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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Starbucks Corporation | NASDAQ:SBUX | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.53 | -0.70% | 75.65 | 75.71 | 75.75 | 76.73 | 75.52 | 76.23 | 10,960,364 | 00:57:18 |
Comp Store Sales Rise 7% Globally; 7% in the Americas and 12% in CAP; Global Traffic Up 3%
Net Revenues Rise 18% to a Q2 Record $4.6 Billion
GAAP Operating Income Up 21% to a Q2 Record $778 Million; Non-GAAP Operating Income Up 23% to $789 Million
Channel Development Revenues Up 16% and Operating Income Up 23%
Earnings Per Share Jump 18% to a Split-Adjusted Q2 Record $0.33 Per Share
Starbucks Corporation (NASDAQ: SBUX) today reported financial results for its 13-week fiscal second quarter and 26-week fiscal year to date ended March 29, 2015. All per-share data has been adjusted for the stock split announced on March 18, 2015 and effected on April 9, 2015. Q2 FY15 GAAP results include Starbucks Japan acquisition-related items; non-GAAP results exclude these items. Please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release.
Q2 Fiscal 2015 Highlights:
“Starbucks record financial and operating performance in Q2 was driven by our people all around the world yet woven together by one common thread - industry leading partner (employee) facing and customer facing innovation,” said Howard Schultz, Starbucks chairman and ceo. “Innovation is the force that will continue to drive our business and enable us to expand and increase revenues and profits - always through the lens of humanity - long into the future,” Schultz added.
“Starbucks Q2 represented another quarter of strong revenue growth and record operating and financial performance all around the world, and despite significant foreign exchange headwinds,” said Scott Maw, Starbucks cfo. “As we enter the second half of 2015 - and look to the future - we are ideally positioned to continue benefiting from the investments we are making in our people, in innovation and in our stores - and to continue delivering world class returns to our shareholders.”
Second Quarter Fiscal 2015 Summary
Quarter Ended Mar 29, 2015 Comparable Store Sales(1) Sales Growth Change in Transactions Change in Ticket Consolidated 7% 3% 4% Americas 7% 2% 5% EMEA 2% 2% 1% CAP 12% 10% 2% (1) Includes only Starbucks company-operated stores open 13 months or longer. Operating Results Quarter Ended ($ in millions, except per share amounts) Mar 29, 2015 Mar 30, 2014 Change Net New Stores(1) 210 335 (125) Revenues $4,563.5 $3,873.8 18% Operating Income $777.5 $644.1 21% Operating Margin 17.0% 16.6% 40 bps EPS $0.33 $0.28 18%(1) Net new stores include the closure of 132 Target Canada licensed stores in the second quarter of fiscal 2015.
Consolidated net revenues were $4.6 billion in Q2 FY15, an increase of 18% over Q2 FY14. The increase was primarily driven by incremental revenues from the acquisition of Starbucks Japan, a 7% increase in global comparable store sales and the opening of 1,511 net new stores over the past 12 months, and was partially offset by unfavorable foreign currency translation.
Consolidated operating income grew 21% to $777.5 million in Q2 FY15, up from $644.1 million in Q2 FY14. Consolidated operating margin of 17.0% expanded 40 basis points primarily driven by sales leverage and partially offset by the impact of our ownership change in Starbucks Japan, which drove 100 basis points of margin decline.
Q2 Americas Segment Results
Quarter Ended ($ in millions) Mar 29, 2015 Mar 30, 2014 ChangeNet New Stores(1)
(2) 128 (130) Revenues $3,128.0 $2,808.8 11% Operating Income $709.6 $605.6 17% Operating Margin 22.7% 21.6% 110 bps(1) Net new stores include the closure of 132 Target Canada licensed stores in the second quarter of fiscal 2015.
Net revenues for the Americas segment were $3.1 billion in Q2 FY15, an increase of 11% over Q2 FY14. The increase was driven by 7% growth in comparable store sales and incremental revenues from 636 net new store openings over the past 12 months.
