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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 | |
---|---|---|---|---|---|---|---|---|---|---|
0.55 | 0.63% | 88.39 | 88.28 | 88.39 | 89.25 | 87.3704 | 87.40 | 7,185,109 | 00:50:51 |
Comp Store Sales Rise 7% Globally, 8% in the Americas, and 11% in China/Asia Pacific; Global Traffic Up 4%
Global Revenues Rise 18%; GAAP Operating Income Up 22% to a Q3 Record $939 Million
GAAP EPS Jumps 21% to a Q3 Record $0.41; Non-GAAP EPS Jumps 24% to a Q3 Record $0.42
Company Increases Outlook for Fiscal 2015
Starbucks Corporation (NASDAQ: SBUX) today reported financial results for its 13-week fiscal third quarter and 39-week fiscal year to date ended June 28, 2015. Q3 FY15 GAAP results include Starbucks Japan acquisition-related items, which are excluded from the non-GAAP results. Please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release.
Q3 Fiscal 2015 Highlights:
“Starbucks Q3 fiscal 2015 stands as among the strongest and most remarkable quarters in our over 23 years as a public company,” said Howard Schultz, chairman and ceo. “The 4% increase in global transactions we reported equates to our having served an additional 23 million customer occasions in Q3 of this year over last year, clearly evidencing a continuation of the strong momentum we have seen across our business and around the world this fiscal year,” Schultz added.
“Starbucks very strong year over year financial performance in Q3 demonstrates our commitment to delivering best in class financial and operating results while at the same time investing in our future growth - building new stores, renovating existing stores, deploying new technology - investing in our partners and delivering an elevated Starbucks Experience to our customers,” said Scott Maw, Starbucks cfo. “We believe that by getting this balance right, we will be able to continue delivering exceptional growth, profitability and increased returns to our shareholders,” Maw added.
Third Quarter Fiscal 2015 Summary
Quarter Ended Jun 28, 2015Comparable Store Sales(1)
Sales Growth
Change in Transactions
Change in Ticket
Consolidated 7% 4% 3% Americas 8% 4% 4% EMEA 3% 2% 1% CAP 11% 10% 1%(1) Includes only Starbucks company-operated stores open 13 months or longer.
Operating Results
Quarter Ended
($ in millions, except per share amounts)
Jun 28, 2015 Jun 29, 2014 Change Net New Stores 431 344 87 Revenues $4,881.2 $4,153.7 18% Operating Income $938.6 $768.5 22% Operating Margin 19.2% 18.5% 70 bps EPS $0.41 $0.34 21%Consolidated net revenues were $4.9 billion in Q3 FY15, an increase of 18% over Q3 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 1,592 net new stores over the past 12 months.
Consolidated operating income grew 22% to $938.6 million in Q3 FY15, up from $768.5 million in Q3 FY14. Consolidated operating margin expanded 70 basis points to 19.2% primarily driven by sales leverage. This was partially offset by the impact of our ownership change in Starbucks Japan, which drove 90 basis points of margin decline, and by investments in our store partners (employees) in the Americas segment.
Q3 Americas Segment Results
Quarter Ended
($ in millions)
Jun 28, 2015
Jun 29, 2014
Change
Net New Stores 171 149 22 Revenues $3,414.6 $3,057.7 12% Operating Income $855.3 $728.5 17% Operating Margin 25.0% 23.8% 120 bpsNet revenues for the Americas segment were $3.4 billion in Q3 FY15, an increase of 12% over Q3 FY14. The increase was driven by 8% growth in comparable store sales and incremental revenues from 658 net new store openings over the past 12 months.
Operating income of $855.3 million in Q3 FY15 increased 17% from $728.5 million in Q3 FY14. Operating margin expanded 120 basis points to 25.0% primarily due to sales leverage and lower commodity costs, primarily dairy, and was partially offset by investments in our store partners (employees).
Q3 EMEA Segment Results
Quarter Ended
($ in millions)
Jun 28, 2015 Jun 29, 2014 Change Net New Stores 58 37 21 Revenues $294.7 $323.5 (9)% Operating Income $36.0 $29.2 23% Operating Margin 12.2% 9.0% 320 bpsNet revenues for the EMEA segment were $294.7 million in Q3 FY15, a 9% decrease versus Q3 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 3% increase in comparable store sales.
