Q2 Comp Store Sales Up 2% Globally and in the U.S., Up 4% in China
Consolidated Net Revenues Up 14% to a Record $6.0 Billion
GAAP EPS of $0.47; Non-GAAP EPS of $0.53, Up 18% Year-Over-Year
Active Starbucks RewardsTM Membership in the U.S. Increases
12% Year-Over-Year to 14.9 Million
Company Reiterates Fiscal 2018 Outlook; Announces Additional 100M Share
Repurchase Authorization
SEATTLE--(BUSINESS WIRE)--
Starbucks Corporation (NASDAQ: SBUX) today reported financial results
for its 13-week fiscal second quarter ended April 1, 2018. 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.
Q2 Fiscal 2018 Highlights
-
Global comparable store sales increased 2%, driven by a 3% increase in
average ticket
-
Americas and U.S. comp store sales increased 2%
-
CAP comp store sales increased 3%
-
China comp store sales increased 4%
-
Consolidated net revenues of $6.0 billion, up 14% over the prior year
including:
-
3% net benefit from consolidation of the recently acquired East
China business and other streamline-driven activities, including
Teavana mall store closures, the Tazo divestiture, and the
conversion of certain international retail operations from
company-owned to licensed models
-
2% benefit from foreign currency translation
-
GAAP operating margin, inclusive of restructuring and impairment
charges, declined to 12.8%, down 490 basis points compared to the
prior year
-
Non-GAAP operating margin of 16.2% declined 170 basis points
compared to the prior year
-
GAAP Earnings Per Share of $0.47, up 4% over the prior year
-
Non-GAAP EPS of $0.53, up 18% over the prior year
-
The Starbucks RewardsTM loyalty program added 1.6 million
active members in the U.S., up 12% over the prior year
-
Starbucks RewardsTM member spend increased to 39% of U.S.
company-operated sales; Mobile Order and Pay represented 12% of U.S.
company-operated transactions
-
The company opened 468 net new Starbucks stores in Q2 and now operates
28,209 stores across 76 markets. During the quarter, the company also
closed 298 Teavana® stores
-
The company returned $2.0 billion to shareholders in the quarter
through a combination of dividends and share repurchases
“Starbucks Q2 of fiscal 2018 represented another quarter of record
financial results, highlighted by accelerating momentum across our
Americas business - particularly in the U.S., continued strong
performance in China and our strongest comp growth in Japan in five
quarters,” said Kevin Johnson, president and ceo. “At the same time we
made measurable progress against each of the strategic initiatives that
position Starbucks to continue delivering best-in-class operating and
financial results long into the future.”
“We have a clear set of actions underway to improve profitability
through a combination of comp and beverage growth and savings across
COGS, waste and labor as we move through the back half of the year,”
said Scott Maw, cfo. “We are continuing to invest in our business -
strategically and with a ‘long game’ mentality - while at the same time
taking decisive near-term action to maximize our brand portfolio and
ensure that we continue to deliver outsized returns to our shareholders
in the quarters and years ahead.”
|
Second Quarter Fiscal 2018 Summary
|
|
|
|
|
|
|
|
|
Quarter Ended Apr 1, 2018
|
|
Comparable Store Sales(1)
|
|
Sales Growth
|
|
Change in Transactions
|
|
Change in Ticket
|
|
Consolidated
|
|
2%
|
|
(1)%
|
|
3%
|
|
Americas
|
|
2%
|
|
0%
|
|
3%
|
|
CAP
|
|
3%
|
|
0%
|
|
3%
|
|
EMEA(2)
|
|
(1)%
|
|
(4)%
|
|
3%
|
|
(1) Includes only Starbucks company-operated stores open
13 months or longer. Comparable store sales exclude the effect of
fluctuations in foreign currency exchange rates.
|
|
(2) Company-operated stores represent 16% of the EMEA
segment store portfolio as of April 1, 2018.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Results
|
|
Quarter Ended
|
|
Change
|
|
($ in millions, except per share amounts)
|
|
Apr 1, 2018
|
|
Apr 2, 2017
|
|
|
Net New Stores (1)
|
|
170
|
|
427
|
|
(257)
|
|
Revenues
|
|
$6,031.8
|
|
$5,294.0
|
|
14%
|
|
Operating Income
|
|
$772.5
|
|
$935.4
|
|
(17)%
|
|
Operating Margin
|
|
12.8%
|
|
17.7%
|
|
(490) bps
|
|
EPS
|
|
$0.47
|
|
$0.45
|
|
4%
|
|
(1) Q2 2018 net new stores include the closure of 298
Teavana-branded stores.
|
|
|
Consolidated net revenues grew 14% over Q2 FY17 to $6.0 billion in Q2
FY18, primarily driven by incremental revenues from the impact of our
ownership change in East China, incremental revenues from 2,103 net new
Starbucks store openings over the past 12 months, and 2% growth in
global comparable store sales.
Consolidated operating income declined 17% to $772.5 million in Q2 FY18,
down from $935.4 million in Q2 FY17. Consolidated operating margin
declined 490 basis points to 12.8%, primarily due to restructuring and
impairments, food-related mix shift primarily in the Americas segment,
higher investments in our store partners (employees), and the impact of
our ownership change in East China.
|
Q2 Americas Segment Results
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Change
|
|
($ in millions)
|
|
Apr 1, 2018
|
|
Apr 2, 2017
|
|
|
Net New Stores
|
|
187
|
|
200
|
|
(13)
|
|
Revenues
|
|
$4,003.5
|
|
$3,720.4
|
|
8%
|
|
Operating Income
|
|
$801.3
|
|
$826.1
|
|
(3)%
|
|
Operating Margin
|
|
20.0%
|
|
22.2%
|
|
(220) bps
|
|
|
|
|
|
|
|
|
Net revenues for the Americas segment grew 8% over Q2 FY17 to $4.0
billion in Q2 FY18, primarily driven by incremental revenues from 966
net new store openings over the past 12 months and a 2% growth in
comparable store sales.
Operating income declined 3% to $801.3 million in Q2 FY18, down from
$826.1 million in Q2 FY17. Operating margin of 20.0% declined 220 basis
points, primarily due to higher investments in our store partners
(employees) and food-related mix shift.
|
Q2 China/Asia Pacific Segment Results
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Change
|
|
($ in millions)
|
|
Apr 1, 2018
|
|
Apr 2, 2017
|
|
|
Net New Stores
|
|
216
|
|
187
|
|
29
|
|
Revenues
|
|
$1,186.4
|
|
$768.9
|
|
54%
|
|
Operating Income
|
|
$204.6
|
|
$175.9
|
|
16%
|
|
Operating Margin
|
|
17.2%
|
|
22.9%
|
|
(570) bps
|
Net revenues for the China/Asia Pacific segment grew 54% over Q2 FY17 to
$1,186.4 million in Q2 FY18, primarily driven by incremental revenues
from the impact of our ownership change in East China, incremental
revenues from 759 net new store openings over the past 12 months,
favorable foreign currency translation, and a 3% increase in comparable
store sales. The increase was partially offset by the absence of
company-operated store revenue related to the sale of our Singapore
retail operations to a licensed partner in Q4 FY17.
