.4 | ) | 0.1 | 0.1 | |||||||||||
General and administrative expenses | 10.9 | 17.9 | (39.1 | ) | 0.5 | 0.9 | |||||||||||
Total operating expenses | 1,309.6 | 1,291.8 | 1.4 | 65.2 | 66.8 | ||||||||||||
Income from equity investees | 194.4 | 166.6 | 16.7 | 9.7 | 8.6 | ||||||||||||
Operating income | $ | 893.4 | $ | 807.3 | 10.7 | % | 44.5 | % | 41.8 | % |
(1) | Includes an unfavorable revenue deduction adjustment pertaining to periods prior to FY17 of $13.2 million, as recorded in Q2 FY17. |
Oct 1, 2017 | Oct 2, 2016 | % Change | ||||||||
(13 Weeks Ended) | (14 Weeks Ended) | |||||||||
Quarter Ended | ||||||||||
Net revenues: | ||||||||||
Company-operated stores | $ | 41.5 | $ | 45.3 | (8.4 | )% | ||||
Licensed stores | 0.5 | 0.9 | (44.4 | ) | ||||||
CPG, foodservice and other | 62.6 | 69.0 | (9.3 | ) | ||||||
Total net revenues | 104.6 | 115.2 | (9.2 | ) | ||||||
Cost of sales including occupancy costs(1) | 78.5 | 69.9 | 12.3 | |||||||
Store operating expenses | 24.1 | 30.0 | (19.7 | ) | ||||||
Other operating expenses | 15.3 | 16.1 | (5.0 | ) | ||||||
Depreciation and amortization expenses | 0.7 | 3.1 | (77.4 | ) | ||||||
General and administrative expenses | 2.8 | 6.2 | (54.8 | ) | ||||||
Restructuring and impairments(2) | 29.2 | — | nm | |||||||
Total operating expenses | 150.6 | 125.3 | 20.2 | |||||||
Operating loss | $ | (46.0 | ) | $ | (10.1 | ) | 355.4 | % | ||
Oct 1, 2017 | Oct 2, 2016 | % Change | ||||||||
Year Ended | (52 Weeks Ended) | (53 Weeks Ended) | ||||||||
Net revenues: | ||||||||||
Company-operated stores | $ | 197.3 | $ | 224.3 | (12.0 | )% | ||||
Licensed stores | 2.6 | 3.9 | (33.3 | ) | ||||||
CPG, foodservice and other | 271.7 | 296.1 | (8.2 | ) | ||||||
Total net revenues | 471.6 | 524.3 | (10.1 | ) | ||||||
Cost of sales including occupancy costs(1) | 308.0 | 316.5 | (2.7 | ) | ||||||
Store operating expenses | 113.5 | 115.0 | (1.3 | ) | ||||||
Other operating expenses | 68.2 | 91.4 | (25.4 | ) | ||||||
Depreciation and amortization expenses | 10.1 | 13.3 | (24.1 | ) | ||||||
General and administrative expenses | 14.6 | 26.5 | (44.9 | ) | ||||||
Restructuring and impairments(3) | 131.5 | — | nm | |||||||
Total operating expenses | 645.9 | 562.7 | 14.8 | |||||||
Operating loss | $ | (174.3 | ) | $ | (38.4 | ) | 353.9 | % |
(1) | As a result of our restructuring efforts, $9.3 million was recorded in cost of sales including occupancy cost related to inventory write-offs. |
Oct 1, 2017 | Oct 2, 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 2,462.3 | $ | 2,128.8 | |||
Short-term investments | 228.6 | 134.4 | |||||
Accounts receivable, net | 870.4 | 768.8 | |||||
Inventories | 1,364.0 | 1,378.5 | |||||
Prepaid expenses and other current assets | 358.1 | 347.4 | |||||
Total current assets | 5,283.4 | 4,757.9 | |||||
Long-term investments | 542.3 | 1,141.7 | |||||
Equity and cost investments | 481.6 | 354.5 | |||||
Property, plant and equipment, net | 4,919.5 | 4,533.8 | |||||
Deferred income taxes, net | 795.4 | 885.4 | |||||
Other long-term assets | 362.8 | 403.3 | |||||
Other intangible assets | 441.4 | 516.3 | |||||
Goodwill | 1,539.2 | 1,719.6 | |||||
TOTAL ASSETS | $ | 14,365.6 | $ | 14,312.5 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 782.5 | $ | 730.6 | |||
Accrued liabilities | 1,934.5 | 1,999.1 | |||||
Insurance reserves | 215.2 | 246.0 | |||||
Stored value card liability | 1,288.5 | 1,171.2 | |||||
Current portion of long-term debt | — | 399.9 | |||||
Total current liabilities | 4,220.7 | 4,546.8 | |||||
Long-term debt | 3,932.6 | 3,185.3 | |||||
Other long-term liabilities | 755.3 | 689.7 | |||||
Total liabilities | 8,908.6 | 8,421.8 | |||||
Shareholders’ equity: | |||||||