Operating income increased 23% to $36.0 million in Q3 FY15, up from $29.2 million in Q3 FY14. Operating margin expanded 320 basis points to 12.2%, primarily due to sales leverage driven by the ongoing shift in the portfolio towards more licensed stores.
Q3 China/Asia Pacific Segment Results
Quarter Ended($ in millions)
Jun 28, 2015 Jun 29, 2014 Change Net New Stores 205 160 45 Revenues $652.7 $287.6 127% Operating Income $150.0 $100.8 49% Operating Margin 23.0% 35.0% (1,200) bpsNet revenues for the China/Asia Pacific segment grew 127% to $652.7 million in Q3 FY15. The increase was primarily driven by incremental revenues from the acquisition of Starbucks Japan. Also contributing were incremental revenues from 750 net new store openings over the past 12 months and an 11% increase in comparable store sales.
Operating income grew 49% to $150.0 million in Q3 FY15. Operating margin declined 1,200 basis points to 23.0% due to the impact of our ownership change in Starbucks Japan, which drove a 1,570 basis point decline. The remaining 370 basis point expansion was primarily driven by sales leverage as well as improved profitability in our company-operated stores in the region.
Q3 Channel Development Segment Results
Quarter Ended ($ in millions)Jun 28, 2015
Jun 29, 2014 Change Revenues $403.6 $375.3 8% Operating Income $143.4 $139.3 3% Operating Margin 35.5% 37.1% (160) bpsNet revenues for the Channel Development segment grew 8% to $403.6 million in Q3 FY15, primarily driven by increased sales of premium single-serve products and higher foodservice sales.
Operating income of $143.4 million in Q3 FY15 grew 3% compared to Q3 FY14. Operating margin decreased 160 basis points to 35.5%, primarily driven by increased marketing spend and increased coffee costs. The decrease was partially offset by leverage on cost of sales and increased income from our North American Coffee Partnership.
Q3 All Other Segments Results
Quarter Ended
($ in millions)
Jun 28, 2015
Jun 29, 2014
Change
Net New Stores (3) (2) (1) Revenues $115.6 $109.6 5% Operating Loss $(13.1) $(18.9) (31)%Year to Date Financial Results
Three Quarters Ended Jun 28, 2015Comparable Store Sales(1)
Sales Growth
Change in Transactions Change in Ticket Consolidated 7% 3% 4% Americas 7% 3% 4% EMEA 3% 2% 1% CAP 10% 9% 1%(1) Includes only Starbucks company-operated stores open 13 months or longer.
Operating Results
Three Quarters Ended ($ in millions, except per share amounts) Jun 28, 2015 Jun 29, 2014 ChangeNet New Stores (1)
1,153 1,096 57 Revenues $14,247.9 $12,267.1 16% Operating Income $2,631.6 $2,226.3 18% Operating Margin 18.5% 18.1% 40 bps EPS $1.39 $0.97 43%(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 Q4 FY15 non-GAAP adjustments relate to the acquisition of Starbucks Japan and the redemption of debt; please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release.