Q2 FY18 operating income of $204.6 million grew 16% over Q2 FY17
operating income of $175.9 million. Operating margin declined 570 basis
points to 17.2%, primarily due to the impact of our ownership change in
East China.
|
Q2 EMEA Segment Results
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Change
|
|
($ in millions)
|
|
Apr 1, 2018
|
|
Apr 2, 2017
|
|
|
Net New Stores
|
|
64
|
|
46
|
|
18
|
|
Revenues
|
|
$266.1
|
|
$231.7
|
|
15%
|
|
Operating Income/(Loss)
|
|
($4.3)
|
|
$27.7
|
|
(116)%
|
|
Operating Margin
|
|
(1.6)%
|
|
12.0%
|
|
(1,360) bps
|
Net revenues for the EMEA segment grew 15% over Q2 FY17 to $266.1
million in Q2 FY18, primarily driven by favorable foreign currency
translation and incremental revenues from the opening of 385 net new
licensed stores over the past 12 months. Partially offsetting the
increase was a decrease in comparable store sales.
Operating loss of $4.3 million in Q2 FY18 declined 116% versus operating
income of $27.7 million in Q2 FY17. Operating margin declined 1,360
basis points to (1.6)%, primarily driven by a partial impairment of
goodwill related to our Switzerland retail business and sales deleverage
on company-operated stores.
|
Q2 Channel Development Segment Results
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Change
|
|
($ in millions)
|
|
Apr 1, 2018
|
|
Apr 2, 2017
|
|
|
Revenues
|
|
$500.2
|
|
$461.3
|
|
8%
|
|
Operating Income
|
|
$215.3
|
|
$193.6
|
|
11%
|
|
Operating Margin
|
|
43.0%
|
|
42.0%
|
|
100 bps
|
Net revenues for the Channel Development segment of $500.2 million in Q2
FY18 increased 8% versus the prior year quarter primarily driven by
higher sales of premium single-serve products and lapping a prior year
revenue deduction adjustment, partially offset by the absence of revenue
from the sale of our Tazo brand in the first quarter of fiscal 2018.
Operating income of $215.3 million in Q2 FY18 grew 11% compared to Q2
FY17. Operating margin expanded 100 basis points to 43.0%, primarily
driven by lapping a revenue deduction adjustment, partially offset by
lower income from our North American Coffee Partnership joint venture.
|
Q2 All Other Segments Results
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
Change
|
|
($ in millions)
|
|
Apr 1, 2018
|
|
Apr 2, 2017
|
|
|
Net New Stores
|
|
(297)
|
|
(6)
|
|
(291)
|
|
Revenues
|
|
$75.6
|
|
$111.7
|
|
(32)%
|
|
Operating Loss
|
|
$(114.8)
|
|
$(25.5)
|
|
350%
|
All Other Segments primarily includes Seattle’s Best Coffee®, Starbucks
ReserveTM Coffee and Roastery businesses, and Teavana-branded
stores. The operating loss in Q2 FY18 was primarily due to restructuring
costs related to our strategy to close Teavana retail stores and focus
on TeavanaTM tea within Starbucks stores.
|
Year to Date Financial Results
|
|
|
|
|
|
|
|
|
|
|
|
|
Two Quarters Ended April 1, 2018
|
|
Comparable Store Sales(1)
|
|
Sales Growth
|
|
Change in Transactions
|
|
Change in Ticket
|
|
Consolidated
|
|
2%
|
|
0%
|
|
2%
|
|
Americas
|
|
2%
|
|
0%
|
|
2%
|
|
CAP
|
|
2%
|
|
0%
|
|
2%
|
|
EMEA(2)
|
|
(1)%
|
|
(4)%
|
|
3%
|
|
(1) Includes only Starbucks company-operated stores open
13 months or longer. Comparable store sales exclude the effect of
fluctuations in foreign currency exchange rates.
|
|
(2) Company-operated stores represent 16% of the EMEA
segment store portfolio as of April 1, 2018.
|
|
|
|
|
|
|
|
|
|
|
|
Operating Results
|
|
Two Quarters Ended
|
|
Change
|
|
($ in millions, except per share amounts)
|
|
Apr 1, 2018
|
|
Apr 2, 2017
|
|
|
Net New Stores (1)
|
|
870
|
|
1,076
|
|
(206)
|
|
Revenues
|
|
$12,105.5
|
|
$11,027.0
|
|
10%
|
|
Operating Income
|
|
$1,888.6
|
|
$2,068.3
|
|
(9)%
|
|
Operating Margin
|
|
15.6%
|
|
18.8%
|
|
(320) bps
|
|
EPS
|
|
$2.05
|
|
$0.96
|
|
114%
|
|
(1) Fiscal 2018 net new stores include the net closure of
300 Teavana-branded stores.
|
|
|
Fiscal 2018 Targets
The company reiterates the following full year FY18 targets but notes
that all guidance items exclude the yet to be determined impact of its
previously announced plan to close more than 8,000 company-owned stores
in the U.S. on May 29, 2018 to conduct racial-bias training for all
partners (employees) in the U.S.
-
Continue to expect approximately 2,300 net new Starbucks 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 when excluding approximately 2 points of net favorability from
the East China acquisition and other streamline-driven activities
-
Continue to 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
Please refer to the reconciliation of GAAP measures to non-GAAP measures
at the end of this release.
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
-
Starbucks announced it will close more than 8,000 company-owned stores
and its corporate offices in the U.S. on May 29 to conduct racial-bias
training for all partners (employees) in the U.S. The training will be
provided to nearly 175,000 partners (employees) across the country and
will become part of the onboarding process for new partners. Once
complete, the company will make the education materials available to
other companies, including its licensees.
-
The company hosted its 26th Annual Meeting of Shareholders on March 21
in Seattle. The company announced that Starbucks had reached 100
percent pay equity for partners of all genders and races performing
similar work across the U.S.
-
In partnership with Closed Loop Partners and its Center for the
Circular Economy, Starbucks committed $10 million in March to
establish a groundbreaking consortium launching the NextGen Cup
Challenge. Through the NextGen Cup Challenge, the consortium will
award accelerator grants to promote the development of more
sustainable cup solutions and invite industry participation and
partnership on the way to identifying a global solution.
-
The company announced that it had entered into an agreement with
SouthRock Capital Ltda – a leading multi-brand restaurant operator in
Brazil – to fully license Starbucks retail operations in Brazil. The
agreement provides SouthRock the rights to develop and operate
Starbucks stores across the country. With the transition of ownership
in Brazil, Starbucks retail operations across all markets in Latin
America and the Caribbean became wholly licensed.
-
In March Starbucks opened the doors to its 46,000-square foot Hacienda
Alsacia Visitor Center, located on the grounds of its Costa Rican
coffee farm.
-
The company opened its Starbucks ReserveTM Coffee SODO
store in Seattle on February 27, inviting visitors to take a journey
of discovery with small-lot Starbucks ReserveTM
coffees and PrinciTM food. This location is the first
of the company’s new Starbucks Reserve store concept, introducing a
marketplace-style environment to showcase its premium Starbucks
Reserve brand.
-
In February, Starbucks and Chase announced the availability of the
Starbucks RewardsTM Visa® Card, a co-brand credit card
integrated directly into the Starbucks RewardsTM loyalty
program. The new credit card is an expansion of the ongoing
relationship between the two companies. Chase Merchant Services is the
payment processing partner for Starbucks stores in the U.S. and
Canada, and Chase Pay is accepted at participating Starbucks stores in
the U.S., as well as through the Starbucks mobile app.
