Starbucks Investor Relations

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Starbucks Coffee Company Outlines Core Strategies to Continue Delivering Long-Term Shareholder Value in Sixth Biennial Analyst Conference
Announcements Include Increased Store Growth Targets, International New Market Plans, New Entertainment Partnership and Expanded Product Innovation across All Businesses

SEATTLE, Oct 05, 2006 (BUSINESS WIRE) -- Starbucks (NASDAQ:SBUX) hosted its sixth Biennial Analyst Conference today in Seattle during which senior executives outlined the strategy and initiatives to support Starbucks long-term growth goals including an increase in its global store count target to 40,000 locations.

Early in the day, Jim Donald, Starbucks president and chief executive officer, announced the Company is raising its long-term store target to 40,000 Starbucks locations worldwide, an increase from Starbucks previous target of 30,000 stores. By more than tripling the Company's current store base, Starbucks expects to ultimately have approximately 20,000 locations in the U.S. and 20,000 locations internationally. The Company just completed its fiscal year 2006 opening more than 2,000 net new stores for the first time and expects to further accelerate new store development plans by adding approximately 2,400 net new locations in fiscal 2007.

"Our near-term and long-term store targets reflect our belief in the significant retail potential still unrealized in the U.S. and internationally," commented Donald. "With passionate partners and broad global demand for the Starbucks Experience, we will continue to bring convenient Starbucks locations delivering legendary service to our customers in existing and new markets around the world."

"We believe we are in the early stages of growth and we see tremendous long-term and global growth opportunity ahead for Starbucks," stated Howard Schultz, chairman. "With our ongoing focus on innovation and execution, we have the experience to realize the full potential of the brand and achieve sustainable growth and shareholder value well into the future."

Financial Highlights

Since the Starbucks Analyst Conference in 2004, the Company's financial accomplishments include annual net revenue growth in excess of 20 percent, operating margin improvement and two-year compound annual earnings per share growth of 24 percent, based on its previously stated fiscal 2006 target of $0.72 to $0.73. Starbucks also expects its return on equity to reach approximately 25 percent in 2006. In addition, Starbucks was named one of the "World's Most Respected Companies," by Financial Times and continued to exceed its purchasing goals under C.A.F.E. Practices, Starbucks sustainable coffee purchasing guidelines.

"The strategies and initiatives outlined at today's conference support Starbucks continued commitment to global growth goals which include annual net revenue growth of approximately 20 percent and earnings per share growth in the range of 20 percent to 25 percent for the next three to five years," stated Michael Casey, chief financial officer.

Conference Recap

The Company's senior leadership team spoke on areas related to growth and innovation for Starbucks.

Growth Highlights

-- Starbucks continues to target strong financial performance for fiscal 2007 including opening 2,400 net new stores on a global basis, total revenue growth of approximately 20 percent and earnings per share in the range of $0.87 to $0.89.

-- Through September 2006 Starbucks has posted 177 consecutive months of positive comparable store sales growth and 15 consecutive years with growth of five percent or greater.

-- Starbucks customer base remains a key strength growing in number, diversity and frequency of visit, and 87 percent of the Company's customers are extremely or very likely to recommend Starbucks to others.

-- Starbucks has demonstrated an ability to create new consumer demand at a rate in excess of the national coffee market by accelerating profitable store growth in new U.S. markets.

-- Average annual sales for Company-operated U.S. stores are in excess of $1 million and growing.

-- Starbucks is increasing equity ownership in rapidly growing International markets -- currently 100 percent ownership in 10 countries and 50 percent ownership in six countries.

-- By the end of calendar 2007, the Company plans to open its first stores in four new International markets including Brazil, Russia, India and Egypt.

Innovation Highlights

-- Starbucks launched 22 innovative new beverages in the past two years including the most popular Pumpkin Spice Latte, Cinnamon Dolce Latte, Green Tea Frappuccino(R) blended creme, and Banana Frappuccino(R) blended beverage as well as two Frappuccino(R) juice blends.

-- Premium and proprietary food offerings are becoming a key component of the Starbucks Experience and an important driver of growth.

-- The Company announced plans for a broad roll-out to expand warm breakfast items as a core offering in approximately 6,500 U.S. Company-operated stores by the end of fiscal 2008.

-- Starbucks and Apple announced the launch of a Starbucks Entertainment Area on iTunes to feature new and exclusive Hear Music releases in addition to critically acclaimed catalog titles.

-- Innovation goes beyond the core retail business as the Company unveiled a heated-on-demand vending initiative and announced the first international expansion of its Kraft relationship to distribute Starbucks coffee into supermarkets in Canada and the U.K.

Monthly Financial Releases

During the conference, Starbucks also announced that it will no longer issue monthly financial releases as of the start of its fiscal year 2007. The Company's September FY 2006 release issued on Oct. 4, 2006 was the last monthly release. Starbucks monthly financial releases contained revenue, comparable store sales growth and store count metrics.

"We have decided to stop issuing monthly revenue releases because we believe that providing the information on a monthly basis encourages a short-term focus and provokes volatility in the Company's stock that is not representative of Starbucks overall and longer-term performance," noted Michael Casey, chief financial officer. Casey added, "We remain confident in our fiscal 2007 comparable store sales growth target range of three percent to seven percent, and we will continue to report results on a quarterly basis within the Company's quarterly financial press releases."

Starbucks Coffee Company

Through the dedication of our passionate partners (employees), Starbucks Coffee Company has transformed the way people in 37 countries enjoy their coffee, one cup at a time. Starbucks is the premier purveyor of the finest coffee in the world, with more than 12,000 retail locations in North America, Latin America, Europe, the Middle East and the Pacific Rim. The Company is committed to offering its customers the highest quality coffee and human connection through the Starbucks Experience, while striving to improve the social, environmental and economic well being of its partners, coffee farmers, countries of coffee origin, and the communities which it serves. Through Ethos Water, Starbucks demonstrates its long history of integrating a social conscience into all aspects of its business. The Company surprises and delights its customers by producing and selling bottled Starbucks Frappuccino(R) coffee drinks, Starbucks DoubleShot(R) espresso drinks and Starbucks(R) superpremium ice creams through its joint venture partnerships, and Starbucks(TM) Coffee and Cream Liqueurs through a marketing and distribution agreement, in other convenient locations outside its retail operations. The Company's brand portfolio includes superpremium Tazo(R) teas, Starbucks Hear Music(TM) compact discs, Seattle's Best Coffee and Torrefazione Italia. These brands' unique and innovative personalities allow Starbucks to appeal to a broad consumer base.

This release includes the following forward-looking statements: anticipated store openings, trends in or expectations regarding the Company's net revenue, comparable store sales, return on equity and earnings per share results, and the number of stores to offer warming. These forward-looking statements are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Actual future results and trends may differ materially depending on a variety of factors including but not limited to, coffee, dairy and other raw material prices and availability, successful execution of internal performance and expansion plans, fluctuations in U.S. and international economies and currencies, the impact of initiatives by competitors, the effect of legal proceedings, and other risks detailed in the Company's 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 Oct. 2, 2005. The Company assumes no obligation to update any of these forward-looking statements.

(C) 2006 Starbucks Coffee Company. All rights reserved.

SOURCE: Starbucks Coffee Company

Starbucks Coffee Company
JoAnn DeGrande, Investor Relations, 206-318-7118
investorrelations@starbucks.com
or
Valerie O'Neil, Media, 206-318-7100
voneil@starbucks.com
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