Net Revenues Up 6% to a Record $6 Billion; Global and U.S. Comp Store
Sales Up 2%
China Net Revenues Up 30%; China Comps Up 6%
Q1 GAAP EPS of $1.57; Non-GAAP EPS of $0.65 Includes $0.07 Benefit from
U.S. Tax Law Change
Company Adds 1.4 Million Active Starbucks Rewards™ Members in the U.S.
to 14.2 Million, Up 11% Year-Over-Year
SEATTLE--(BUSINESS WIRE)--
Starbucks Corporation (NASDAQ:SBUX) today reported financial results for
its 13-week fiscal first quarter ended December 31, 2017. GAAP results
in fiscal 2018 and fiscal 2017 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.
Q1 Fiscal 2018 Highlights
-
Global comparable store sales increased 2%, driven by a 2%
increase in average ticket
-
Americas and U.S. comp store sales increased 2%, driven by
a 2% increase in average ticket
-
CAP comp store sales increased 1%, driven by a 1% increase
in transactions
-
China comp store sales increased 6%, driven by a 6%
increase in transactions
-
Consolidated net revenues of $6.1 billion grew 6% versus the prior year
-
GAAP operating margin of 18.4% declined 140 basis points compared to
the prior year; non-GAAP operating margin of 19.2% declined 80 basis
points
-
GAAP Earnings Per Share of $1.57 included $0.79 of net gain related to
the acquisition of East China and a $0.13 net benefit from other items
which are excluded from non-GAAP results
-
Non-GAAP EPS grew 25% to $0.65 per share and included a $0.07
benefit from changes in the U.S. tax law
-
Active membership in Starbucks Rewards in the U.S. grew 11% versus the
prior year to 14.2 million, with member spend representing 37% of U.S.
company-operated sales, and Mobile Order and Pay representing 11% of
U.S. company-operated transactions
-
Starbucks Card reached 42% of U.S. and Canada company-operated
transactions
-
The company opened 700 net new stores globally, bringing total store
count to 28,039 across 76 markets
-
The company returned a record $2 billion to shareholders in the
quarter through a combination of dividends and share repurchases
“Starbucks reported another quarter of record financial results in Q1 of
fiscal 2018, with consolidated revenues up 6% over last year - up 7%
excluding 1% for the impact of streamlining activities in the quarter.
China grew revenues 30% in Q1, with the strategic acquisition of East
China positioning us to accelerate our growth in the key China market,”
said Kevin Johnson, president and ceo. “Today, Starbucks has two
powerful, independent but complementary engines driving our global
growth, the U.S. and China. Our work to streamline the company is
sharpening our focus on our core operating priorities.”
“Starbucks delivered solid revenue and profit growth and our first ever
$6 billion revenue quarter in Q1,” said Scott Maw, cfo. “We are
laser-focused on accelerating growth in China and driving improvement
across the U.S. business as we move into and through the back half of
the year, and remain committed to delivering on the long-term targets we
announced last quarter.”
|
First Quarter Fiscal 2018 Summary
|
|
|
|
|
|
Quarter Ended Dec 31, 2017
|
Comparable Store Sales(1)
|
|
Sales Growth
|
|
Change in Transactions
|
|
Change in Ticket
|
Consolidated
|
|
2%
|
|
0%
|
|
2%
|
Americas
|
|
2%
|
|
0%
|
|
2%
|
CAP
|
|
1%
|
|
1%
|
|
0%
|
EMEA(2)
|
|
(1)%
|
|
(4)%
|
|
3%
|
(1) Includes only Starbucks company-operated stores open
13 months or longer. Comparable store sales exclude the effect of
fluctuations in foreign currency exchange rates.
|
(2) Company-operated stores represent 16% of the EMEA
segment store portfolio as of December 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
Operating Results
|
|
|
|
Quarter Ended
|
|
|
|
Change
|
($ in millions, except per share amounts)
|
|
|
|
Dec 31, 2017
|
|
|
|
Jan 1, 2017
|
|
|
|
Net New Stores (1)
|
|
|
|
700
|
|
|
|
649
|
|
|
|
51
|
Revenues
|
|
|
|
$6,073.7
|
|
|
|
$5,732.9
|
|
|
|
6%
|
Operating Income
|
|
|
|
$1,116.1
|
|
|
|
$1,132.6
|
|
|
|
(1)%
|
Operating Margin
|
|
|
|
18.4%
|
|
|
|
19.8%
|
|
|
|
(140) bps
|
EPS
|
|
|
|
$1.57
|
|
|
|
$0.51
|
|
|
|
208%
|
(1) Q1 2018 net new stores include the closure of 2
Teavana-branded stores.
|
|
Consolidated net revenues grew 6% over Q1 FY17 to $6.1 billion in Q1
FY18, primarily driven by incremental revenues from the opening of 2,305
net new stores over the past 12 months and a 2% growth in global
comparable store sales.