Operating income of $709.6 million in Q2 FY15 increased 17% from $605.6 million in Q2 FY14. Operating margin of 22.7% expanded 110 basis points primarily driven by sales leverage and partially offset by investments in our store partners (employees).
Q2 EMEA Segment Results
Quarter Ended ($ in millions) Mar 29, 2015 Mar 30, 2014 Change Net New Stores 35 32 3 Revenues $280.3 $309.9 (10)% Operating Income $29.2 $17.7 65% Operating Margin 10.4% 5.7% 470 bpsNet revenues for the EMEA segment were $280.3 million in Q2 FY15, a 10% decrease versus Q2 FY14. The decrease was primarily driven by unfavorable foreign currency translation and the shift in the portfolio towards more licensed stores. Partially offsetting the decrease was a 2% increase in comparable store sales.
Operating income increased 65% to $29.2 million in Q2 FY15, up from $17.7 million in Q2 FY14. Operating margin expanded 470 basis points to 10.4%, primarily due to sales leverage driven by the ongoing shift in the portfolio towards more licensed stores.
Q2 China/Asia Pacific Segment Results
Quarter Ended ($ in millions) Mar 29, 2015 Mar 30, 2014 Change Net New Stores 176 174 2 Revenues $595.2 $265.3 124% Operating Income $112.4 $87.0 29% Operating Margin 18.9% 32.8% (1,390) bpsNet revenues for the China/Asia Pacific segment grew 124% to $595.2 million in Q2 FY15. The increase was primarily driven by incremental revenues from the acquisition of Starbucks Japan. Also contributing were incremental revenues from 711 net new store openings over the past 12 months and a 12% increase in comparable store sales.
Operating income grew 29% to $112.4 million in Q2 FY15. Operating margin declined 1,390 basis points to 18.9% due to the impact of our ownership change in Starbucks Japan, which drove a 1,470 basis point decline. The remaining 80 basis point expansion was primarily driven by sales leverage.
Q2 Channel Development Segment Results
Quarter Ended ($ in millions) Mar 29, 2015 Mar 30, 2014 Change Revenues $428.0 $370.4 16% Operating Income $156.1 $127.3 23% Operating Margin 36.5% 34.4% 210 bpsNet revenues for the Channel Development segment grew 16% to $428.0 million in Q2 FY15, primarily driven by increased sales of premium single-serve products. Increased sales of packaged coffee and foodservice sales also contributed.
Operating income of $156.1 million in Q2 FY15 grew 23% compared to Q2 FY14. Operating margin increased 210 basis points to 36.5%, primarily due to efficiencies in cost of goods sold, increased income from our North American Coffee Partnership and sales leverage.
Q2 All Other Segments Results
Quarter Ended ($ in millions) Mar 29, 2015 Mar 30, 2014 Change Net New Stores 1 1 0 Revenues $132.0 $119.4 11% Operating Loss $(4.1) $(7.8) (47)%Year to Date Financial Results
Two Quarters Ended Mar 29, 2015 Comparable Store Sales(1) Sales Growth Change in Transactions Change in Ticket Consolidated 6% 2% 4% Americas 6% 2% 4% EMEA 3% 2% 1% CAP 10% 9% 1% (1) Includes only Starbucks company-operated stores open 13 months or longer. Operating Results Two Quarters Ended ($ in millions, except per share amounts) Mar 29, 2015 Mar 30, 2014 ChangeNet New Stores(1)
722 752 (30) Revenues $9,366.8 $8,113.4 15% Operating Income $1,693.1 $1,457.7 16% Operating Margin 18.1% 18.0% 10 bps EPS $0.97 $0.63 54%(1) Net new stores include the closure of 132 Target Canada licensed stores in the second quarter of fiscal 2015.
Fiscal 2015 Targets
Starbucks is providing the following fiscal 2015 targets. Projected FY15 non-GAAP adjustments relate to the acquisition of Starbucks Japan; please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release.
The Company Reaffirms the Following Targets:
The Company Updates the Following Targets:
Company Updates
Conference Call
Starbucks will be holding a conference call today at 2:00 p.m. Pacific Time, which will be hosted by Howard Schultz, chairman and ceo; Kevin Johnson, 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 through approximately 9:00 p.m. Pacific Time on Thursday, May 21, 2015.