-
For the 12th consecutive year, Starbucks was named one of the World’s
Most Ethical Companies by the Ethisphere Institute in February.
Separately, Starbucks was named the fifth most admired company in the
world by Fortune magazine in January. This is the 16th
year in a row that Starbucks has appeared on Fortune’s global list.
-
The company closed an underwritten public offering of $1 billion of
3.100% senior notes due 2023 and $600 million of 3.500% senior notes
due 2028. The company plans to use the net proceeds for general
corporate purposes, including the repurchase of Starbucks common stock
under the company’s ongoing share repurchase program, business
expansion, payment of cash dividends on Starbucks common stock, or the
financing of possible acquisitions.
-
The company repurchased 27.4 million shares of common stock in Q2
FY18; the company's Board of Directors has authorized an additional
100 million shares for repurchase under its ongoing share repurchase
program. With the additional 100 million shares, the company now has
approximately 124 million shares available for purchase under current
authorizations.
-
The Board of Directors declared a cash dividend of $0.30 per share,
payable on May 25, 2018, to shareholders of record as of May 10, 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, Roz Brewer,
group president and coo, 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, May
26, 2018.
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, accelerating momentum, and potential of our business,
operations, and brand, the impact of our food, beverage and digital
innovation, operational improvements, actions to improve profitability
and timing, including through a combination of comp and beverage growth
and savings across COGS, waste and labor, our 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 and tax
rates, our fiscal 2018 and long-term financial targets, and our
strategic, operational, and digital initiatives, including the East
China acquisition, 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
|
|
|
|
Apr 1,
2018
|
|
Apr 2,
2017
|
|
%
Change
|
|
Apr 1,
2018
|
|
Apr 2,
2017
|
|
|
|
|
|
|
|
|
|
|
|
As a % of total net revenues
|
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Company-operated stores
|
|
$
|
4,828.0
|
|
|
$
|
4,195.4
|
|
|
15.1
|
%
|
|
80.0
|
%
|
|
79.2
|
%
|
|
Licensed stores
|
|
625.6
|
|
|
546.7
|
|
|
14.4
|
|
|
10.4
|
|
|
10.3
|
|
|
CPG, foodservice and other (1)
|
|
578.2
|
|
|
551.9
|
|
|
4.8
|
|
|
9.6
|
|
|
10.4
|
|
|
Total net revenues
|
|
6,031.8
|
|
|
5,294.0
|
|
|
13.9
|
|
|
100.0
|
|
|
100.0
|
|
|
Cost of sales including occupancy costs (2)
|
|
2,516.0
|
|
|
2,141.2
|
|
|
17.5
|
|
|
41.7
|
|
|
40.4
|
|
|
Store operating expenses
|
|
1,789.6
|
|
|
1,586.4
|
|
|
12.8
|
|
|
29.7
|
|
|
30.0
|
|
|
Other operating expenses (3)
|
|
134.3
|
|
|
134.7
|
|
|
(0.3
|
)
|
|
2.2
|
|
|
2.5
|
|
|
Depreciation and amortization expenses
|
|
331.6
|
|
|
253.6
|
|
|
30.8
|
|
|
5.5
|
|
|
4.8
|
|
|
General and administrative expenses
|
|
405.8
|
|
|
326.8
|
|
|
24.2
|
|
|
6.7
|
|
|
6.2
|
|
|
Restructuring and impairments (4)
|
|
134.7
|
|
|
—
|
|
|
nm
|
|
2.2
|
|
|
—
|
|
|
Total operating expenses
|
|
5,312.0
|
|
|
4,442.7
|
|
|
19.6
|
|
|
88.1
|
|
|
83.9
|
|
|
Income from equity investees
|
|
52.7
|
|
|
84.1
|
|
|
(37.3
|
)
|
|
0.9
|
|
|
1.6
|
|
|
Operating income
|
|
772.5
|
|
|
935.4
|
|
|
(17.4
|
)
|
|
12.8
|
|
|
17.7
|
|
|
Gain resulting from acquisition of joint venture (5)
|
|
47.6
|
|
|
—
|
|
|
nm
|
|
0.8
|
|
|
—
|
|
|
Gain/(loss) resulting from divestiture of certain operations (6)
|
|
(4.9
|
)
|
|
9.6
|
|
|
nm
|
|
(0.1
|
)
|
|
0.2
|
|
|
Interest income and other, net
|
|
35.5
|
|
|
58.3
|
|
|
(39.1
|
)
|
|
0.6
|
|
|
1.1
|
|
|
Interest expense
|
|
(35.1
|
)
|
|
(22.9
|
)
|
|
53.3
|
|
|
(0.6
|
)
|
|
(0.4
|
)
|
|
Earnings before income taxes
|
|
815.6
|
|
|
980.4
|
|
|
(16.8
|
)
|
|
13.5
|
|
|
18.5
|
|
|
Income tax expense
|
|
155.8
|
|
|
327.6
|
|
|
(52.4
|
)
|
|
2.6
|
|
|
6.2
|
|
|
Net earnings including noncontrolling interests
|
|
659.8
|
|
|
652.8
|
|
|
1.1
|
|
|
10.9
|
|
|
12.3
|
|
|
Net loss attributable to noncontrolling interests
|
|
(0.3
|
)
|
|
—
|
|
|
nm
|
|
—
|
|
|
—
|
|
|
Net earnings attributable to Starbucks
|
|
$
|
660.1
|
|
|
$
|
652.8
|
|
|
1.1
|
|
|
10.9
|
%
|
|
12.3
|
%
|
|
Net earnings per common share - diluted
|
|
$
|
0.47
|
|
|
$
|
0.45
|
|
|
4.4
|
%
|
|
|
|
|
|
Weighted avg. shares outstanding - diluted
|
|
1,406.6
|
|
|
1,464.8
|
|
|
|
|
|
|
|
|
Cash dividends declared per share
|
|
$
|
0.30
|
|
|
$
|
0.25
|
|
|
|
|
|
|
|
|
Supplemental Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
Store operating expenses as a % of company-operated store revenues
|
|
|
|
37.1
|
%
|
|
37.8
|
%
|
|
Other operating expenses as a % of non-company-operated store
revenues
|
|
|
|
11.2
|
%
|
|
12.3
|
%
|
|
Effective tax rate including noncontrolling interests
|
|
|
|
19.1
|
%
|
|
33.4
|
%
|
|
(1)
|
|
CPG revenues in Q2 FY17 included an unfavorable revenue deduction
adjustment pertaining to prior periods of $20.6 million.
|
|
(2)
|
|
Reduced inventory write-offs of $2.3 million related to our
restructuring efforts was recorded in cost of sales including
occupancy costs.
|
|
(3)
|
|
Includes $2.8 million of business process optimization costs,
primarily consulting fees.
|
|
(4)
|
|
Represents $106.2 million associated with our restructuring
efforts, primarily lease termination costs and $28.5 million of
Switzerland goodwill impairment.
|
|
(5)
|
|
Represents a gain adjustment related to finalizing the acquisition
of our East China joint venture.
|
|
(6)
|
|
Primarily includes the loss on the sale of our Brazil retail
operations of $8.5 million and a gain adjustment related to
finalizing the sale of our Taiwan joint venture of $3.6 million.
|
|
(7)
|
|
Included in interest income and other, net is the gain on the sale
of our investment in Square, Inc. warrants of $40.5 million in Q2
FY17.