Consolidated operating income declined 1% to $1,116.1 million in Q1
FY18, down from $1,132.6 million in Q1 FY17. Consolidated operating
margin declined 140 basis points to 18.4%, primarily due to food-related
mix shift in the Americas, as well as restructuring costs related to the
company's ongoing efforts to streamline business operations.
|
Q1 Americas Segment Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
Change
|
($ in millions)
|
|
|
|
Dec 31, 2017
|
|
|
|
Jan 1, 2017
|
|
|
|
Net New Stores
|
|
|
|
278
|
|
|
|
251
|
|
|
|
27
|
Revenues
|
|
|
|
$4,265.8
|
|
|
|
$3,991.4
|
|
|
|
7%
|
Operating Income
|
|
|
|
$979.4
|
|
|
|
$958.5
|
|
|
|
2%
|
Operating Margin
|
|
|
|
23.0%
|
|
|
|
24.0%
|
|
|
|
(100) bps
|
|
Net revenues for the Americas segment grew 7% over Q1 FY17 to $4.3
billion in Q1 FY18, primarily driven by incremental revenues from 979
net new store openings over the past 12 months and a 2% growth in
comparable store sales.
Operating income of $979.4 million in Q1 FY18 grew 2% versus $958.5
million in Q1 FY17. Operating margin of 23.0% declined 100 basis points
primarily due to food-related mix shift, partially offset by sales
leverage.
|
Q1 China/Asia Pacific Segment Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
Change
|
($ in millions)
|
|
|
|
Dec 31, 2017
|
|
|
|
Jan 1, 2017
|
|
|
|
Net New Stores
|
|
|
|
300
|
|
|
|
303
|
|
|
|
(3)
|
Revenues
|
|
|
|
$843.7
|
|
|
|
$770.8
|
|
|
|
9%
|
Operating Income
|
|
|
|
$196.8
|
|
|
|
$163.4
|
|
|
|
20%
|
Operating Margin
|
|
|
|
23.3%
|
|
|
|
21.2%
|
|
|
|
210 bps
|
|
Net revenues for the China/Asia Pacific segment grew 9% over Q1 FY17 to
$843.7 million in Q1 FY18, primarily driven by incremental revenues from
1,033 net new store openings over the past 12 months and a 1% increase
in comparable store sales. The increase was partially offset by the
absence of revenue related to the sale of our Singapore retail
operations to a licensed partner in Q4 FY17 as part of the company's
ongoing efforts to streamline business operations and retail geographies.
Q1 FY18 operating income of $196.8 million grew 20% over Q1 FY17
operating income of $163.4 million. Operating margin expanded 210 basis
points to 23.3%, primarily due to sales leverage and favorable foreign
currency translation.
|
Q1 EMEA Segment Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
Change
|
($ in millions)
|
|
|
|
Dec 31, 2017
|
|
|
|
Jan 1, 2017
|
|
|
|
Net New Stores
|
|
|
|
123
|
|
|
|
95
|
|
|
|
28
|
Revenues
|
|
|
|
$283.9
|
|
|
|
$262.4
|
|
|
|
8%
|
Operating Income
|
|
|
|
$39.1
|
|
|
|
$44.1
|
|
|
|
(11)%
|
Operating Margin
|
|
|
|
13.8%
|
|
|
|
16.8%
|
|
|
|
(300) bps
|
|
Net revenues for the EMEA segment grew 8% over Q1 FY17 to $283.9 million
in Q1 FY18, primarily driven by favorable foreign currency translation
and incremental revenues from the opening of 365 net new licensed stores
over the past 12 months.
Operating income of $39.1 million in Q1 FY18 declined 11% versus
operating income of $44.1 million in Q1 FY17. Operating margin declined
300 basis points to 13.8% primarily driven by sales deleverage in
company-operated stores.
|
Q1 Channel Development Segment Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
Change
|
($ in millions)
|
|
|
|
Dec 31, 2017
|
|
|
|
Jan 1, 2017
|
|
|
|
Revenues
|
|
|
|
$560.3
|
|
|
|
$553.7
|
|
|
|
1%
|
Operating Income
|
|
|
|
$243.3
|
|
|
|
$242.9
|
|
|
|
—%
|
Operating Margin
|
|
|
|
43.4%
|
|
|
|
43.9%
|
|
|
|
(50) bps
|
|
Net revenues for the Channel Development segment of $560.3 million in Q1
FY18 increased 1% versus the prior year quarter primarily driven by our
foodservice, international and packaged coffee channels. This increase
was partially offset by competitive pricing on single-serve items and
the absence of revenue from the sale of our Tazo tea brand late in Q1
FY18.
Operating income of $243.3 million in Q1 FY18 was flat compared to Q1
FY17. Operating margin declined 50 basis points to 43.4% primarily
driven by deleverage on cost of sales and lower income from our North
American Coffee Partnership joint venture, partially offset by lower
marketing expense.
|
Q1 All Other Segments Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
Change
|
($ in millions)
|
|
|
|
Dec 31, 2017
|
|
|
|
Jan 1, 2017
|
|
|
|
Net New Stores
|
|
|
|
(1)
|
|
|
|
—
|
|
|
|
(1)
|
Revenues
|
|
|
|
$120.0
|
|
|
|
$154.6
|
|
|
|
(22)%
|
Operating Income/(Loss)
|
|
|
|
$(30.0)
|
|
|
|
$9.6
|
|
|
|
nm
|
|
All Other Segments primarily includes Teavana-branded stores, Seattle’s
Best Coffee®, and Starbucks Reserve™ and Roastery businesses.
The operating loss in Q1 FY18 was primarily due to restructuring costs
related to our strategy to close Teavana retail stores and focus on
Teavana tea within Starbucks stores.
Fiscal 2018 Targets
The company reiterates the following full year FY18 targets, with the
exception of earnings per share which has been modified for the expected
net impact of changes in the U.S. tax law and related reinvestments.
Year-over-year growth is based on prior year non-GAAP results. Please
refer to the reconciliation of GAAP measures to non-GAAP measures at the
end of this release.