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, health and potential of our business, operations and brand, our innovation, growth and growth opportunities and related investments, earnings per share, revenues, operating margins, profits, capital expenditures, tax rate, financial discipline, anticipated gains and costs related to the acquisition of Starbucks Japan, comparable store sales and net new stores. 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 material breaches of our information technology systems if any were to occur, costs associated with, and the successful execution of, the company’s initiatives and plans, including the acquisition of Starbucks Japan, the acceptance of the company’s products by our customers, the impact of competition, coffee, dairy and other raw material prices and availability, the effect of legal proceedings, and other risks detailed in the company filings with the Securities and Exchange Commission, including the “Risk Factors” section of Starbucks Annual Report on Form 10-K for the fiscal year ended September 28, 2014. 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 Mar 29, 2015 Mar 30, 2014 %Change
Mar 29, 2015 Mar 30, 2014 As a % of totalnet revenues
Net revenues: Company-operated stores $ 3,622.9 $ 3,068.0 18.1 % 79.4 % 79.2 % Licensed stores 421.3 356.2 18.3 9.2 9.2 CPG, foodservice and other 519.3 449.6 15.5 11.4 11.6 Total net revenues 4,563.5 3,873.8 17.8 100.0 100.0 Cost of sales including occupancy costs 1,859.8 1,629.2 14.2 40.8 42.1 Store operating expenses 1,324.6 1,134.5 16.8 29.0 29.3 Other operating expenses 133.5 110.9 20.4 2.9 2.9 Depreciation and amortization expenses 217.1 174.4 24.5 4.8 4.5 General and administrative expenses 305.9 240.6 27.1 6.7 6.2 Total operating expenses 3,840.9 3,289.6 16.8 84.2 84.9 Income from equity investees 54.9 59.9 (8.3 ) 1.2 1.5 Operating income 777.5 644.1 20.7 17.0 16.6 Interest income and other, net 1.3 17.8 (92.7 ) — 0.5 Interest expense (16.9 ) (16.7 ) 1.2 (0.4 ) (0.4 ) Earnings before income taxes 761.9 645.2 18.1 16.7 16.7 Income taxes 266.3 218.3 22.0 5.8 5.6 Net earnings including noncontrolling interests 495.6 426.9 16.1 10.9 11.0 Net earnings/(loss) attributable to noncontrolling interests 0.7 (0.1 ) nm — — Net earnings attributable to Starbucks $ 494.9 $ 427.0 15.9 10.8 % 11.0 % Net earnings per common share - diluted $ 0.33 $ 0.28 17.9 % Weighted avg. shares outstanding - diluted 1,516.5 1,529.1 Cash dividends declared per share $ 0.160 $ 0.130 Supplemental Ratios: Store operating expenses as a percentage of company-operated store revenues 36.6 % 37.0 % Effective tax rate including noncontrolling interests 35.0 % 33.8 % Two Quarters Ended Two Quarters Ended Mar 29, 2015 Mar 30, 2014 %Change
Mar 29, 2015 Mar 30, 2014As a % of total
net revenues