Common stock ($0.001 par value) — authorized, 2,400.0 shares; issued and outstanding, 1,431.6 and 1,460.5 shares, respectively | 1.4 | 1.5 | |||||
Additional paid-in capital | 41.1 | 41.1 | |||||
Retained earnings | 5,563.2 | 5,949.8 | |||||
Accumulated other comprehensive loss | (155.6 | ) | (108.4 | ) | |||
Total shareholders’ equity | 5,450.1 | 5,884.0 | |||||
Noncontrolling interests | 6.9 | 6.7 | |||||
Total equity | 5,457.0 | 5,890.7 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 14,365.6 | $ | 14,312.5 |
Fiscal Year Ended | Oct 1, 2017 | Oct 2, 2016 | Sep 27, 2015 | ||||||||
OPERATING ACTIVITIES: | |||||||||||
Net earnings including noncontrolling interests | $ | 2,884.9 | $ | 2,818.9 | $ | 2,759.3 | |||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 1,067.1 | 1,030.1 | 933.8 | ||||||||
Deferred income taxes, net | 95.1 | 265.7 | 21.2 | ||||||||
Income earned from equity method investees | (310.2 | ) | (250.2 | ) | (190.2 | ) | |||||
Distributions received from equity method investees | 186.6 | 223.3 | 148.2 | ||||||||
Gain resulting from acquisition/sale of equity in joint ventures and certain retail operations | (93.5 | ) | (6.1 | ) | (394.3 | ) | |||||
Loss on extinguishment of debt | — | — | 61.1 | ||||||||
Stock-based compensation | 176.0 | 218.1 | 209.8 | ||||||||
Excess tax benefit on share-based awards | (77.5 | ) | (122.8 | ) | (132.4 | ) | |||||
Goodwill impairments | 87.2 | — | — | ||||||||
Other | 68.9 | 45.1 | 53.8 | ||||||||
Cash provided by changes in operating assets and liabilities: | |||||||||||
Accounts receivable | (96.8 | ) | (55.6 | ) | (82.8 | ) | |||||
Inventories | 14.0 | (67.5 | ) | (207.9 | ) | ||||||
Accounts payable | 46.4 | 46.9 | 137.7 | ||||||||
Stored value card liability | 130.8 | 180.4 | 170.3 | ||||||||
Other operating assets and liabilities | (4.7 | ) | 248.8 | 261.5 | |||||||
Net cash provided by operating activities | 4,174.3 | 4,575.1 | 3,749.1 | ||||||||
INVESTING ACTIVITIES: | |||||||||||
Purchases of investments | (674.4 | ) | (1,585.7 | ) | (567.4 | ) | |||||
Sales of investments | 1,054.5 | 680.7 | 600.6 | ||||||||
Maturities and calls of investments | 149.6 | 27.9 | 18.8 | ||||||||
Acquisitions, net of cash acquired | — | — | (284.3 | ) | |||||||
Additions to property, plant and equipment | (1,519.4 | ) | (1,440.3 | ) | (1,303.7 | ) | |||||
Net proceeds from sale of equity in joint ventures and certain retail operations | 85.4 | 69.6 | 8.9 | ||||||||
Other | 54.3 | 24.9 | 6.8 | ||||||||
Net cash used by investing activities | (850.0 | ) | (2,222.9 | ) | (1,520.3 | ) | |||||
FINANCING ACTIVITIES: | |||||||||||
Proceeds from issuance of long-term debt | 750.2 | 1,254.5 | 848.5 | ||||||||
Repayments of long-term debt | (400.0 | ) | — | (610.1 | ) | ||||||
Cash used for purchase of non-controlling interest | — | — | (360.8 | ) | |||||||
Proceeds from issuance of common stock | 150.8 | 160.7 | 191.8 | ||||||||
Excess tax benefit on share-based awards | 77.5 | 122.8 | 132.4 | ||||||||
Cash dividends paid | (1,450.4 | ) | (1,178.0 | ) | (928.6 | ) | |||||
Repurchase of common stock | (2,042.5 | ) | (1,995.6 | ) | (1,436.1 | ) | |||||
Minimum tax withholdings on share-based awards | (82.8 | ) | (106.0 | ) | (75.5 | ) | |||||
Other | (4.4 | ) | (8.4 | ) | (18.1 | ) | |||||
Net cash used by financing activities | (3,001.6 | ) | (1,750.0 | ) | (2,256.5 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | 10.8 | (3.5 | ) | (150.6 | ) | ||||||
Net increase/(decrease) in cash and cash equivalents | 333.5 | 598.7 | (178.3 | ) | |||||||
CASH AND CASH EQUIVALENTS: | |||||||||||
Beginning of period | 2,128.8 | 1,530.1 | 1,708.4 | ||||||||
End of period | $ | 2,462.3 | $ | 2,128.8 | $ | 1,530.1 | |||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||||||