-
Continue to expect approximately 2,300 net new stores globally
-
Continue to expect 3-5% comparable store sales growth globally, expect
to be near the low end of the range for the year
-
Continue to expect consolidated revenue growth in the high single
digits consistent with long term guidance; when including
approximately 2% of net favorability related to the acquisition of
East China and other streamlining activities, we expect consolidated
revenue growth of approximately 9-11% in FY18
-
Now expect GAAP EPS in the range of $3.32 to $3.36 and non-GAAP EPS in
the range of $2.48 to $2.53, consistent with guidance issued last
quarter but updated to include the expected net impact of the new U.S.
tax law's federal statutory tax rate and related reinvestments
The company will provide select quarterly and segment information
regarding its business outlook during its regularly scheduled quarterly
earnings conference calls; this information will also be available
following the call on the company's website at http://investor.starbucks.com.
Company Updates
-
On December 31, Starbucks completed the previously announced
acquisition of the remaining 50% share of its East China business from
long-term joint venture partners, Uni-President ("UPEC") and President
Chain Store Corporation ("PCSC"). As a result of this acquisition,
Starbucks has assumed 100% ownership of over 1,400 Starbucks stores in
Shanghai and in the Jiangsu and Zhejiang Provinces, bringing the total
number of company-owned stores in China to over 3,100 at the time of
closing. Also on December 31, UPEC and PCSC acquired Starbucks 50%
interest in President Starbucks Coffee Taiwan Limited and assumed 100%
ownership of Starbucks operations in Taiwan.
-
The company completed its previously announced sale of the Tazo Tea
brand to Unilever on December 11. Starbucks will instead drive a
single tea brand strategy and focus with its super premium tea brand,
Teavana, by continuing to invest in the growth, innovation and
development of the Teavana brand of teas in its Starbucks stores and
in channels outside its stores.
-
Last week, the company was named 5th in Fortune’s World’s Most Admired
Companies survey, and placed in the top spot for the food services
industry.
-
The company opened its Starbucks Reserve™ Roastery in Shanghai, China,
on December 5, now the largest Starbucks store in the world. The
Roastery features onsite baking by Italian food purveyor Rocco Princi
for the first time ever in China and features onsite roasting and
brewing of Starbucks Reserve coffees. Starbucks also brought Princi
Bakery to the U.S. inside its Seattle Roastery in November 2017.
-
Together with its local business partner, Baristas del Caribe, LLC,
Starbucks opened its first store in Puerto Rico since Hurricane Maria
struck the island in September 2017. The two companies and their
namesake nonprofit foundations have also collectively contributed more
than $1.3 million toward emergency relief and long-term rebuilding
efforts across the region.
-
In November 2017, the company opened its first store in Jamaica and
entered its 76th market globally, marking a historic milestone for the
global coffee company’s Caribbean operations and its storied history
of sourcing high-quality coffee from the region going back more than
four decades.
-
The company repurchased 28.5 million shares of common stock in Q1
FY18; approximately 52 million shares remain available for purchase
under current authorizations.
-
The Board of Directors declared a cash dividend of $0.30 per share,
payable on February 23, 2018, to shareholders of record as of February
8, 2018.
Conference Calls
Starbucks will hold a conference call today at 2:00 p.m. Pacific Time,
which will be hosted by Kevin Johnson, president and ceo, and Scott Maw,
cfo. The call will be webcast and can be accessed at http://investor.starbucks.com.
A replay of the webcast will be available until end of day Saturday,
February 24, 2018.
In addition, Starbucks will hold a supplemental conference call to
provide a market update on China as well as to address high-level
modeling-related questions on Wednesday, January 31, 2018, at 2:00 p.m.
Pacific Time. A press release announcing the webcast will be provided in
advance.
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, the impact of our food, beverage and digital innovation,
operational improvements, our two significant profit engines driving our
global returns, our focus on accelerating growth in China, driving
improvement across the U.S. business, statements regarding the estimated
impact of the changes in U.S. tax law, net new stores, revenues,
earnings per share, operating margins, comparable store sales, our
fiscal 2018 and long-term financial targets, and our strategic,
operational, and digital moves, including the purchase of the remaining
50% ownership of the East China market, the closure of Teavana stores
and other streamlining activities. 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, adulteration,
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 recently completed purchase of the remaining 50%
ownership of the East China market and the closure of Teavana stores,
the acceptance of the company’s products by our customers, our ability
to obtain financing on acceptable terms, the impact of competition,
coffee, dairy and other raw materials prices and availability, the
effect of legal proceedings, the effects of the U.S. Tax Cuts and Jobs
Act and related guidance and regulations that may be implemented, 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 1, 2017.