Net revenues: Company-operated stores $ 7,395.7 $ 6,411.8 15.3 % 79.0 % 79.0 % Licensed stores 905.3 758.0 19.4 9.7 9.3 CPG, foodservice and other 1,065.8 943.6 13.0 11.4 11.6 Total net revenues 9,366.8 8,113.4 15.4 100.0 100.0 Cost of sales including occupancy costs 3,851.0 3,424.2 12.5 41.1 42.2 Store operating expenses 2,640.1 2,309.6 14.3 28.2 28.5 Other operating expenses 262.9 225.8 16.4 2.8 2.8 Depreciation and amortization expenses 423.1 344.1 23.0 4.5 4.2 General and administrative expenses 604.3 483.2 25.1 6.5 6.0 Litigation credit — (20.2 ) (100.0 ) — (0.2 ) Total operating expenses 7,781.4 6,766.7 15.0 83.1 83.4 Income from equity investees 107.7 111.0 (3.0 ) 1.1 1.4 Operating income 1,693.1 1,457.7 16.1 18.1 18.0 Gain resulting from acquisition of joint venture 390.6 — nm 4.2 — Interest income and other, net 11.1 37.6 (70.5 ) 0.1 0.5 Interest expense (33.2 ) (31.3 ) 6.1 (0.4 ) (0.4 ) Earnings before income taxes 2,061.6 1,464.0 40.8 22.0 18.0 Income taxes 581.2 496.4 17.1 6.2 6.1 Net earnings including noncontrolling interests 1,480.4 967.6 53.0 15.8 11.9 Net earnings/(loss) attributable to noncontrolling interests 2.1 — nm — — Net earnings attributable to Starbucks $ 1,478.3 $ 967.6 52.8 % 15.8 % 11.9 % Net earnings per common share - diluted $ 0.97 $ 0.63 54.0 % Weighted avg. shares outstanding - diluted 1,516.7 1,530.7 Cash dividends declared per share $ 0.320 $ 0.260 Supplemental Ratios: Store operating expenses as a percentage of company-operated store revenues 35.7 % 36.0 % Effective tax rate including noncontrolling interests 28.2 % 33.9 %Segment Results (in millions)
Americas
Mar 29, 2015 Mar 30, 2014 %Change
Mar 29, 2015 Mar 30, 2014Quarter Ended
As a % of Americastotal net revenues
Net revenues: Company-operated stores $ 2,818.6 $ 2,561.3 10.0 % 90.1 % 91.2 % Licensed stores 301.9 237.8 27.0 9.7 8.5 Foodservice and other 7.5 9.7 (22.7 ) 0.2 0.3 Total net revenues 3,128.0 2,808.8 11.4 100.0 100.0 Cost of sales including occupancy costs 1,135.8 1,059.6 7.2 36.3 37.7 Store operating expenses 1,065.0 963.9 10.5 34.0 34.3 Other operating expenses 36.4 23.7 53.6 1.2 0.8 Depreciation and amortization expenses 128.6 114.8 12.0 4.1 4.1 General and administrative expenses 52.6 41.2 27.7 1.7 1.5 Total operating expenses 2,418.4 2,203.2 9.8 77.3 78.4 Operating income $ 709.6 $ 605.6 17.2 % 22.7 % 21.6 % Supplemental Ratios: Store operating expenses as a percentage of company-operated store revenues 37.8 % 37.6 %Two Quarters Ended
Net revenues: Company-operated stores $ 5,829.2 $ 5,348.2 9.0 % 89.8 % 90.9 % Licensed stores 648.1 512.1 26.6 10.0 8.7 Foodservice and other 17.6 21.4 (17.8 ) 0.3 0.4 Total net revenues 6,494.9 5,881.7 10.4 100.0 100.0 Cost of sales including occupancy costs 2,396.8 2,223.8 7.8 36.9 37.8 Store operating expenses 2,149.4 1,963.5 9.5 33.1 33.4 Other operating expenses 66.6 49.0 35.9 1.0 0.8 Depreciation and amortization expenses 255.7 227.1 12.6 3.9 3.9 General and administrative expenses 99.3 80.7 23.0 1.5 1.4 Total operating expenses 4,967.8 4,544.1 9.3 76.5 77.3 Operating income $ 1,527.1 $ 1,337.6 14.2 % 23.5 % 22.7 % Supplemental Ratios: Store operating expenses as a percentage of company-operated store revenues 36.9 % 36.7 %EMEA