|
|
|
|
Two Quarters Ended
|
|
Two Quarters Ended
|
|
|
|
Apr 1,
2018
|
|
Apr 2,
2017
|
|
%
Change
|
|
Apr 1,
2018
|
|
Apr 2,
2017
|
|
|
|
|
|
|
|
|
|
|
|
As a % of total
net revenues
|
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Company-operated stores
|
|
$
|
9,569.8
|
|
|
$
|
8,664.7
|
|
|
10.4
|
%
|
|
79.1
|
%
|
|
78.6
|
%
|
|
Licensed stores
|
|
1,308.0
|
|
|
1,149.1
|
|
|
13.8
|
|
|
10.8
|
|
|
10.4
|
|
|
CPG, foodservice and other (1)
|
|
1,227.7
|
|
|
1,213.2
|
|
|
1.2
|
|
|
10.1
|
|
|
11.0
|
|
|
Total net revenues
|
|
12,105.5
|
|
|
11,027.0
|
|
|
9.8
|
|
|
100.0
|
|
|
100.0
|
|
|
Cost of sales including occupancy costs (2)
|
|
5,018.9
|
|
|
4,436.2
|
|
|
13.1
|
|
|
41.5
|
|
|
40.2
|
|
|
Store operating expenses
|
|
3,526.5
|
|
|
3,224.6
|
|
|
9.4
|
|
|
29.1
|
|
|
29.2
|
|
|
Other operating expenses (3)
|
|
276.0
|
|
|
280.1
|
|
|
(1.5
|
)
|
|
2.3
|
|
|
2.5
|
|
|
Depreciation and amortization expenses
|
|
590.4
|
|
|
503.3
|
|
|
17.3
|
|
|
4.9
|
|
|
4.6
|
|
|
General and administrative expenses
|
|
784.9
|
|
|
683.1
|
|
|
14.9
|
|
|
6.5
|
|
|
6.2
|
|
|
Restructuring and impairments (4)
|
|
162.3
|
|
|
—
|
|
|
nm
|
|
1.3
|
|
|
—
|
|
|
Total operating expenses
|
|
10,359.0
|
|
|
9,127.3
|
|
|
13.5
|
|
|
85.6
|
|
|
82.8
|
|
|
Income from equity investees
|
|
142.1
|
|
|
168.6
|
|
|
(15.7
|
)
|
|
1.2
|
|
|
1.5
|
|
|
Operating income
|
|
1,888.6
|
|
|
2,068.3
|
|
|
(8.7
|
)
|
|
15.6
|
|
|
18.8
|
|
|
Gain resulting from acquisition of joint venture (5)
|
|
1,373.9
|
|
|
—
|
|
|
nm
|
|
11.3
|
|
|
—
|
|
|
Gain/(loss) resulting from divestiture of certain operations (6)
|
|
496.3
|
|
|
9.6
|
|
|
nm
|
|
4.1
|
|
|
0.1
|
|
|
Interest income and other, net (7)
|
|
123.7
|
|
|
82.4
|
|
|
50.1
|
|
|
1.0
|
|
|
0.7
|
|
|
Interest expense
|
|
(61.0
|
)
|
|
(46.7
|
)
|
|
30.6
|
|
|
(0.5
|
)
|
|
(0.4
|
)
|
|
Earnings before income taxes
|
|
3,821.5
|
|
|
2,113.6
|
|
|
80.8
|
|
|
31.6
|
|
|
19.2
|
|
|
Income tax expense
|
|
911.6
|
|
|
709.0
|
|
|
28.6
|
|
|
7.5
|
|
|
6.4
|
|
|
Net earnings including noncontrolling interests
|
|
2,909.9
|
|
|
1,404.6
|
|
|
107.2
|
|
|
24.0
|
|
|
12.7
|
|
|
Net loss attributable to noncontrolling interests
|
|
(0.4
|
)
|
|
(0.3
|
)
|
|
33.3
|
|
|
—
|
|
|
—
|
|
|
Net earnings attributable to Starbucks
|
|
$
|
2,910.3
|
|
|
$
|
1,404.9
|
|
|
107.2
|
|
|
24.0
|
%
|
|
12.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings per common share - diluted
|
|
$
|
2.05
|
|
|
$
|
0.96
|
|
|
113.5
|
%
|
|
|
|
|
|
Weighted avg. shares outstanding - diluted
|
|
1,420.5
|
|
|
1,467.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share
|
|
$
|
0.60
|
|
|
$
|
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
Store operating expenses as a % of company-operated store revenues
|
|
|
|
36.9
|
%
|
|
37.2
|
%
|
|
Other operating expenses as a % of non-company-operated store
revenues
|
|
|
|
10.9
|
%
|
|
11.9
|
%
|
|
Effective tax rate including noncontrolling interests
|
|
|
|
23.9
|
%
|
|
33.5
|
%
|
|
(1)
|
|
CPG revenues in Q2 FY17 included an unfavorable revenue deduction
adjustment pertaining to prior periods of $13.2 million.
|
|
(2)
|
|
As a result of our restructuring efforts, $2.1 million was recorded
in cost of sales including occupancy costs related to inventory
write-offs.
|
|
(3)
|
|
Includes $2.8 million of business process optimization costs,
primarily consulting fees.
|
|
(4)
|
|
Primarily includes restructuring expenses of $131.3 million
associated with our Teavana-branded stores, $2.5 million related to
our Starbucks North American retail businesses and $28.5 million of
Switzerland goodwill impairment.
|
|
(5)
|
|
Represents the gain resulting from the acquisition of our East China
joint venture.
|
|
(6)
|
|
Primarily includes the gains on the sales of our Tazo brand and
Taiwan joint venture for $347.9 million and $156.6 million,
respectively.
|
|
(7)
|
|
Included in interest income and other, net is the gain on the sale
of our investment in Square, Inc. warrants of $40.5 million in Q2
FY17.