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
|
|
|
Dec 31, 2017
|
|
Jan 1, 2017
|
|
% Change
|
|
Dec 31, 2017
|
|
Jan 1, 2017
|
|
|
|
|
|
|
|
|
|
As a % of total net revenues
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
Company-operated stores
|
|
$
|
4,741.8
|
|
|
$
|
4,469.3
|
|
|
6.1
|
%
|
|
78.1
|
%
|
|
78.0
|
%
|
Licensed stores
|
|
682.4
|
|
|
602.4
|
|
|
13.3
|
|
|
11.2
|
|
|
10.5
|
|
CPG, foodservice and other
|
|
649.5
|
|
|
661.2
|
|
|
(1.8
|
)
|
|
10.7
|
|
|
11.5
|
|
Total net revenues
|
|
6,073.7
|
|
|
5,732.9
|
|
|
5.9
|
|
|
100.0
|
|
|
100.0
|
|
Cost of sales including occupancy costs(1)
|
|
2,502.9
|
|
|
2,295.0
|
|
|
9.1
|
|
|
41.2
|
|
|
40.0
|
|
Store operating expenses
|
|
1,737.0
|
|
|
1,638.2
|
|
|
6.0
|
|
|
28.6
|
|
|
28.6
|
|
Other operating expenses
|
|
141.6
|
|
|
145.4
|
|
|
(2.6
|
)
|
|
2.3
|
|
|
2.5
|
|
Depreciation and amortization expenses
|
|
258.8
|
|
|
249.7
|
|
|
3.6
|
|
|
4.3
|
|
|
4.4
|
|
General and administrative expenses
|
|
379.1
|
|
|
356.4
|
|
|
6.4
|
|
|
6.2
|
|
|
6.2
|
|
Restructuring expenses(2)
|
|
27.6
|
|
|
—
|
|
|
nm
|
|
0.5
|
|
|
—
|
|
Total operating expenses
|
|
5,047.0
|
|
|
4,684.7
|
|
|
7.7
|
|
|
83.1
|
|
|
81.7
|
|
Income from equity investees
|
|
89.4
|
|
|
84.4
|
|
|
5.9
|
|
|
1.5
|
|
|
1.5
|
|
Operating income
|
|
1,116.1
|
|
|
1,132.6
|
|
|
(1.5
|
)
|
|
18.4
|
|
|
19.8
|
|
Gain resulting from acquisition of joint venture(3)
|
|
1,326.3
|
|
|
—
|
|
|
nm
|
|
21.8
|
|
|
—
|
|
Gains resulting from divestiture of certain operations (4)
|
|
501.2
|
|
|
—
|
|
|
nm
|
|
8.3
|
|
|
—
|
|
Interest income and other, net
|
|
88.2
|
|
|
24.1
|
|
|
266.0
|
|
|
1.5
|
|
|
0.4
|
|
Interest expense
|
|
(25.9
|
)
|
|
(23.8
|
)
|
|
8.8
|
|
|
(0.4
|
)
|
|
(0.4
|
)
|
Earnings before income taxes
|
|
3,005.9
|
|
|
1,132.9
|
|
|
165.3
|
|
|
49.5
|
|
|
19.8
|
|
Income tax expense
|
|
755.8
|
|
|
381.4
|
|
|
98.2
|
|
|
12.4
|
|
|
6.7
|
|
Net earnings including noncontrolling interests
|
|
2,250.1
|
|
|
751.5
|
|
|
199.4
|
|
|
37.0
|
|
|
13.1
|
|
Net earnings/(loss) attributable to noncontrolling interests
|
|
(0.1
|
)
|
|
(0.3
|
)
|
|
(66.7
|
)
|
|
—
|
|
|
—
|
|
Net earnings attributable to Starbucks
|
|
$
|
2,250.2
|
|
|
$
|
751.8
|
|
|
199.3
|
|
|
37.0
|
%
|
|
13.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per common share - diluted
|
|
$
|
1.57
|
|
|
$
|
0.51
|
|
|
207.8
|
%
|
|
|
|
|
Weighted avg. shares outstanding - diluted
|
|
1,434.6
|
|
|
1,470.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share
|
|
$
|
0.30
|
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Ratios:
|
|
|
|
|
|
|
|
|
|
|
Store operating expenses as a % of company-operated store revenues
|
|
|
|
|
|
|
|
36.6
|
%
|
|
36.7
|
%
|
Other operating expenses as a % of non-company-operated store
revenues
|
|
|
|
|
|
|
|
10.6
|
%
|
|
11.5
|
%
|
Effective tax rate including noncontrolling interests
|
|
|
|
|
|
|
|
25.1
|
%
|
|
33.7
|
%
|
|
(1) As a result of our restructuring efforts, $4.4
million was recorded in cost of sales including occupancy costs
related to inventory write-offs.
|
|
(2) Primarily includes restructuring expenses of $25.9
million associated with our Teavana-branded stores and $1.6
million related to our Starbucks North American retail businesses.
|
|
(3) Represents the gain resulting from the acquisition
of our East China joint venture.
|
|
(4) Primarily includes the gains on the sales of our
Tazo brand and our Taiwan joint venture for $347.9 million and
$153.0 million, respectively.