Mar 29, 2015 Mar 30, 2014 %Change
Mar 29, 2015 Mar 30, 2014Quarter Ended
As a % of EMEAtotal net revenues
Net revenues: Company-operated stores $ 212.5 $ 245.5 (13.4 )% 75.8 % 79.2 % Licensed stores 56.6 54.4 4.0 20.2 17.6 Foodservice 11.2 10.0 12.0 4.0 3.2 Total net revenues 280.3 309.9 (9.6 ) 100.0 100.0 Cost of sales including occupancy costs 135.0 158.3 (14.7 ) 48.2 51.1 Store operating expenses 76.2 92.4 (17.5 ) 27.2 29.8 Other operating expenses 13.5 11.8 14.4 4.8 3.8 Depreciation and amortization expenses 12.7 14.8 (14.2 ) 4.5 4.8 General and administrative expenses 14.7 16.0 (8.1 ) 5.2 5.2 Total operating expenses 252.1 293.3 (14.0 ) 89.9 94.6 Income from equity investees 1.0 1.1 (9.1 ) 0.4 0.4 Operating income $ 29.2 $ 17.7 65.0 % 10.4 % 5.7 % Supplemental Ratios: Store operating expenses as a percentage of company-operated store revenues 35.9 % 37.6 %Two Quarters Ended
Net revenues: Company-operated stores $ 470.2 $ 514.5 (8.6 )% 76.6 % 79.2 % Licensed stores 119.9 115.0 4.3 19.5 17.7 Foodservice 23.6 20.0 18.0 3.8 3.1 Total net revenues 613.7 649.5 (5.5 ) 100.0 100.0 Cost of sales including occupancy costs 291.4 326.5 (10.8 ) 47.5 50.3 Store operating expenses 162.0 188.8 (14.2 ) 26.4 29.1 Other operating expenses 27.2 23.4 16.2 4.4 3.6 Depreciation and amortization expenses 26.5 29.4 (9.9 ) 4.3 4.5 General and administrative expenses 28.7 32.1 (10.6 ) 4.7 4.9 Total operating expenses 535.8 600.2 (10.7 ) 87.3 92.4 Income from equity investees 1.2 1.9 (36.8 ) 0.2 0.3 Operating income $ 79.1 $ 51.2 54.5 % 12.9 % 7.9 % Supplemental Ratios: Store operating expenses as a percentage of company-operated store revenues 34.5 % 36.7 %China/Asia Pacific (CAP)
Mar 29, 2015 Mar 30, 2014 %Change
Mar 29, 2015 Mar 30, 2014Quarter Ended
As a % of CAPtotal net revenues
Net revenues: Company-operated stores $ 532.3 $ 202.5 162.9 % 89.4 % 76.3 % Licensed stores 61.4 62.8 (2.2 ) 10.3 23.7 Foodservice and other 1.5 — nm 0.3 — Total net revenues 595.2 265.3 124.3 100.0 100.0 Cost of sales including occupancy costs 269.4 127.4 111.5 45.3 48.0 Store operating expenses 157.0 52.4 199.6 26.4 19.8 Other operating expenses 12.5 11.1 12.6 2.1 4.2 Depreciation and amortization expenses 37.0 11.8 213.6 6.2 4.4 General and administrative expenses 32.4 13.0 149.2 5.4 4.9 Total operating expenses 508.3 215.7 135.7 85.4 81.3 Income from equity investees 25.5 37.4 (31.8 ) 4.3 14.1 Operating income $ 112.4 $ 87.0 29.2 % 18.9 % 32.8 % Supplemental Ratios: Store operating expenses as a percentage of company-operated store revenues 29.5 % 25.9 %Two Quarters Ended