|
|
|
|
|
|
Segment Results (in millions)
|
|
|
|
|
|
|
|
|
|
|
|
Americas
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apr 1,
2018
|
|
Apr 2,
2017
|
|
%
Change
|
|
Apr 1,
2018
|
|
Apr 2,
2017
|
|
|
|
Quarter Ended
|
|
|
|
|
|
|
|
As a % of Americas
total net revenues
|
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Company-operated stores
|
|
$
|
3,564.8
|
|
|
$
|
3,334.9
|
|
|
6.9
|
%
|
|
89.0
|
%
|
|
89.6
|
%
|
|
Licensed stores
|
|
429.3
|
|
|
376.7
|
|
|
14.0
|
|
|
10.7
|
|
|
10.1
|
|
|
Foodservice and other
|
|
9.4
|
|
|
8.8
|
|
|
6.8
|
|
|
0.2
|
|
|
0.2
|
|
|
Total net revenues
|
|
4,003.5
|
|
|
3,720.4
|
|
|
7.6
|
|
|
100.0
|
|
|
100.0
|
|
|
Cost of sales including occupancy costs
|
|
1,534.4
|
|
|
1,354.9
|
|
|
13.2
|
|
|
38.3
|
|
|
36.4
|
|
|
Store operating expenses
|
|
1,411.8
|
|
|
1,299.1
|
|
|
8.7
|
|
|
35.3
|
|
|
34.9
|
|
|
Other operating expenses
|
|
34.7
|
|
|
31.5
|
|
|
10.2
|
|
|
0.9
|
|
|
0.8
|
|
|
Depreciation and amortization expenses
|
|
160.4
|
|
|
155.4
|
|
|
3.2
|
|
|
4.0
|
|
|
4.2
|
|
|
General and administrative expenses
|
|
60.0
|
|
|
53.4
|
|
|
12.4
|
|
|
1.5
|
|
|
1.4
|
|
|
Restructuring expenses (1)
|
|
0.9
|
|
|
—
|
|
|
nm
|
|
—
|
|
|
—
|
|
|
Total operating expenses
|
|
3,202.2
|
|
|
2,894.3
|
|
|
10.6
|
|
|
80.0
|
|
|
77.8
|
|
|
Operating income
|
|
$
|
801.3
|
|
|
$
|
826.1
|
|
|
(3.0
|
)%
|
|
20.0
|
%
|
|
22.2
|
%
|
|
Supplemental Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
Store operating expenses as a % of company-operated store revenues
|
|
|
|
39.6
|
%
|
|
39.0
|
%
|
|
Other operating expenses as a % of non-company-operated store
revenues
|
|
|
|
7.9
|
%
|
|
8.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Two Quarters Ended
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Company-operated stores
|
|
$
|
7,351.8
|
|
|
$
|
6,895.9
|
|
|
6.6
|
%
|
|
88.9
|
%
|
|
89.4
|
%
|
|
Licensed stores
|
|
896.0
|
|
|
798.0
|
|
|
12.3
|
|
|
10.8
|
|
|
10.3
|
|
|
Foodservice and other
|
|
21.5
|
|
|
17.9
|
|
|
20.1
|
|
|
0.3
|
|
|
0.2
|
|
|
Total net revenues
|
|
8,269.3
|
|
|
7,711.8
|
|
|
7.2
|
|
|
100.0
|
|
|
100.0
|
|
|
Cost of sales including occupancy costs
|
|
3,138.2
|
|
|
2,795.2
|
|
|
12.3
|
|
|
38.0
|
|
|
36.2
|
|
|
Store operating expenses
|
|
2,845.3
|
|
|
2,655.5
|
|
|
7.1
|
|
|
34.4
|
|
|
34.4
|
|
|
Other operating expenses
|
|
72.2
|
|
|
63.4
|
|
|
13.9
|
|
|
0.9
|
|
|
0.8
|
|
|
Depreciation and amortization expenses
|
|
318.4
|
|
|
307.8
|
|
|
3.4
|
|
|
3.9
|
|
|
4.0
|
|
|
General and administrative expenses
|
|
112.1
|
|
|
105.3
|
|
|
6.5
|
|
|
1.4
|
|
|
1.4
|
|
|
Restructuring expenses (1)
|
|
2.5
|
|
|
—
|
|
|
nm
|
|
—
|
|
|
—
|
|
|
Total operating expenses
|
|
6,488.7
|
|
|
5,927.2
|
|
|
9.5
|
|
|
78.5
|
|
|
76.9
|
|
|
Operating income
|
|
$
|
1,780.6
|
|
|
$
|
1,784.6
|
|
|
(0.2
|
)%
|
|
21.5
|
%
|
|
23.1
|
%
|
|
Supplemental Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
Store operating expenses as a % of company-operated store revenues
|
|
|
|
38.7
|
%
|
|
38.5
|
%
|
|
Other operating expenses as a % of non-company-operated store
revenues
|
|
|
|
7.9
|
%
|
|
7.8
|
%
|
|
(1)
|
|
Represents restructuring expenses of $0.9 million and $2.5 million
for the quarter and two quarters ended April 1, 2018, respectively,
related to our Starbucks North American retail business.
|
|
|
|
|
|
China/Asia Pacific (CAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apr 1,
2018
|
|
Apr 2,
2017
|
|
%
Change
|
|
Apr 1,
2018
|
|
Apr 2,
2017
|
|
|
|
Quarter Ended
|
|
|
|
|
|
|
|
As a % of CAP
total net revenues
|
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Company-operated stores
|
|
$
|
1,098.6
|
|
|
$
|
687.8
|
|
|
59.7
|
%
|
|
92.6
|
%
|
|
89.5
|
%
|
|
Licensed stores
|
|
84.3
|
|
|
78.4
|
|
|
7.5
|
|
|
7.1
|
|
|
10.2
|
|
|
Foodservice and other
|
|
3.5
|
|
|
2.7
|
|
|
29.6
|
|
|
0.3
|
|
|
0.4
|
|
|
Total net revenues
|
|
1,186.4
|
|
|
768.9
|
|
|
54.3
|
|
|
100.0
|
|
|
100.0
|
|
|
Cost of sales including occupancy costs
|
|
510.6
|
|
|
333.5
|
|
|
53.1
|
|
|
43.0
|
|
|
43.4
|
|
|
Store operating expenses
|
|
306.5
|
|
|
202.5
|
|
|
51.4
|
|
|
25.8
|
|
|
26.3
|
|
|
Other operating expenses
|
|
18.6
|
|
|
17.6
|
|
|
5.7
|
|
|
1.6
|
|
|
2.3
|
|
|
Depreciation and amortization expenses
|
|
121.6
|
|
|
49.3
|
|
|
146.7
|
|
|
10.2
|
|
|
6.4
|
|
|
General and administrative expenses
|
|
41.2
|
|
|
34.2
|
|
|
20.5
|
|
|
3.5
|
|
|
4.4
|
|
|
Total operating expenses
|
|
998.5
|
|
|
637.1
|
|
|
56.7
|
|
|
84.2
|
|
|
82.9
|
|
|
Income from equity investees
|
|
16.7
|
|
|
44.1
|
|
|
(62.1
|
)
|
|
1.4
|
|
|
5.7
|
|
|
Operating income
|
|
$
|
204.6
|
|
|
$
|
175.9
|
|
|
16.3
|
%
|
|
17.2
|
%
|
|
22.9
|
%
|
|
Supplemental Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
Store operating expenses as a % of company-operated store revenues
|
|
|
|
27.9
|
%
|
|
29.4
|
%
|
|