The Company Provides 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, August 20, 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, momentum, health and potential of our business, operations and brand, our innovation, growth and growth opportunities and related investments, earnings per share, revenues, operating margins, profitability, 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 CORPORATIONCONSOLIDATED STATEMENTS OF EARNINGS(unaudited, in millions, except per share data)
Quarter Ended Quarter EndedJun 28, 2015
Jun 29, 2014%Change
Jun 28, 2015 Jun 29, 2014As a % of totalnet revenues
Net revenues: Company-operated stores $ 3,915.0 $ 3,290.5 19.0 % 80.2 % 79.2 % Licensed stores 475.2 408.1 16.4 9.7 9.8 CPG, foodservice and other 491.0 455.1 7.9 10.1 11.0Total net revenues
4,881.2 4,153.7 17.5 100.0 100.0 Cost of sales including occupancy costs 1,953.9 1,711.5 14.2 40.0 41.2 Store operating expenses 1,392.4 1,176.5 18.4 28.5 28.3 Other operating expenses 131.6 120.6 9.1 2.7 2.9 Depreciation and amortization expenses 236.5 180.1 31.3 4.8 4.3 General and administrative expenses 288.5 269.4 7.1 5.9 6.5Total operating expenses
4,002.9 3,458.1 15.8 82.0 83.3 Income from equity investees 60.3 72.9 (17.3 ) 1.2 1.8Operating income
938.6 768.5 22.1 19.2 18.5 Interest income and other, net 25.5 19.4 31.4 0.5 0.5 Interest expense (19.1 ) (16.4 ) 16.5 (0.4 ) (0.4 ) Earnings before income taxes 945.0 771.5 22.5 19.4 18.6 Income taxes 318.5 259.0 23.0 6.5 6.2 Net earnings including noncontrolling interests 626.5 512.5 22.2 12.8 12.3Net earnings/(loss) attributable to noncontrolling interests
(0.2 ) (0.1 ) 100.0 — —Net earnings attributable to Starbucks
$ 626.7 $ 512.6 22.3 12.8 % 12.3 %Net earnings per common share - diluted
$ 0.41 $ 0.34 20.6 % Weighted avg. shares outstanding - diluted 1,515.7 1,522.0 Cash dividends declared per share $ 0.16 $ 0.13Supplemental Ratios:
Store operating expenses as a percentage of company-operated store revenues 35.6 % 35.8 % Effective tax rate including noncontrolling interests 33.7 % 33.6 % Three Quarters Ended Three Quarters EndedJun 28, 2015
Jun 29, 2014
%Change
Jun 28, 2015
Jun 29, 2014
As a % of totalnet revenues
Net revenues: Company-operated stores $ 11,310.7 $ 9,702.3 16.6 % 79.4 % 79.1 % Licensed stores 1,380.5 1,166.1 18.4 9.7 9.5 CPG, foodservice and other 1,556.7 1,398.7 11.3 10.9 11.4 Total net revenues 14,247.9 12,267.1 16.1 100.0 100.0 Cost of sales including occupancy costs 5,804.9 5,135.7 13.0 40.7 41.9 Store operating expenses 4,032.5 3,486.1 15.7 28.3 28.4 Other operating expenses 394.5 346.3 13.9 2.8 2.8 Depreciation and amortization expenses 659.6 524.2 25.8 4.6 4.3 General and administrative expenses 892.8 752.6 18.6 6.3 6.1 Litigation credit — (20.2 ) (100.0 ) — (0.2 ) Total operating expenses 11,784.3 10,224.7 15.3 82.7 83.4 Income from equity investees 168.0 183.9 (8.6 ) 1.2 1.5Operating income
2,631.6 2,226.3 18.2 18.5 18.1 Gain resulting from acquisition of joint venture 390.6 —nm
2.7 — Interest income and other, net 36.6 57.0 (35.8 ) 0.3 0.5 Interest expense (52.3 ) (47.7 ) 9.6 (0.4 ) (0.4 ) Earnings before income taxes 3,006.5 2,235.6 34.5 21.1 18.2 Income taxes 899.7 755.4 19.1 6.3 6.2 Net earnings including noncontrolling interests 2,106.8 1,480.2 42.3 14.8 12.1 Net earnings/(loss) attributable to noncontrolling interests 1.9 (0.1 ) nm — —
Net earnings attributable to Starbucks
$ 2,104.9 $ 1,480.3 42.2 % 14.8 % 12.1 %Net earnings per common share - diluted