Net revenues: Company-operated stores $ 954.1 $ 404.1 136.1 % 87.5 % 75.9 % Licensed stores 134.6 128.1 5.1 % 12.3 24.1 Foodservice and other 2.3 — nm 0.2 — Total net revenues 1,091.0 532.2 105.0 100.0 100.0 Cost of sales including occupancy costs 503.0 260.2 93.3 46.1 48.9 Store operating expenses 274.8 103.7 165.0 25.2 19.5 Other operating expenses 27.6 21.7 27.2 2.5 4.1 Depreciation and amortization expenses 65.1 22.0 195.9 6.0 4.1 General and administrative expenses 58.1 27.1 114.4 5.3 5.1 Total operating expenses 928.6 434.7 113.6 85.1 81.7 Income from equity investees 58.2 70.5 (17.4 ) 5.3 13.2 Operating income $ 220.6 $ 168.0 31.3 % 20.2 % 31.6 % Supplemental Ratios: Store operating expenses as a percentage of company-operated store revenues 28.8 % 25.7 %Channel Development
Mar 29, 2015 Mar 30, 2014 %Change
Mar 29, 2015 Mar 30, 2014Quarter Ended
As a % ofChannel Development
total net revenues
Net revenues: CPG $ 329.8 $ 282.1 16.9 % 77.1 % 76.2 % Foodservice 98.2 88.3 11.2 22.9 23.8 Total net revenues 428.0 370.4 15.6 100.0 100.0 Cost of sales 244.5 213.6 14.5 57.1 57.7 Other operating expenses 50.9 46.6 9.2 11.9 12.6 Depreciation and amortization expenses 0.6 0.4 50.0 0.1 0.1 General and administrative expenses 4.3 3.9 10.3 1.0 1.1 Total operating expenses 300.3 264.5 13.5 70.2 71.4 Income from equity investees 28.4 21.4 32.7 6.6 5.8 Operating income $ 156.1 $ 127.3 22.6 % 36.5 % 34.4 %Two Quarters Ended
Net revenues: CPG $ 673.5 $ 588.5 14.4 % 77.4 % 76.3 % Foodservice 197.0 183.0 7.7 22.6 23.7 Total net revenues 870.5 771.5 12.8 100.0 100.0 Cost of sales 493.8 459.2 7.5 56.7 59.5 Other operating expenses 102.0 94.6 7.8 11.7 12.3 Depreciation and amortization expenses 1.3 0.8 62.5 0.1 0.1 General and administrative expenses 8.4 9.3 (9.7 ) 1.0 1.2 Total operating expenses 605.5 563.9 7.4 69.6 73.1 Income from equity investees 48.3 38.6 25.1 5.5 5.0 Operating income $ 313.3 $ 246.2 27.3 % 36.0 % 31.9 %All Other Segments
Mar 29, 2015 Mar 30, 2014 %Change
Quarter Ended
Net revenues: Company-operated stores $ 59.5 $ 58.7 1.4 % Licensed stores 1.4 1.2 16.7 CPG, foodservice and other 71.1 59.5 19.5 Total net revenues 132.0 119.4 10.6 Cost of sales including occupancy costs 76.6 68.8 11.3 Store operating expenses 26.4 25.8 2.3 Other operating expenses 20.3 18.0 12.8 Depreciation and amortization expenses 3.9 3.7 5.4 General and administrative expenses 8.9 10.9 (18.3 ) Total operating expenses 136.1 127.2 7.0 Operating loss $ (4.1 ) $ (7.8 ) (47.4 )%Two Quarters Ended
Net revenues: Company-operated stores $ 142.2 $ 145.0 (1.9 )% Licensed stores 2.7 2.8 (3.6 ) CPG, foodservice and other 151.8 130.7 16.1 Total net revenues 296.7 278.5 6.5 Cost of sales including occupancy costs 169.8 151.3 12.2 Store operating expenses 53.9 53.6 0.6 Other operating expenses 39.8 37.6 5.9 Depreciation and amortization expenses 7.9 7.3 8.2 General and administrative expenses 18.9 22.6 (16.4 ) Total operating expenses 290.3 272.4 6.6 Operating income $ 6.4 $ 6.1 4.9 %Supplemental Information
The following supplemental information is provided for historical and comparative purposes.