Other operating expenses as a % of non-company-operated store
revenues
|
|
|
|
21.2
|
%
|
|
21.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Two Quarters Ended
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Company-operated stores
|
|
$
|
1,841.1
|
|
|
$
|
1,379.2
|
|
|
33.5
|
%
|
|
90.7
|
%
|
|
89.6
|
%
|
|
Licensed stores
|
|
182.6
|
|
|
156.4
|
|
|
16.8
|
|
|
9.0
|
|
|
10.2
|
|
|
Foodservice and other
|
|
6.3
|
|
|
4.0
|
|
|
57.5
|
|
|
0.3
|
|
|
0.3
|
|
|
Total net revenues
|
|
2,030.0
|
|
|
1,539.6
|
|
|
31.9
|
|
|
100.0
|
|
|
100.0
|
|
|
Cost of sales including occupancy costs
|
|
882.3
|
|
|
670.8
|
|
|
31.5
|
|
|
43.5
|
|
|
43.6
|
|
|
Store operating expenses
|
|
525.1
|
|
|
406.8
|
|
|
29.1
|
|
|
25.9
|
|
|
26.4
|
|
|
Other operating expenses
|
|
39.8
|
|
|
36.7
|
|
|
8.4
|
|
|
2.0
|
|
|
2.4
|
|
|
Depreciation and amortization expenses
|
|
175.3
|
|
|
98.0
|
|
|
78.9
|
|
|
8.6
|
|
|
6.4
|
|
|
General and administrative expenses
|
|
73.6
|
|
|
74.8
|
|
|
(1.6
|
)
|
|
3.6
|
|
|
4.9
|
|
|
Total operating expenses
|
|
1,696.1
|
|
|
1,287.1
|
|
|
31.8
|
|
|
83.6
|
|
|
83.6
|
|
|
Income from equity investees
|
|
67.5
|
|
|
86.6
|
|
|
(22.1
|
)
|
|
3.3
|
|
|
5.6
|
|
|
Operating income
|
|
$
|
401.4
|
|
|
$
|
339.1
|
|
|
18.4
|
%
|
|
19.8
|
%
|
|
22.0
|
%
|
|
Supplemental Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
Store operating expenses as a % of company-operated store revenues
|
|
|
|
28.5
|
%
|
|
29.5
|
%
|
|
Other operating expenses as a % of non-company-operated store
revenues
|
|
|
|
21.1
|
%
|
|
22.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
EMEA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apr 1,
2018
|
|
Apr 2,
2017
|
|
%
Change
|
|
Apr 1,
2018
|
|
Apr 2,
2017
|
|
|
|
Quarter Ended
|
|
|
|
|
|
|
|
As a % of EMEA
total net revenues
|
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Company-operated stores
|
|
$
|
138.7
|
|
|
$
|
127.5
|
|
|
8.8
|
%
|
|
52.1
|
%
|
|
55.0
|
%
|
|
Licensed stores
|
|
112.0
|
|
|
90.9
|
|
|
23.2
|
|
|
42.1
|
|
|
39.2
|
|
|
Foodservice
|
|
15.4
|
|
|
13.3
|
|
|
15.8
|
|
|
5.8
|
|
|
5.7
|
|
|
Total net revenues
|
|
266.1
|
|
|
231.7
|
|
|
14.8
|
|
|
100.0
|
|
|
100.0
|
|
|
Cost of sales including occupancy costs
|
|
145.1
|
|
|
122.6
|
|
|
18.4
|
|
|
54.5
|
|
|
52.9
|
|
|
Store operating expenses
|
|
57.7
|
|
|
50.3
|
|
|
14.7
|
|
|
21.7
|
|
|
21.7
|
|
|
Other operating expenses (1)
|
|
20.0
|
|
|
14.1
|
|
|
41.8
|
|
|
7.5
|
|
|
6.1
|
|
|
Depreciation and amortization expenses
|
|
8.1
|
|
|
7.6
|
|
|
6.6
|
|
|
3.0
|
|
|
3.3
|
|
|
General and administrative expenses
|
|
11.0
|
|
|
9.4
|
|
|
17.0
|
|
|
4.1
|
|
|
4.1
|
|
|
Restructuring and impairments (2)
|
|
28.5
|
|
|
—
|
|
|
nm
|
|
10.7
|
|
|
—
|
|
|
Total operating expenses
|
|
270.4
|
|
|
204.0
|
|
|
32.5
|
|
|
101.6
|
|
|
88.0
|
|
|
Operating income/(loss)
|
|
$
|
(4.3
|
)
|
|
$
|
27.7
|
|
|
(115.5
|
)%
|
|
(1.6
|
)%
|
|
12.0
|
%
|
|
Supplemental Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
Store operating expenses as a % of company-operated store revenues
|
|
|
|
41.6
|
%
|
|
39.5
|
%
|
|
Other operating expenses as a % of non-company-operated store
revenues
|
|
|
|
15.7
|
%
|
|
13.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Two Quarters Ended
|
|
|
|
|
|
|
|
|
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
Company-operated stores
|
|
$
|
290.2
|
|
|
$
|
273.4
|
|
|
6.1
|
%
|
|
52.8
|
%
|
|
55.4
|
%
|
|
Licensed stores
|
|
228.2
|
|
|
193.0
|
|
|
18.2
|
|
|
41.5
|
|
|
39.1
|
|
|
Foodservice
|
|
31.5
|
|
|
27.5
|
|
|
14.5
|
|
|
5.7
|
|
|
5.6
|
|
|
Total net revenues
|
|
549.9
|
|
|
493.9
|
|
|
11.3
|
|
|
100.0
|
|
|
100.0
|
|
|
Cost of sales including occupancy costs
|
|
297.2
|
|
|
258.7
|
|
|
14.9
|
|
|
54.0
|
|
|
52.4
|
|
|
Store operating expenses
|
|
112.4
|
|
|
97.1
|
|
|
15.8
|
|
|
20.4
|
|
|
19.7
|
|
|
Other operating expenses (1)
|
|
36.3
|
|
|
30.2
|
|
|
20.2
|
|
|
6.6
|
|
|
6.1
|
|
|
Depreciation and amortization expenses
|
|
15.8
|
|
|
15.2
|
|
|
3.9
|
|
|
2.9
|
|
|
3.1
|
|
|
General and administrative expenses
|
|
25.0
|
|
|
21.1
|
|
|
18.5
|
|
|
4.5
|
|
|
4.3
|
|
|
Restructuring and impairments (2)
|
|
28.5
|
|
|
—
|
|
|
nm
|
|
5.2
|
|
|
—
|
|
|
Total operating expenses
|
|
515.2
|
|
|
422.3
|
|
|
22.0
|
|
|
93.7
|
|
|
85.5
|
|
|
Operating income
|
|
$
|
34.7
|
|
|
$
|
71.6
|
|
|
(51.5
|
)%
|
|
6.3
|
%
|
|
14.5
|
%
|
|
Supplemental Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
Store operating expenses as a % of company-operated store revenues
|
|
|
|
38.7
|
%
|
|
35.5
|
%
|
|
Other operating expenses as a % of non-company-operated store
revenues
|
|
|
|
14.0
|
%
|
|
13.7
|
%
|
|
(1)
|
|
Includes $2.8 million of business process optimization costs,
primarily consulting fees.
|
|
(2)
|
|
Represents goodwill impairment of $28.5 million related to our
Switzerland retail business.