$ 1.39 $ 0.97 43.3 % Weighted avg. shares outstanding - diluted 1,516.3 1,527.8 Cash dividends declared per share $ 0.48 $ 0.39Supplemental Ratios:
Store operating expenses as a percentage of company-operated store revenues 35.7 % 35.9 % Effective tax rate including noncontrolling interests 29.9 % 33.8 %Segment Results (in millions)
Americas
Jun 28, 2015
Jun 29, 2014
%Change
Jun 28, 2015
Jun 29, 2014
Quarter Ended
As a % of Americastotal net revenues
Net revenues: Company-operated stores $ 3,061.3 $ 2,772.3 10.4 % 89.7 % 90.7 % Licensed stores 344.9 275.6 25.1 10.1 9.0 Foodservice and other 8.4 9.8 (14.3 ) 0.2 0.3 Total net revenues 3,414.6 3,057.7 11.7 100.0 100.0 Cost of sales including occupancy costs 1,227.7 1,130.0 8.6 36.0 37.0 Store operating expenses 1,126.7 1,002.4 12.4 33.0 32.8 Other operating expenses 26.9 26.2 2.7 0.8 0.9 Depreciation and amortization expenses 130.8 119.5 9.5 3.8 3.9 General and administrative expenses 47.2 51.1 (7.6 ) 1.4 1.7 Total operating expenses 2,559.3 2,329.2 9.9 75.0 76.2 Operating income $ 855.3 $ 728.5 17.4 % 25.0 % 23.8 % Supplemental Ratios: Store operating expenses as a percentage of company-operated store revenues 36.8 % 36.2 %Three Quarters Ended
Net revenues: Company-operated stores $ 8,890.5 $ 8,120.6 9.5 % 89.7 % 90.8 % Licensed stores 993.0 787.6 26.1 10.0 8.8 Foodservice and other 26.0 31.2 (16.7 ) 0.3 0.3 Total net revenues 9,909.5 8,939.4 10.9 100.0 100.0 Cost of sales including occupancy costs 3,624.4 3,353.8 8.1 36.6 37.5 Store operating expenses 3,276.1 2,965.9 10.5 33.1 33.2 Other operating expenses 93.4 75.2 24.2 0.9 0.8 Depreciation and amortization expenses 386.5 346.6 11.5 3.9 3.9 General and administrative expenses 146.6 131.9 11.1 1.5 1.5 Total operating expenses 7,527.0 6,873.4 9.5 76.0 76.9 Operating income $ 2,382.5 $ 2,066.0 15.3 % 24.0 % 23.1 % Supplemental Ratios: Store operating expenses as a percentage of company-operated store revenues 36.8 % 36.5 %EMEA
Jun 28, 2015 Jun 29, 2014
%Change
Jun 28, 2015Jun 29, 2014
Quarter Ended
As a % of EMEAtotal net revenues
Net revenues: Company-operated stores $ 217.8 $ 251.8 (13.5 )% 73.9 % 77.8 % Licensed stores 65.5 60.8 7.7 22.2 18.8 Foodservice 11.4 10.9 4.6 3.9 3.4 Total net revenues 294.7 323.5 (8.9 ) 100.0 100.0 Cost of sales including occupancy costs 143.1 161.4 (11.3 ) 48.6 49.9 Store operating expenses 78.4 91.4 (14.2 ) 26.6 28.3 Other operating expenses 12.9 12.5 3.2 4.4 3.9 Depreciation and amortization expenses 12.4 15.1 (17.9 ) 4.2 4.7 General and administrative expenses 12.8 15.0 (14.7 ) 4.3 4.6 Total operating expenses 259.6 295.4 (12.1 ) 88.1 91.3 Income from equity investees 0.9 1.1 (18.2 ) 0.3 0.3 Operating income $ 36.0 $ 29.2 23.3 % 12.2 % 9.0 % Supplemental Ratios: Store operating expenses as a percentage of company-operated store revenues 36.0 % 36.3 %
Three Quarters Ended
Net revenues: Company-operated stores $ 688.0 $ 766.3 (10.2 )% 75.7 % 78.8 % Licensed stores 185.4 175.8 5.5 20.4 18.1 Foodservice 35.0 30.9 13.3 3.9 3.2 Total net revenues 908.4 973.0 (6.6 ) 100.0 100.0 Cost of sales including occupancy costs 434.4 487.9 (11.0 ) 47.8 50.1 Store operating expenses 240.4 280.1 (14.2 ) 26.5 28.8 Other operating expenses 40.0 35.9 11.4 4.4 3.7 Depreciation and amortization expenses 38.9 44.5 (12.6 ) 4.3 4.6 General and administrative expenses 41.6 47.1 (11.7 ) 4.6 4.8 Total operating expenses 795.3 895.5 (11.2 ) 87.5 92.0 Income from equity investees 2.1 3.0 (30.0 ) 0.2 0.3 Operating income $ 115.2 $ 80.5 43.1 % 12.7 % 8.3 %Supplemental Ratios:
Store operating expenses as a percentage of company-operated store revenues 34.9 % 36.6 %China/Asia Pacific (CAP)
Jun 28, 2015 Jun 29, 2014%Change
Jun 28, 2015 Jun 29, 2014Quarter Ended
As a % of CAPtotal net revenues
Net revenues: Company-operated stores $ 588.4 $ 217.0 171.2 % 90.1 % 75.5 % Licensed stores 63.1 70.6 (10.6 ) 9.7 24.5 Foodservice and other 1.2 — nm 0.2 — Total net revenues 652.7 287.6 126.9 100.0 100.0 Cost of sales including occupancy costs 281.8 137.8 104.5 43.2 47.9 Store operating expenses 161.2 54.8 194.2 24.7 19.1 Other operating expenses 15.8 13.2 19.7 2.4 4.6 Depreciation and amortization expenses 41.2 11.3 264.6 6.3 3.9 General and administrative expenses 30.3 16.0 89.4 4.6 5.6 Total operating expenses 530.3 233.1 127.5 81.2 81.1 Income from equity investees 27.6 46.3 (40.4 ) 4.2 16.1 Operating income $ 150.0 $ 100.8 48.8 % 23.0 % 35.0 % Supplemental Ratios: Store operating expenses as a percentage of company-operated store revenues 27.4 % 25.3 %Three Quarters Ended
Net revenues: Company-operated stores $ 1,542.5 $ 621.1 148.3 % 88.5 % 75.8 % Licensed stores 197.6 198.7 (0.6 )% 11.3 24.2 Foodservice and other 3.5 — nm 0.2 — Total net revenues 1,743.6 819.8 112.7 100.0 100.0 Cost of sales including occupancy costs 784.8 398.0 97.2 45.0 48.5 Store operating expenses 436.0 158.5 175.1 25.0 19.3 Other operating expenses 43.4 34.8 24.7 2.5 4.2 Depreciation and amortization expenses 106.3 33.4 218.3 6.1 4.1 General and administrative expenses 88.4 43.1 105.1 5.1 5.3 Total operating expenses 1,458.9 667.8 118.5 83.7 81.5 Income from equity investees 85.8 116.8 (26.5 ) 4.9 14.2 Operating income $ 370.5 $ 268.8 37.8 % 21.2 % 32.8 % Supplemental Ratios: Store operating expenses as a percentage of company-operated store revenues 28.3 % 25.5 %Channel Development
Jun 28, 2015 Jun 29, 2014%Change
Jun 28, 2015 Jun 29, 2014Quarter Ended
As a % ofChannel Developmenttotal net revenues
Net revenues: CPG $ 302.2 $ 286.6 5.4 % 74.9 % 76.4 % Foodservice 101.4 88.7 14.3 25.1 23.6 Total net revenues 403.6 375.3 7.5 100.0 100.0 Cost of sales 228.3 208.3 9.6 56.6 55.5 Other operating expenses 58.9 48.3 21.9 14.6 12.9 Depreciation and amortization expenses 0.7 0.4 75.0 0.2 0.1 General and administrative expenses 4.1 4.5 (8.9 ) 1.0 1.2 Total operating expenses 292.0 261.5 11.7 72.3 69.7 Income from equity investees 31.8 25.5 24.7 7.9 6.8 Operating income $ 143.4 $ 139.3 2.9 % 35.5 % 37.1 %Three Quarters Ended
Net revenues: CPG $ 975.8 $ 875.1 11.5 % 76.6 % 76.3 % Foodservice 298.4 271.7 9.8 23.4 23.7 Total net revenues 1,274.2 1,146.8 11.1 100.0 100.0 Cost of sales 722.2 667.5 8.2 56.7 58.2 Other operating expenses 160.9 142.9 12.6 12.6 12.5 Depreciation and amortization expenses 2.0 1.2 66.7 0.2 0.1 General and administrative expenses 12.5 13.8 (9.4 ) 1.0 1.2 Total operating expenses 897.6 825.4 8.7 70.4 72.0 Income from equity investees 80.1 64.1 25.0 6.3 5.6 Operating income $ 456.7 $ 385.5 18.5 % 35.8 % 33.6 %All Other Segments
Jun 28, 2015 Jun 29, 2014%Change
Quarter Ended
Net revenues: Company-operated stores $ 47.5 $ 49.4 (3.8 )% Licensed stores 1.7 1.1 54.5 CPG, foodservice and other 66.4 59.1 12.4 Total net revenues 115.6 109.6 5.5 Cost of sales including occupancy costs 72.7 65.9 10.3 Store operating expenses 26.1 27.9 (6.5 ) Other operating expenses 17.3 20.5 (15.6 ) Depreciation and amortization expenses 4.3 3.9 10.3 General and administrative expenses 8.3 10.3 (19.4 ) Total operating expenses 128.7 128.5 0.2 Operating loss $ (13.1 ) $ (18.9 ) (30.7 )%Three Quarters Ended