Cash paid during the period for: | |||||||||||
Interest, net of capitalized interest | $ | 96.6 | $ | 74.7 | $ | 69.5 | |||||
Income taxes, net of refunds | $ | 1,389.1 | $ | 878.7 | $ | 1,072.2 |
Quarter Ended | |||||
($ in millions) | Oct 1, 2017 | Oct 2, 2016 | Change | ||
Revenues | $3,583.8 | $3,615.5 | (1)% | ||
Comparable Store Sales Growth(1) | 2% | 4% | |||
Change in Transactions | 0% | (1%) | |||
Change in Ticket | 2% | 6% | |||
(1) Includes only Starbucks company-operated stores open 13 months or longer. For fiscal 2016, comparable store sales percentages were calculated excluding the 53rd week. |
Net stores opened/(closed) and transferred during the period | |||||||||||||||||
Quarter Ended | Year Ended | Stores open as of | |||||||||||||||
Oct 1, 2017 | Oct 2, 2016 | Oct 1, 2017 | Oct 2, 2016 | Oct 1, 2017 | Oct 2, 2016 | ||||||||||||
(13 Weeks Ended) | (14 Weeks Ended) | (52 Weeks Ended) | (53 Weeks Ended) | ||||||||||||||
Americas: | |||||||||||||||||
Company-operated stores | 112 | 144 | 394 | 348 | 9,413 | 9,019 | |||||||||||
Licensed stores | 145 | 163 | 558 | 456 | 7,146 | 6,588 | |||||||||||
Total Americas | 257 | 307 | 952 | 804 | 16,559 | 15,607 | |||||||||||
China/Asia Pacific(1): | |||||||||||||||||
Company-operated stores | (28 | ) | 136 | 259 | 359 | 3,070 | 2,811 | ||||||||||
Licensed stores | 324 | 180 | 777 | 622 | 4,409 | 3,632 | |||||||||||
Total China/Asia Pacific | 296 | 316 | 1,036 | 981 | 7,479 | 6,443 | |||||||||||
EMEA(2): | |||||||||||||||||
Company-operated stores | (4 | ) | (18 | ) | (21 | ) | (214 | ) | 502 | 523 | |||||||
Licensed stores | 108 | 95 | 353 | 494 | 2,472 | 2,119 | |||||||||||
Total EMEA | 104 | 77 | 332 | 280 | 2,974 | 2,642 | |||||||||||
All Other Segments(3): | |||||||||||||||||
Company-operated stores | (54 | ) | (7 | ) | (68 | ) | (17 | ) | 290 | 358 | |||||||
Licensed stores | — | (3 | ) | 2 | (6 | ) | 37 | 35 | |||||||||
Total All Other Segments | (54 | ) | (10 | ) | (66 | ) | (23 | ) | 327 | 393 | |||||||
Total Company | 603 | 690 | 2,254 | 2,042 | 27,339 | 25,085 | |||||||||||
(1) China/Asia Pacific store data includes the transfer of 133 company-operated retail stores in Singapore to licensed stores as a result of the sale to Maxim's Caterers Limited in the fourth quarter of fiscal 2017. | |||||||||||||||||
(2) EMEA store data includes the transfer of 144 Germany company-operated retail stores to licensed stores as a result of the sale to AmRest Holdings SE in the third quarter of fiscal 2016. | |||||||||||||||||
(3) As of October 1, 2017, All Other Segments included 325 Teavana-branded stores, of which 288 stores were company-operated. |
Non-GAAP Exclusion | Rationale |
Sale of Singapore retail operations | Management excludes the net gain and associated transaction costs related to the sale of our Singapore 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. |
Greater China transaction costs | Management excludes transaction costs related to the East China acquisition and the Taiwan divestiture as these incremental costs are specific to the purchase and sale activities that do not contribute to a meaningful evaluation of the company’s future operating performance or comparisons to the company’s past operating performance. |
Restructuring and impairment charges | Management excludes restructuring and impairment charges related to strategic shifts in its Teavana and e-commerce business units as well as related to divesting certain lower margin businesses and assets, such as closure of certain company-operated stores. These expenses are anticipated to be completed within a finite period of time. Additionally, management excludes goodwill impairment charges related to its Switzerland retail business. These expenses do not contribute to a meaningful evaluation of the company’s future operating performance or comparisons to the company’s past operating performance. |