U.S. Supplemental Data
Quarter Ended ($ in millions) Mar 29, 2015 Mar 30, 2014 Change Revenues $2,842.1 $2,520.4 13% Comparable Store Sales Growth(1) 7% 6% Change in Transactions 2% 2% Change in Ticket 5% 3% (1) Includes only Starbucks company-operated stores open 13 months or longerStore Data:
Net stores opened (closed) during the period Quarter Ended Two Quarters Ended Stores open as of Mar 29, 2015 Mar 30, 2014 Mar 29, 2015 Mar 30, 2014 Mar 29, 2015 Mar 30, 2014 Americas(1) Company-operated stores 52 59 119 86 8,514 8,164 Licensed stores (54 ) 69 89 184 5,885 5,599 (2 ) 128 208 270 14,399 13,763 EMEA(2) Company-operated stores (17 ) 1 (24 ) 4 793 830 Licensed stores 52 31 117 92 1,440 1,235 35 32 93 96 2,233 2,065CAP(3,4)
Company-operated stores 66 53 1,137 114 2,269 996 Licensed stores 110 121 (727 ) 269 2,765 3,269 176 174 410 383 5,034 4,265 All Other Segments Company-operated stores 1 4 10 11 379 368 Licensed stores — (3 ) 1 (8 ) 43 58 1 1 11 3 422 426 Total Company 210 335 722 752 22,088 20,519 (1) Americas store data includes the closure of 132 Target Canada licensed stores in the second quarter of fiscal 2015. (2) EMEA store data has been adjusted for the transfer of certain company-operated stores to licensed stores in the second and fourth quarters of fiscal 2014. (3) CAP store data includes the transfer of 1,009 Japan stores from licensed stores to company-operated as a result of the acquisition of Starbucks Japan in the first quarter of fiscal 2015. (4) CAP store data has been adjusted for the transfer of certain company-operated stores to licensed stores in the fourth quarter of fiscal 2014.Non-GAAP Disclosure
In addition to the GAAP results provided in this release, the company provides consolidated non-GAAP earnings per share ("non-GAAP EPS") for Q4 and full year fiscal 2014, consolidated non-GAAP operating income, non-GAAP operating margin and non-GAAP EPS for Q2 fiscal 2015, China/Asia Pacific (“CAP”) segment non-GAAP operating income and non-GAAP operating margin for Q2 fiscal 2015, and projected consolidated non-GAAP EPS for Q3, Q4 and full year fiscal 2015. These non-GAAP financial measures are not in accordance with, or alternatives for, generally accepted accounting principles in the United States. 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. The company’s management believes that providing these non-GAAP financial measures better enables investors to understand and evaluate the company’s historical and prospective operating performance.
The consolidated Q4 and full year fiscal 2014 non-GAAP EPS excludes the net benefit from transactions in Q4 fiscal 2014. The consolidated full year fiscal 2014 non-GAAP EPS also excludes the benefit recognized from a Kraft related litigation credit in Q1 fiscal 2014. The net benefit from transactions in Q4 fiscal 2014 includes a gain on the sale of our Malaysia equity method investment, partially offset by a loss on the sale of our Australia retail operations and transaction costs incurred related to the acquisition of Starbucks Japan. Management excludes these items because they believe the impacts do not reflect expected future gains or expenses and do not contribute to a meaningful evaluation of the company’s future operating performance or comparisons to the company’s past operating performance.
The consolidated Q2 fiscal 2015 non-GAAP financial measures exclude certain Starbucks Japan acquisition-related items, specifically amortization expense from acquired intangible assets and transaction and integration costs. The Q2 fiscal 2015 CAP segment non-GAAP financial measures exclude the amortization expense from acquired intangible assets related to the acquisition of Starbucks Japan. Management excludes the acquisition-related transaction costs described above because they believe these items do not reflect expected future expenses and do not contribute to a meaningful evaluation of the company’s future operating performance or comparisons to the company’s past operating performance. In addition, management believes it is useful to exclude the integration costs and the amortization of the acquired intangible assets when evaluating performance because they are not representative of our core business operations. Although these items will affect earnings per share beyond fiscal 2015, the majority of these costs will be recognized over a finite period of time. More specifically, the amounts of the acquired intangible assets are specific to the transaction and the related amortization was fixed at the time of acquisition and generally cannot subsequently be changed or influenced by management in a future period. Therefore, these items do not contribute to a meaningful evaluation of the company’s fiscal 2015 operating performance or comparisons of the company’s fiscal 2015 operating performance to the company’s past operating performance or, with respect to the CAP segment, to a meaningful evaluation of the CAP segment’s operating performance or comparisons to the CAP segment’s past operating performance.