|
|
Segment Results (in millions)
|
Americas
|
|
|
|
|
|
|
|
Dec 31, 2017
|
|
Jan 1, 2017
|
|
% Change
|
|
Dec 31, 2017
|
|
Jan 1, 2017
|
|
Quarter Ended
|
|
|
|
|
|
|
|
As a % of Americas total net revenues
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
Company-operated stores
|
|
$
|
3,787.0
|
|
|
$
|
3,561.0
|
|
|
6.3
|
%
|
|
88.8
|
%
|
|
89.2
|
%
|
Licensed stores
|
|
466.7
|
|
|
421.3
|
|
|
10.8
|
|
|
10.9
|
|
|
10.6
|
|
Foodservice and other
|
|
12.1
|
|
|
9.1
|
|
|
33.0
|
|
|
0.3
|
|
|
0.2
|
|
Total net revenues
|
|
4,265.8
|
|
|
3,991.4
|
|
|
6.9
|
|
|
100.0
|
|
|
100.0
|
|
Cost of sales including occupancy costs
|
|
1,603.8
|
|
|
1,440.3
|
|
|
11.4
|
|
|
37.6
|
|
|
36.1
|
|
Store operating expenses
|
|
1,433.4
|
|
|
1,356.3
|
|
|
5.7
|
|
|
33.6
|
|
|
34.0
|
|
Other operating expenses
|
|
37.5
|
|
|
31.9
|
|
|
17.6
|
|
|
0.9
|
|
|
0.8
|
|
Depreciation and amortization expenses
|
|
158.0
|
|
|
152.4
|
|
|
3.7
|
|
|
3.7
|
|
|
3.8
|
|
General and administrative expenses
|
|
52.1
|
|
|
52.0
|
|
|
0.2
|
|
|
1.2
|
|
|
1.3
|
|
Restructuring expenses(1)
|
|
1.6
|
|
|
—
|
|
|
nm
|
|
—
|
|
|
—
|
|
Total operating expenses
|
|
3,286.4
|
|
|
3,032.9
|
|
|
8.4
|
|
|
77.0
|
|
|
76.0
|
|
Operating income
|
|
$
|
979.4
|
|
|
$
|
958.5
|
|
|
2.2
|
%
|
|
23.0
|
%
|
|
24.0
|
%
|
Supplemental Ratios:
|
|
|
|
|
|
|
|
|
|
|
Store operating expenses as a % of company-operated store revenues
|
|
|
|
|
|
|
|
37.9
|
%
|
|
38.1
|
%
|
Other operating expenses as a % of non-company-operated store
revenues
|
|
|
|
|
|
|
|
7.8
|
%
|
|
7.4
|
%
|
|
(1) Represents restructuring expenses of $1.6 million
related to our Starbucks North American retail business.
|
|
|
China/Asia Pacific (CAP)
|
|
|
|
|
|
|
|
Dec 31, 2017
|
|
Jan 1, 2017
|
|
% Change
|
|
Dec 31, 2017
|
|
Jan 1, 2017
|
|
Quarter Ended
|
|
|
|
|
|
|
|
As a % of CAP total net revenues
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
Company-operated stores
|
|
$
|
742.5
|
|
|
$
|
691.5
|
|
|
7.4
|
%
|
|
88.0
|
%
|
|
89.7
|
%
|
Licensed stores
|
|
98.4
|
|
|
78.0
|
|
|
26.2
|
|
|
11.7
|
|
|
10.1
|
|
Foodservice and other
|
|
2.8
|
|
|
1.3
|
|
|
115.4
|
|
|
0.3
|
|
|
0.2
|
|
Total net revenues
|
|
843.7
|
|
|
770.8
|
|
|
9.5
|
|
|
100.0
|
|
|
100.0
|
|
Cost of sales including occupancy costs
|
|
371.7
|
|
|
337.3
|
|
|
10.2
|
|
|
44.1
|
|
|
43.8
|
|
Store operating expenses
|
|
218.6
|
|
|
204.3
|
|
|
7.0
|
|
|
25.9
|
|
|
26.5
|
|
Other operating expenses
|
|
21.2
|
|
|
19.1
|
|
|
11.0
|
|
|
2.5
|
|
|
2.5
|
|
Depreciation and amortization expenses
|
|
53.7
|
|
|
48.6
|
|
|
10.5
|
|
|
6.4
|
|
|
6.3
|
|
General and administrative expenses
|
|
32.4
|
|
|
40.6
|
|
|
(20.2
|
)
|
|
3.8
|
|
|
5.3
|
|
Total operating expenses
|
|
697.6
|
|
|
649.9
|
|
|
7.3
|
|
|
82.7
|
|
|
84.3
|
|
Income from equity investees
|
|
50.7
|
|
|
42.5
|
|
|
19.3
|
|
|
6.0
|
|
|
5.5
|
|
Operating income
|
|
$
|
196.8
|
|
|
$
|
163.4
|
|
|
20.4
|
%
|
|
23.3
|
%
|
|
21.2
|
%
|
Supplemental Ratios:
|
|
|
|
|
|
|
|
|
|
|
Store operating expenses as a % of company-operated store revenues
|
|
|
|
|
|
|
|
29.4
|
%
|
|
29.5
|
%
|
Other operating expenses as a % of non-company-operated store
revenues
|
|
|
|
|
|
|
|
20.9
|
%
|
|
24.1
|
%
|
|
|
EMEA
|
|
|
|
|
|
|
|
Dec 31, 2017
|
|
Jan 1, 2017
|
|
% Change
|
|
Dec 31, 2017
|
|
Jan 1, 2017
|
|
Quarter Ended
|
|
|
|
|
|
|
|
As a % of EMEA total net revenues
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
Company-operated stores
|
|
$
|
151.6
|
|
|
$
|
145.9
|
|
|
3.9
|