Starbucks Japan acquisition-related items | 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. Integration costs are expected to be concentrated in the first several years post-acquisition. Additionally, future amortization of the acquired intangible assets 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. |
The Starbucks Foundation donation | Management excludes the company's largest donation to a non-profit organization as this item does not contribute to a meaningful evaluation of the company's future operating performance or comparisons to the company's past 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. |
($ in millions) | Quarter Ended | ||||||||
Consolidated | Oct 1, 2017 | Oct 2, 2016 | Change | ||||||
(13 Weeks Ended) | (14 Weeks Ended) | ||||||||
Operating income, as reported (GAAP) | $ | 1,022.5 | $ | 1,227.5 | (16.7)% | ||||
Sale of Singapore retail operations (1) | 1.4 | — | |||||||
Greater China transaction costs | 3.9 | — | |||||||
Restructuring and impairment charges (2) | 44.6 | — | |||||||
Starbucks Japan acquisition-related items (3) | 15.9 | 16.7 | |||||||
The Starbucks Foundation donation | 50.0 | — | |||||||
Non-GAAP operating income | 1,138.3 | 1,244.2 | (8.5)% | ||||||
Impact of the extra week - Q4 FY16 | — | 137.3 | |||||||
Non-GAAP operating income | $ | 1,138.3 | $ | 1,106.9 | 2.8% | ||||
Operating margin, as reported (GAAP) | 17.9 | % | 21.5 | % | (360) bps | ||||
Sale of Singapore retail operations (1) | — | — | |||||||
Greater China transaction costs | 0.1 | — | |||||||
Restructuring and impairment charges (2) | 0.8 | — | |||||||
Starbucks Japan acquisition-related items (3) | 0.3 | 0.3 | |||||||
The Starbucks Foundation donation | 0.9 | — | |||||||
Non-GAAP operating margin | 20.0 | % | 21.8 | % | (180) bps | ||||
Impact of the extra week - Q4 FY16 | — | 0.9 | |||||||
Non-GAAP operating margin | 20.0 | % | 20.9 | % | (90) bps | ||||
Diluted net earnings per share, as reported (GAAP) | $ | 0.54 | $ | 0.54 | 0.0% | ||||
Sale of Singapore retail operations (1) | (0.06 | ) | — | ||||||
Greater China transaction costs | — | — | |||||||
Restructuring and impairment charges (2) | 0.03 | — | |||||||
Starbucks Japan acquisition-related items (3) | 0.01 | 0.01 | |||||||
Sale of Germany retail operations(4) | — | 0.02 | |||||||
The Starbucks Foundation donation | 0.03 | — | |||||||
Income tax effect on Non-GAAP adjustments (5) | (0.02 | ) | (0.01 | ) | |||||
Non-GAAP net earnings per share | $ | 0.55 | $ | 0.56 | (1.8)% | ||||
Impact of the extra week - Q4 FY16 | — | (0.09 | ) | ||||||
Income tax effect on the impact of the extra week - Q4 FY16 (5) | — | 0.03 | |||||||
Non-GAAP net earnings per share | $ | 0.55 | $ | 0.50 | 10.0% |
(1) | Transaction costs of $1.4 million associated with the transfer of Singapore company-operated retail stores to licensed stores are recorded within operating income; gain from the sale of $83.9 million is recorded within interest income and other, net. |
(2) | Represents restructuring and impairment charges of $33.3 million associated with our restructuring efforts. Inventory write-offs of $11.3 million related to these efforts were recorded within cost of sales including occupancy costs. |
(3) | Includes ongoing amortization expense of acquired intangible assets associated with the acquisition and post-acquisition integration costs, such as incremental information technology and compensation-related costs. |
(4) | Represents additional cost incurred associated with the sale of our Germany retail operations. |