|
|
|
|
|
|
Channel Development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Apr 1,
2018
|
|
Apr 2,
2017
|
|
%
Change
|
|
Apr 1,
2018
|
|
Apr 2,
2017
|
|
|
|
Quarter Ended
|
|
|
|
|
|
|
|
As a % of
Channel Development
total net
revenues
|
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
CPG (1)
|
|
$
|
379.9
|
|
|
$
|
346.3
|
|
|
9.7
|
%
|
|
75.9
|
%
|
|
75.1
|
%
|
|
Foodservice
|
|
120.3
|
|
|
115.0
|
|
|
4.6
|
|
|
24.1
|
|
|
24.9
|
|
|
Total net revenues
|
|
500.2
|
|
|
461.3
|
|
|
8.4
|
|
|
100.0
|
|
|
100.0
|
|
|
Cost of sales
|
|
268.0
|
|
|
254.5
|
|
|
5.3
|
|
|
53.6
|
|
|
55.2
|
|
|
Other operating expenses
|
|
49.4
|
|
|
50.5
|
|
|
(2.2
|
)
|
|
9.9
|
|
|
10.9
|
|
|
Depreciation and amortization expenses
|
|
0.2
|
|
|
0.6
|
|
|
(66.7
|
)
|
|
—
|
|
|
0.1
|
|
|
General and administrative expenses
|
|
3.3
|
|
|
2.1
|
|
|
57.1
|
|
|
0.7
|
|
|
0.5
|
|
|
Total operating expenses
|
|
320.9
|
|
|
307.7
|
|
|
4.3
|
|
|
64.2
|
|
|
66.7
|
|
|
Income from equity investees
|
|
36.0
|
|
|
40.0
|
|
|
(10.0
|
)
|
|
7.2
|
|
|
8.7
|
|
|
Operating income
|
|
$
|
215.3
|
|
|
$
|
193.6
|
|
|
11.2
|
%
|
|
43.0
|
%
|
|
42.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Two Quarters Ended
|
|
|
|
|
|
|
|
|
|
|
|
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
CPG (1)
|
|
$
|
815.6
|
|
|
$
|
783.3
|
|
|
4.1
|
%
|
|
76.9
|
%
|
|
77.2
|
%
|
|
Foodservice
|
|
244.8
|
|
|
231.6
|
|
|
5.7
|
|
|
23.1
|
|
|
22.8
|
|
|
Total net revenues
|
|
1,060.4
|
|
|
1,014.9
|
|
|
4.5
|
|
|
100.0
|
|
|
100.0
|
|
|
Cost of sales
|
|
564.3
|
|
|
543.0
|
|
|
3.9
|
|
|
53.2
|
|
|
53.5
|
|
|
Other operating expenses
|
|
104.9
|
|
|
110.9
|
|
|
(5.4
|
)
|
|
9.9
|
|
|
10.9
|
|
|
Depreciation and amortization expenses
|
|
0.7
|
|
|
1.2
|
|
|
(41.7
|
)
|
|
0.1
|
|
|
0.1
|
|
|
General and administrative expenses
|
|
6.7
|
|
|
5.4
|
|
|
24.1
|
|
|
0.6
|
|
|
0.5
|
|
|
Total operating expenses
|
|
676.6
|
|
|
660.5
|
|
|
2.4
|
|
|
63.8
|
|
|
65.1
|
|
|
Income from equity investees
|
|
74.6
|
|
|
82.0
|
|
|
(9.0
|
)
|
|
7.0
|
|
|
8.1
|
|
|
Operating income
|
|
$
|
458.4
|
|
|
$
|
436.4
|
|
|
5.0
|
%
|
|
43.2
|
%
|
|
43.0
|
%
|
|
(1)
|
|
CPG revenues included an unfavorable revenue deduction adjustment
pertaining to periods prior to the Q2 FY17 and YTD FY17 of $20.6
million and $13.2 million, respectively, as recorded in Q2 FY17.
|
|
|
|
|
|
All Other Segments
|
|
|
|
|
|
|
|
|
|
|
Apr 1,
2018
|
|
Apr 2,
2017
|
|
%
Change
|
|
|
Quarter Ended
|
|
|
|
|
|
Net revenues:
|
|
|
|
|
|
|
|
|
Company-operated stores
|
|
$
|
25.9
|
|
|
$
|
45.2
|
|
|
(42.7
|
)%
|
|
Licensed stores
|
|
—
|
|
|
0.7
|
|
|
nm
|
|
CPG, foodservice and other
|
|
49.7
|
|
|
65.8
|
|
|
(24.5
|
)
|
|
Total net revenues
|
|
75.6
|
|
|
111.7
|
|
|
(32.3
|
)
|
|
Cost of sales including occupancy costs (1)
|
|
57.8
|
|
|
74.1
|
|
|
(22.0
|
)
|
|
Store operating expenses
|
|
13.6
|
|
|
34.5
|
|
|
(60.6
|
)
|
|
Other operating expenses
|
|
10.7
|
|
|
20.7
|
|
|
(48.3
|
)
|
|
Depreciation and amortization expenses
|
|
1.0
|
|
|
3.5
|
|
|
(71.4
|
)
|
|
General and administrative expenses
|
|
2.0
|
|
|
4.4
|
|
|
(54.5
|
)
|
|
Restructuring expenses (2)
|
|
105.3
|
|
|
—
|
|
|
nm
|
|
Total operating expenses
|
|
190.4
|
|
|
137.2
|
|
|
38.8
|
|
|
Operating loss
|
|
$
|
(114.8
|
)
|
|
$
|
(25.5
|
)
|
|
350.2
|
|
|
|
|
|
|
|
|
|
|
|
Two Quarters Ended
|
|
|
|
|
|
|
|
|
Net revenues:
|
|
|
|
|
|
|
|
|
Company-operated stores
|
|
$
|
86.7
|
|
|
$
|
116.2
|
|
|
(25.4
|
)%
|
|
Licensed stores
|
|
1.2
|
|
|
1.7
|
|
|
(29.4
|
)
|
|
CPG, foodservice and other
|
|
108.0
|
|
|
148.9
|
|
|
(27.5
|
)
|
|
Total net revenues
|
|
195.9
|
|
|
266.8
|
|
|
(26.6
|
)
|
|
Cost of sales including occupancy costs (1)
|
|
137.0
|
|
|
164.5
|
|
|
(16.7
|
)
|
|
Store operating expenses
|
|
43.7
|
|
|
65.2
|
|
|
(33.0
|
)
|
|
Other operating expenses
|
|
22.1
|
|
|
38.2
|
|
|
(42.1
|
)
|
|
Depreciation and amortization expenses
|
|
1.7
|
|
|
6.3
|
|
|
(73.0
|
)
|
|
General and administrative expenses
|
|
4.7
|
|
|
8.0
|
|
|
(41.3
|
)
|
|
Restructuring expenses (2)
|
|
131.3
|
|
|
—
|
|
|
nm
|
|
Total operating expenses
|
|
340.5
|
|
|
282.2
|
|
|
20.7
|
|
|
Operating loss
|
|
$
|
(144.6
|
)
|
|
$
|
(15.4
|
)
|
|
839.0
|
%
|
|
(1)
|
|
As a result of our restructuring efforts, ($2.3) million and $2.1
million for the quarter and two quarters ended April 1, 2018,
respectively, was recorded in cost of sales including occupancy
costs related to inventory write-offs.
|
|
(2)
|
|
Primarily includes restructuring expenses of $105.3 million and
$131.3 million for the quarter and two quarters ended April 1, 2018,
respectively, associated with our Teavana-branded stores.
|
|
|
|
|
Supplemental Information
The following supplemental information is provided for historical and
comparative purposes.