%
|
|
53.4
|
%
|
|
55.6
|
%
|
Licensed stores
|
|
116.2
|
|
|
102.2
|
|
|
13.7
|
|
|
40.9
|
|
|
38.9
|
|
Foodservice
|
|
16.1
|
|
|
14.3
|
|
|
12.6
|
|
|
5.7
|
|
|
5.4
|
|
Total net revenues
|
|
283.9
|
|
|
262.4
|
|
|
8.2
|
|
|
100.0
|
|
|
100.0
|
|
Cost of sales including occupancy costs
|
|
152.1
|
|
|
136.1
|
|
|
11.8
|
|
|
53.6
|
|
|
51.9
|
|
Store operating expenses
|
|
54.7
|
|
|
46.9
|
|
|
16.6
|
|
|
19.3
|
|
|
17.9
|
|
Other operating expenses
|
|
16.3
|
|
|
16.0
|
|
|
1.9
|
|
|
5.7
|
|
|
6.1
|
|
Depreciation and amortization expenses
|
|
7.7
|
|
|
7.6
|
|
|
1.3
|
|
|
2.7
|
|
|
2.9
|
|
General and administrative expenses
|
|
14.0
|
|
|
11.7
|
|
|
19.7
|
|
|
4.9
|
|
|
4.5
|
|
Total operating expenses
|
|
244.8
|
|
|
218.3
|
|
|
12.1
|
|
|
86.2
|
|
|
83.2
|
|
Operating income
|
|
$
|
39.1
|
|
|
$
|
44.1
|
|
|
(11.3
|
)%
|
|
13.8
|
%
|
|
16.8
|
%
|
Supplemental Ratios:
|
|
|
|
|
|
|
|
|
|
|
Store operating expenses as a % of company-operated store revenues
|
|
|
|
|
|
|
|
36.1
|
%
|
|
32.1
|
%
|
Other operating expenses as a % of non-company-operated store
revenues
|
|
|
|
|
|
|
|
12.3
|
%
|
|
13.7
|
%
|
|
|
Channel Development
|
|
|
|
|
|
|
|
Dec 31, 2017
|
|
Jan 1, 2017
|
|
% Change
|
|
Dec 31, 2017
|
|
Jan 1, 2017
|
|
Quarter Ended
|
|
|
|
|
|
|
|
As a % of Channel Development total
net revenues
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
CPG
|
|
$
|
435.8
|
|
|
$
|
437.1
|
|
|
(0.3
|
)%
|
|
77.8
|
%
|
|
78.9
|
%
|
Foodservice
|
|
124.5
|
|
|
116.6
|
|
|
6.8
|
|
|
22.2
|
|
|
21.1
|
|
Total net revenues
|
|
560.3
|
|
|
553.7
|
|
|
1.2
|
|
|
100.0
|
|
|
100.0
|
|
Cost of sales
|
|
296.3
|
|
|
288.5
|
|
|
2.7
|
|
|
52.9
|
|
|
52.1
|
|
Other operating expenses
|
|
55.6
|
|
|
60.4
|
|
|
(7.9
|
)
|
|
9.9
|
|
|
10.9
|
|
Depreciation and amortization expenses
|
|
0.5
|
|
|
0.6
|
|
|
(16.7
|
)
|
|
0.1
|
|
|
0.1
|
|
General and administrative expenses
|
|
3.3
|
|
|
3.2
|
|
|
3.1
|
|
|
0.6
|
|
|
0.6
|
|
Total operating expenses
|
|
355.7
|
|
|
352.7
|
|
|
0.9
|
|
|
63.5
|
|
|
63.7
|
|
Income from equity investees
|
|
38.7
|
|
|
41.9
|
|
|
(7.6
|
)
|
|
6.9
|
|
|
7.6
|
|
Operating income
|
|
$
|
243.3
|
|
|
$
|
242.9
|
|
|
0.2
|
%
|
|
43.4
|
%
|
|
43.9
|
%
|
|
|
All Other Segments
|
|
|
|
|
|
Dec 31, 2017
|
|
Jan 1, 2017
|
|
% Change
|
Quarter Ended
|
|
|
|
Net revenues:
|
|
|
|
|
|
|
Company-operated stores
|
|
$
|
60.7
|
|
|
$
|
70.9
|
|
|
(14.4
|
)%
|
Licensed stores
|
|
1.1
|
|
|
0.9
|
|
|
22.2
|
|
CPG, foodservice and other
|
|
58.2
|
|
|
82.8
|
|
|
(29.7
|
)
|
Total net revenues
|
|
120.0
|
|
|
154.6
|
|
|
(22.4
|
)
|
Cost of sales including occupancy costs(1)
|
|
79.1
|
|
|
90.4
|
|
|
(12.5
|
)
|
Store operating expenses
|
|
30.3
|
|
|
30.7
|
|
|
(1.3
|
)
|
Other operating expenses
|
|
11.2
|
|
|
17.5
|
|
|
(36.0
|
)
|
Depreciation and amortization expenses
|
|
0.7
|
|
|
2.9
|
|
|
(75.9
|
)
|
General and administrative expenses
|
|
2.7
|
|
|
3.5
|
|
|
(22.9
|
)
|
Restructuring expenses(2)
|
|
26.0
|
|
|
—
|
|
|
nm
|
Total operating expenses
|
|
150.0
|
|
|
145.0
|
|
|
3.4
|
|
Operating income/(loss)
|
|
$
|
(30.0
|
)
|
|
$
|
9.6
|
|
|
nm
|
|
(1) As a result of our restructuring efforts, $4.4
million was recorded in cost of sales including occupancy costs
related to inventory write-offs.
|
|
(2) Primarily includes restructuring expenses of $25.9
million associated with our Teavana-branded stores.
|
|
Supplemental Information
The following supplemental information is provided for historical and
comparative purposes.