The projected consolidated non-GAAP EPS for Q3, Q4 and full year fiscal 2015 exclude certain Starbucks Japan acquisition-related items comprised of projected amortization expense from acquired intangible assets and transaction and integration costs. The projected consolidated non-GAAP EPS for full year fiscal 2015 also excludes the fair value gain in Q1. Management is excluding these items from our projected non-GAAP measures for the same reasons described above.
These non-GAAP financial measures may have limitations as analytical tools, and these measures should not be considered in isolation or as a substitute for analysis of the company’s results as reported under GAAP. Other companies may calculate these non-GAAP financial measures differently than the company does, limiting the usefulness of those measures for comparative purposes.
STARBUCKS CORPORATION
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(unaudited)
Quarter Ended Mar 29, 2015 Mar 30, 2014 ChangeConsolidated
Operating income, as reported (GAAP) $ 777.5 $ 644.1 20.7 % Starbucks Japan acquisition-related items - other(1) 11.9 — Non-GAAP operating income $ 789.4 $ 644.1 22.6 % Operating margin, as reported (GAAP) 17.0 % 16.6 % 40 bps Starbucks Japan acquisition-related items - other(1) 0.3 — Non-GAAP operating margin 17.3 % 16.6 % 70 bps Diluted net earnings per share, as reported (GAAP) $ 0.33 $ 0.28 17.9 % Starbucks Japan acquisition-related items - other(1) 0.01 — Non-GAAP net earnings per share $ 0.33 $ 0.28 17.9 %China/Asia Pacific (CAP)
Operating income, as reported (GAAP) $ 112.4 $ 87.0 29.2 % Starbucks Japan amortization expense of acquired intangibles 11.3 — Non-GAAP operating income $ 123.7 $ 87.0 42.2 % Operating margin, as reported (GAAP) 18.9 % 32.8 % (1,390 ) bps Starbucks Japan amortization expense of acquired intangibles 1.9 — Non-GAAP operating margin 20.8 % 32.8 % (1,200 ) bps (1) Includes ongoing amortization expense of acquired intangible assets and transaction and integration costs. Quarter Ended Jun 28, 2015 Jun 29, 2014Consolidated
(Projected) (As Reported) Change Diluted net earnings per share (GAAP) $0.39 - $0.40 $ 0.3415% - 18%
Starbucks Japan acquisition-related items - other(1) 0.01 — Non-GAAP net earnings per share $0.40 - $0.41 $ 0.34 18% - 21% Quarter Ended Sep 27, 2015 Sep 28, 2014Consolidated
(Projected) (As Reported) Change Diluted net earnings per share (GAAP) $0.40 - $0.41 $ 0.393% - 5%
Net benefit from transactions in Q4 2014(2) — (0.02 ) Starbucks Japan acquisition-related items - other(1) 0.01 — Non-GAAP net earnings per share $0.42 - $0.43 $ 0.37 14% - 16% Year Ended Sep 27, 2015 Sep 28, 2014Consolidated
(Projected) (As Reported) Change Diluted net earnings per share (GAAP) $1.77 - $1.79 $ 1.35 31% - 33% Litigation credit — (0.01 ) Net benefit from transactions in Q4 2014(2) — (0.02 ) Starbucks Japan acquisition-related items - gain(3) (0.26 ) — Starbucks Japan acquisition-related items - other(1) 0.03 — Non-GAAP net earnings per share $1.55 - $1.57 $ 1.33 17% - 18% (1) Includes ongoing amortization expense of acquired intangible assets and transaction and integration costs. (2) The net benefit from transactions in Q4 2014 relates primarily to a $0.02 gain on the sale of our Malaysia equity method investment, partially offset by a loss on the sale of our Australia retail operations and transaction costs incurred in Q4 FY14 related to the acquisition of Starbucks Japan. (3) Gain represents the fair value adjustment of Starbucks preexisting 39.5% ownership interest in Starbucks Japan upon acquisition.
Starbucks Contact, Investor Relations:JoAnn DeGrande206-318-7118investorrelations@starbucks.comorStarbucks Contact, Media:Alisha Damodaran206-318-7100press@starbucks.com
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