|
U.S. Supplemental Data
|
|
|
|
|
|
|
|
|
Quarter Ended
|
|
|
|
($ in millions)
|
Apr 1, 2018
|
|
Apr 2, 2017
|
|
Change
|
|
Revenues
|
$3,656.2
|
|
$3,417.0
|
|
7%
|
|
Comparable Store Sales Growth(1)
|
2%
|
|
3%
|
|
|
|
Change in Transactions
|
0%
|
|
(2%)
|
|
|
|
Change in Ticket
|
3%
|
|
4%
|
|
|
|
(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
|
|
Two Quarters Ended
|
|
Stores open as of
|
|
|
|
Apr 1,
2018
|
|
Apr 2,
2017
|
|
Apr 1,
2018
|
|
Apr 2,
2017
|
|
Apr 1,
2018
|
|
Apr 2,
2017
|
|
Americas:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-operated stores
|
|
(29
|
)
|
|
82
|
|
|
83
|
|
|
157
|
|
|
9,496
|
|
|
9,176
|
|
Licensed stores
|
|
216
|
|
|
118
|
|
|
382
|
|
|
294
|
|
|
7,528
|
|
|
6,882
|
|
Total Americas
|
|
187
|
|
|
200
|
|
|
465
|
|
|
451
|
|
|
17,024
|
|
|
16,058
|
|
China/Asia Pacific(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-operated stores
|
|
134
|
|
|
67
|
|
|
1,746
|
|
|
171
|
|
|
4,816
|
|
|
2,982
|
|
Licensed stores
|
|
82
|
|
|
120
|
|
|
(1,230
|
)
|
|
319
|
|
|
3,179
|
|
|
3,951
|
|
Total China/Asia Pacific
|
|
216
|
|
|
187
|
|
|
516
|
|
|
490
|
|
|
7,995
|
|
|
6,933
|
|
EMEA:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-operated stores
|
|
(7
|
)
|
|
—
|
|
|
(6
|
)
|
|
(18
|
)
|
|
496
|
|
|
505
|
|
Licensed stores
|
|
71
|
|
|
46
|
|
|
193
|
|
|
159
|
|
|
2,665
|
|
|
2,278
|
|
Total EMEA
|
|
64
|
|
|
46
|
|
|
187
|
|
|
141
|
|
|
3,161
|
|
|
2,783
|
|
All Other Segments(2):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company-operated stores
|
|
(285
|
)
|
|
(7
|
)
|
|
(286
|
)
|
|
(9
|
)
|
|
4
|
|
|
349
|
|
Licensed stores
|
|
(12
|
)
|
|
1
|
|
|
(12
|
)
|
|
3
|
|
|
25
|
|
|
38
|
|
Total All Other Segments
|
|
(297
|
)
|
|
(6
|
)
|
|
(298
|
)
|
|
(6
|
)
|
|
29
|
|
|
387
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Company
|
|
170
|
|
|
427
|
|
|
870
|
|
|
1,076
|
|
|
28,209
|
|
|
26,161
|
|
|
|
(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 April 1, 2018, All Other Segments included 25 licensed
Teavana-branded stores.
|
|
|
|
|
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.
|
|
Sale of Brazil retail operations
|
|
Management excludes the net loss related to the sale of our Brazil
retail operations and associated transaction costs as these items do
not reflect future losses, expenses or tax impacts for reasons
discussed above.
|
|
Restructuring, impairment and optimization costs
|
|
Management excludes restructuring charges and business process
optimization costs related to strategic shifts in its Teavana,
e-commerce and other business units. Additionally, management
excludes expenses related to divesting certain lower margin
businesses and assets, such as closure of certain company-operated
stores and Switzerland goodwill impairment. Management excludes
these items for reasons discussed above. 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
|
|
Apr 1,
2018
|
|
Apr 2,
2017
|
|
Change
|
|
Operating income, as reported (GAAP)
|
|
$
|
772.5
|
|
|
$
|
935.4
|
|
|
(17.4)%
|
|
Restructuring, impairment and optimization costs (1)
|
|
135.2
|
|
|
—
|
|
|
|
|
CAP transaction and integration-related items (2)
|
|
66.9
|
|
|
13.8
|
|
|
|
|
Sale of Brazil retail operations transaction costs
|
|
1.6
|
|
|
—
|
|
|
|
|
Sale of Tazo brand transaction costs
|
|
0.9
|
|
|
—
|
|
|
|
|
Non-GAAP operating income
|
|
$
|
977.1
|
|
|
$
|
949.2
|
|
|
2.9%
|
|
|
|
|
|
|
|
|
|
Operating margin, as reported (GAAP)
|
|
12.8
|
%
|
|
17.7
|
%
|
|
(490) bps
|
|
Restructuring, impairment and optimization costs (1)
|
|
2.2
|
|
|
—
|
|
|
|
|
CAP transaction and integration-related items (2)
|
|
1.1
|
|
|
0.3
|
|
|
|
|
Sale of Brazil retail operations transaction costs
|
|
—
|
|
|
—
|
|
|
|
|
Sale of Tazo brand
|
|
—
|
|
|
—
|
|
|
|
|
Non-GAAP operating margin
|
|
16.2
|
%
|
|
17.9
|
%
|
|
(170) bps
|
|
|
|
|
|
|
|
|
|
Diluted net earnings per share, as reported (GAAP)
|
|
$
|
0.47
|
|
|
$
|
0.45
|
|
|
4.4%
|
|
East China acquisition gain
|
|
(0.03
|
)
|
|
—
|
|
|
|
|
Sale of Taiwan joint venture operations
|
|
—
|
|
|
—
|
|
|
|
|
Sale of Tazo brand, net of transaction costs
|
|
—
|
|
|
—
|
|
|
|
|
Restructuring, impairment and optimization costs (1)
|
|
0.10
|
|
|
—
|
|
|
|
|
CAP transaction and integration-related items (2)
|
|
0.05
|
|
|
0.01
|
|
|
|
|
Sale of Germany retail operations (3)
|
|
—
|
|
|
(0.01
|
)
|
|
|
|
Loss on sale of Brazil retail operations, net of transaction costs
|
|
—
|
|
|
—
|
|
|
|
|
Other tax matters (4)
|
|
0.02
|
|
|
—
|
|
|
|
|
Income tax effect on Non-GAAP adjustments (5)
|
|
(0.08
|
)
|
|
—
|
|
|
|
|
Non-GAAP net earnings per share
|
|
$
|
0.53
|
|
|
$
|
0.45
|
|
|
17.8%
|
|
(1)
|
|
Represents $106.2 million associated with our restructuring efforts,
primarily lease termination costs, $28.5 million of Switzerland
goodwill impairment and $2.8 million of business process
optimization costs, primarily consulting fees. These were partially
offset by $2.3 million of reduced inventory write-offs related to
these efforts, which 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 East China and Starbucks Japan;
and the related post-acquisition integration costs, such as
incremental information technology and compensation-related costs.
|
|
(3)
|
|
Represents a Q2 FY17 adjustment associated with estimated
indemnifications related to the sale of our Germany retail
operations, which occurred in FY16.
|
|
(4)
|
|
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.
|
|
(5)
|
|
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
|
|
(0.98
|
)
|
|
—
|
|
|
|
|
Sale of Taiwan joint venture operations
|
|
(0.11
|
)
|
|
—
|
|
|
|
|
Sale of Tazo brand
|
|
(0.25
|
)
|
|
—
|
|
|
|
|
Restructuring, impairment and optimization costs (1)
|
|
0.14
|
|
|
0.11
|
|
|
|
|
CAP transaction and integration-related items (2)
|
|
0.18
|
|
|
0.04
|
|
|
|
|
Sale of Brazil retail operations
|
|
0.01
|
|
|
—
|
|
|
|
|
Sale of Singapore retail operations
|
|
—
|
|
|
(0.06
|
)
|
|
|
|
Sale of Germany retail operations
|
|
—
|
|
|
(0.01
|
)
|
|
|
|
The Starbucks Foundation donation
|
|
—
|
|
|
0.03
|
|
|
|
|
Other tax matters (3)
|
|
0.13
|
|
|
—
|
|
|
|
|
2018 U.S. stock award (4)
|
|
0.03
|
|
|
—
|
|
|
|
|
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, impairment and business optimization costs
and inventory write-offs related to these efforts 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: https://www.businesswire.com/news/home/20180426006721/en/
Source: Starbucks Corporation