|
U.S. Supplemental Data
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
|
($ in millions)
|
|
|
|
Dec 31, 2017
|
|
|
|
Jan 1, 2017
|
|
|
|
Change
|
Revenues
|
|
|
|
$3,884.4
|
|
|
|
$3,654.4
|
|
|
|
6%
|
Comparable Store Sales Growth(1)
|
|
|
|
2%
|
|
|
|
3%
|
|
|
|
|
Change in Transactions
|
|
|
|
0%
|
|
|
|
(2%)
|
|
|
|
|
Change in Ticket
|
|
|
|
2%
|
|
|
|
5%
|
|
|
|
|
(1) Includes only Starbucks company-operated stores open
13 months or longer.
|
|
|
Store Data
|
|
|
|
Net stores opened/(closed) and transferred during
the period
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
Stores open as of
|
|
|
Dec 31, 2017
|
|
Jan 1, 2017
|
|
|
|
Dec 31, 2017
|
|
Jan 1, 2017
|
Americas:
|
|
|
|
|
|
|
|
|
|
|
Company-operated stores
|
|
112
|
|
|
75
|
|
|
|
|
9,525
|
|
|
9,094
|
Licensed stores
|
|
166
|
|
|
176
|
|
|
|
|
7,312
|
|
|
6,764
|
Total Americas
|
|
278
|
|
|
251
|
|
|
|
|
16,837
|
|
|
15,858
|
China/Asia Pacific(1):
|
|
|
|
|
|
|
|
|
|
|
Company-operated stores
|
|
1,612
|
|
|
104
|
|
|
|
|
4,682
|
|
|
2,915
|
Licensed stores
|
|
(1,312
|
)
|
|
199
|
|
|
|
|
3,097
|
|
|
3,831
|
Total China/Asia Pacific
|
|
300
|
|
|
303
|
|
|
|
|
7,779
|
|
|
6,746
|
EMEA:
|
|
|
|
|
|
|
|
|
|
|
Company-operated stores
|
|
1
|
|
|
(18
|
)
|
|
|
|
503
|
|
|
505
|
Licensed stores
|
|
122
|
|
|
113
|
|
|
|
|
2,594
|
|
|
2,232
|
Total EMEA
|
|
123
|
|
|
95
|
|
|
|
|
3,097
|
|
|
2,737
|
All Other Segments(2):
|
|
|
|
|
|
|
|
|
|
|
Company-operated stores
|
|
(1
|
)
|
|
(2
|
)
|
|
|
|
289
|
|
|
356
|
Licensed stores
|
|
—
|
|
|
2
|
|
|
|
|
37
|
|
|
37
|
Total All Other Segments
|
|
(1
|
)
|
|
—
|
|
|
|
|
326
|
|
|
393
|
|
|
|
|
|
|
|
|
|
|
|
Total Company
|
|
700
|
|
|
649
|
|
|
|
|
28,039
|
|
|
25,734
|
|
(1) China/Asia Pacific store data includes the transfer
of 1,477 licensed stores in East China to company-operated retail
stores as a result of the purchase of our East China joint venture
in the first quarter of fiscal 2018.
|
|
(2) As of December 31, 2017, All Other Segments included
323 Teavana-branded stores, of which 286 stores were
company-operated.
|
|
Non-GAAP Disclosure
In addition to the GAAP results provided in this release, the company
provides certain non-GAAP financial measures that 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, as they do not contribute to a meaningful evaluation of
the company's future operating performance or comparisons to the
company's past operating performance. 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
|
|
|
|
|
|
East China acquisition-related gain
|
|
|
|
Management excludes the gain on the purchase of our East China joint
venture as this incremental gain is specific to the purchase
activity and for reasons discussed above.
|
|
|
|
|
|
Sale of Taiwan joint venture operations
|
|
|
|
Management excludes the gain related to the sale of our Taiwan joint
venture operations as this incremental gain is specific to the sale
activity and for reasons discussed above.
|
|
|
|
|
|
Sale of Tazo brand
|
|
|
|
Management excludes the net gain on the sale of our assets
associated with our Tazo brand and associated transaction costs as
these items do not reflect future gains, losses, costs or tax
benefits and for reasons discussed above.
|
|
|
|
|
|
Restructuring expenses
|
|
|
|
Management excludes restructuring 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 for reasons
discussed above. Additionally, these expenses are anticipated to
be completed within a finite period of time.
|
|
|
|
|
|
CAP transaction and integration-related costs
|
|
|
|
Management excludes transaction and integration costs and
amortization of the acquired intangible assets for reasons
discussed above. Additionally, the majority of these costs will be
recognized over a finite period of time.
|
|
|
|
|
|
Sale of Singapore retail operations
|
|
|
|
Management excludes the net gain related to the sale of our
Singapore retail operations as these items do not reflect future
gains, losses or tax impacts and for reasons discussed above.
|
|
|
|
|
|
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 for reasons discussed above.
|
|
|
|
|
|
The Starbucks Foundation donation
|
|
|
|
Management excludes the company's largest donation to a non-profit
organization for reasons discussed above.
|
|
|
|
|
|
2018 U.S. stock award
|
|
|
|
Management excludes the announced incremental 2018 stock-based
compensation award for reasons discussed above.
|
|
|
|
|
|
Other tax matters
|
|
|
|
On December 22, 2017, the Tax Cuts and Jobs Act was signed into
U.S. law. Management excludes the estimated transition tax on
undistributed foreign earnings and the re–measurement of deferred
tax assets and liabilities due to the reduction of the U.S.
federal corporate income tax rate for reasons discussed above.