(5) | Income tax effect on non-GAAP adjustments was determined based on the nature of the underlying items and their relevant jurisdictional tax rates. |
($ in millions) | Year Ended | ||||||||
Consolidated | FY17 | FY16 | |||||||
(52 Weeks Ended) | (53 Weeks Ended) | Change | |||||||
Operating income, as reported (GAAP) | $ | 4,134.7 | $ | 4,171.9 | (0.9)% | ||||
Sale of Singapore retail operations (1) | 1.4 | — | |||||||
Greater China transaction costs | 3.9 | — | |||||||
Restructuring and impairment charges (2) | 164.8 | — | |||||||
Starbucks Japan acquisition-related items (3) | 57.7 | 57.4 | |||||||
Sale of Germany retail operations(4) | — | 2.8 | |||||||
The Starbucks Foundation donation | 50.0 | — | |||||||
Non-GAAP operating income | 4,412.5 | 4,232.1 | 4.3% | ||||||
Impact of the extra week - Q4 FY16 | — | 137.3 | |||||||
Non-GAAP operating income | $ | 4,412.5 | $ | 4,094.8 | 7.8% | ||||
Operating margin, as reported (GAAP) | 18.5 | % | 19.6 | % | (110) bps | ||||
Sale of Singapore retail operations (1) | — | — | |||||||
Greater China transaction costs | — | — | |||||||
Restructuring and impairment charges (2) | 0.7 | — | |||||||
Starbucks Japan acquisition-related items (3) | 0.3 | 0.3 | |||||||
Sale of Germany retail operations(4) | — | — | |||||||
The Starbucks Foundation donation | 0.2 | — | |||||||
Non-GAAP operating margin | 19.7 | % | 19.9 | % | (20) bps | ||||
Impact of the extra week | — | 0.3 | |||||||
Non-GAAP operating margin | 19.7 | % | 19.6 | % | 10 bps | ||||
Diluted net earnings per share, as reported (GAAP) | $ | 1.97 | $ | 1.90 | 3.7% | ||||
Sale of Singapore retail operations (1) | (0.06 | ) | — | ||||||
Greater China transaction costs | — | — | |||||||
Restructuring and impairment charges (2) | 0.11 | — | |||||||
Starbucks Japan acquisition-related items (3) | 0.04 | 0.04 | |||||||
Sale of Germany retail operations(4) | (0.01 | ) | — | ||||||
The Starbucks Foundation donation | 0.03 | — | |||||||
Income tax effect on Non-GAAP adjustments(5) | (0.04 | ) | (0.01 | ) | |||||
Other tax matters (6) | — | (0.01 | ) | ||||||
Non-GAAP net earnings per share | $ | 2.06 | $ | 1.91 | 7.9% | ||||
Impact of the extra week - Q4 FY16 | — | (0.09 | ) | ||||||
Income tax effect on the impact of the extra week - Q4 FY16 (5) | — | 0.03 | |||||||
Non-GAAP net earnings per share | $ | 2.06 | $ | 1.85 | 11.4% |
(1) | Transaction costs of $1.4 million associated with the transfer of Singapore company-operated retail stores to licensed stores are recorded within operating income; gain from the sale of $83.9 million is recorded within interest income and other, net. |
(2) | Represents restructuring and impairment charges of $153.5 million associated with our restructuring efforts. Inventory write-offs of $11.3 million related to these efforts were recorded within cost of sales including occupancy costs. |
(3) | Includes ongoing amortization expense of acquired intangible assets associated with the acquisition and post-acquisition integration costs, such as incremental information technology and compensation-related costs. |
(4) | Costs incurred in Q3 FY16 associated with the sale of Germany retail operations are recorded within operating income. Gain and subsequent adjustment on sale of Germany retail operations is recorded within interest income and other, net. |
(5) | Income tax effect on non-GAAP adjustments was determined based on the nature of the underlying items and their relevant jurisdictional tax rates. |
(6) | Other tax matters include incremental benefit from additional domestic manufacturing deductions claimed in our U.S. consolidated tax returns for periods prior to the years presented. |
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