|
|
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)
|
|
|
|
|
|
($ in millions)
|
|
Quarter Ended
|
|
|
Consolidated
|
|
Dec 31, 2017
|
|
Jan 1, 2017
|
|
Change
|
Operating income, as reported (GAAP)
|
|
$
|
1,116.1
|
|
|
$
|
1,132.6
|
|
|
(1.5)%
|
Restructuring expenses (1)
|
|
32.0
|
|
|
—
|
|
|
|
CAP transaction and integration-related items (2)
|
|
18.5
|
|
|
14.0
|
|
|
|
Sale of Tazo brand transaction costs
|
|
0.9
|
|
|
—
|
|
|
|
Non-GAAP operating income
|
|
$
|
1,167.5
|
|
|
$
|
1,146.6
|
|
|
1.8%
|
|
|
|
|
|
|
|
|
Operating margin, as reported (GAAP)
|
|
18.4
|
%
|
|
19.8
|
%
|
|
(140) bps
|
Restructuring expenses (1)
|
|
0.5
|
|
|
—
|
|
|
|
CAP transaction and integration-related items (2)
|
|
0.3
|
|
|
0.2
|
|
|
|
Sale of Tazo brand
|
|
—
|
|
|
—
|
|
|
|
Non-GAAP operating margin
|
|
19.2
|
%
|
|
20.0
|
%
|
|
(80) bps
|
|
|
|
|
|
|
|
|
Diluted net earnings per share, as reported (GAAP)
|
|
$
|
1.57
|
|
|
$
|
0.51
|
|
|
207.8%
|
East China acquisition gain
|
|
(0.92
|
)
|
|
—
|
|
|
|
Sale of Taiwan joint venture operations
|
|
(0.11
|
)
|
|
—
|
|
|
|
Sale of Tazo brand
|
|
(0.24
|
)
|
|
—
|
|
|
|
Restructuring expenses (1)
|
|
0.02
|
|
|
—
|
|
|
|
CAP transaction and integration-related items (2)
|
|
0.01
|
|
|
0.01
|
|
|
|
Other tax matters (3)
|
|
0.10
|
|
|
—
|
|
|
|
Income tax effect on Non-GAAP adjustments (4)
|
|
0.22
|
|
|
—
|
|
|
|
Non-GAAP net earnings per share
|
|
$
|
0.65
|
|
|
$
|
0.52
|
|
|
25.0%
|
|
(1) Represents $27.6 million associated with our
restructuring efforts, primarily lease termination costs.
Inventory write-offs of $4.4 million related to these efforts were
recorded within cost of sales including occupancy costs.
|
|
(2) Includes transaction costs for the acquisition of
our East China joint venture and the divestiture of our Taiwan
joint venture; ongoing amortization expense of acquired intangible
assets associated with the acquisition of Starbucks Japan; and the
related post-acquisition integration costs, such as incremental
information technology and compensation-related costs.
|
|
(3) Represents the estimated impact of the U.S. Tax
Cuts and Jobs Act, specifically the transition tax on
undistributed foreign earnings and re-measurement of deferred
taxes.
|
|
(4) Income tax effect on non-GAAP adjustments was
determined based on the nature of the underlying items and their
relevant jurisdictional tax rates.
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
|
|
Sep 30, 2018
|
|
Oct 1, 2017
|
|
|
Consolidated
|
|
(Projected)
|
|
(As Reported)
|
|
Change
|
Diluted net earnings per share (GAAP)
|
|
$3.32 - $3.36
|
|
|
$
|
1.97
|
|
|
69% - 71%
|
East China acquisition gain
|
|
(0.94
|
)
|
|
—
|
|
|
|
Sale of Taiwan joint venture operations
|
|
(0.11
|
)
|
|
—
|
|
|
|
Sale of Tazo brand
|
|
(0.25
|
)
|
|
—
|
|
|
|
Restructuring expenses (1)
|
|
0.13
|
|
|
0.11
|
|
|
|
CAP transaction and integration-related items (2)
|
|
0.17
|
|
|
0.04
|
|
|
|
Sale of Singapore retail operations
|
|
—
|
|
|
(0.06
|
)
|
|
|
Sale of Germany retail operations
|
|
—
|
|
|
(0.01
|
)
|
|
|
The Starbucks Foundation donation
|
|
—
|
|
|
0.03
|
|
|
|
Other tax matters (3)
|
|
0.11
|
|
|
—
|
|
|
|
2018 U.S. stock award (4)
|
|
0.04
|
|
|
—
|
|
|
|
Income tax effect on Non-GAAP adjustments (5)
|
|
0.01
|
|
|
(0.04
|
)
|
|
|
Non-GAAP net earnings per share
|
|
$2.48 - $2.53
|
|
|
$
|
2.06
|
|
|
20% - 23%
|
|
(1) Represents restructuring related expenses and
related inventory write-offs recorded within cost of sales
including occupancy costs.
|
|
(2) Includes transaction costs for the acquisition of
our East China joint venture and the divestiture of our Taiwan
joint venture; ongoing amortization expense of acquired intangible
assets associated with the acquisition of our East China joint
venture and Starbucks Japan; and the related post-acquisition
integration costs, such as incremental information technology and
compensation-related costs.
|
|
(3) Represents the estimated impact of the U.S. Tax
Cuts and Jobs Act, specifically the transition tax on
undistributed foreign earnings and re-measurement of deferred
taxes.
|
|
(4) Represents incremental stock-based compensation
award for U.S. partners.
|
|
(5) 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/20180125006234/en/
Source: Starbucks Corporation