Net revenues: Company-operated stores $ 189.7 $ 194.3 (2.4 )% Licensed stores 4.5 4.0 12.5 CPG, foodservice and other 218.0 189.8 14.9 Total net revenues 412.2 388.1 6.2 Cost of sales including occupancy costs 242.5 217.2 11.6 Store operating expenses 80.0 81.6 (2.0 ) Other operating expenses 57.1 58.1 (1.7 ) Depreciation and amortization expenses 12.2 11.3 8.0 General and administrative expenses 27.2 32.9 (17.3 ) Total operating expenses 419.0 401.1 4.5 Operating loss $ (6.8 ) $ (13.0 ) (47.7 )%Supplemental Information
The following supplemental information is provided for historical and comparative purposes.
U.S. Supplemental Data
Quarter Ended($ in millions)
Jun 28, 2015 Jun 29, 2014 Change Revenues $3,091.0 $2,731.2 13% Comparable Store Sales Growth(1) 8% 7% Change in Transactions 4% 2% Change in Ticket 4% 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 Three Quarters Ended Stores open as ofJun 28, 2015
Jun 29, 2014
Jun 28, 2015
Jun 29, 2014
Jun 28, 2015
Jun 29, 2014
Americas(1) Company-operated stores 68 69 187 155 8,582 8,233 Licensed stores 103 80 192 264 5,988 5,679 Total Americas 171 149 379 419 14,570 13,912 EMEA(2) Company-operated stores (9 ) (3 ) (33 ) 1 784 827 Licensed stores 67 40 184 132 1,507 1,275 Total EMEA 58 37 151 133 2,291 2,102 China/Asia Pacific (3,4) Company-operated stores 82 45 1,219 159 2,351 1,041 Licensed stores 123 115 (604 ) 384 2,888 3,384 Total China/Asia Pacific 205 160 615 543 5,239 4,425 All Other Segments Company-operated stores (1 ) 10 9 21 378 378 Licensed stores (2 ) (12 ) (1 ) (20 ) 41 46 Total All Other Segments (3 ) (2 ) 8 1 419 424 Total Company 431 344 1,153 1,096 22,519 20,863(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) China/Asia Pacific 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) China/Asia Pacific 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 Q3 fiscal 2015, China/Asia Pacific (“CAP”) segment non-GAAP operating income and non-GAAP operating margin for Q3 fiscal 2015, and projected consolidated non-GAAP EPS for 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 Q3 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 Q3 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 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, as well as certain losses and costs related to the redemption of the company's $550 million of 6.250% 2017 Senior Notes in Q4 fiscal 2015. Losses and costs related to the redemption are included as debt extinguishment-related items. The projected consolidated non-GAAP EPS for full year fiscal 2015 also excludes the gain in Q1 related to the fair value adjustment of Starbucks 39.5% ownership in Starbucks Japan prior to the acquisition. Management is excluding the Starbucks Japan acquisition-related items from our projected non-GAAP measures for the same reasons described above. Additionally, management is excluding the fair value gain and debt extinguishment-related items because they believe these items do not reflect future gains, losses 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.
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 EndedJun 28, 2015
Jun 29, 2014
ChangeConsolidated
Operating income, as reported (GAAP) $ 938.6 $ 768.5 22.1 % Starbucks Japan acquisition-related items - other(1) 11.5 — Non-GAAP operating income $ 950.1 $ 768.5 23.6 % Operating margin, as reported (GAAP) 19.2 % 18.5 % 70 bps Starbucks Japan acquisition-related items - other(1) 0.2 — Non-GAAP operating margin 19.5 % 18.5 % 100 bps Diluted net earnings per share, as reported (GAAP) $ 0.41 $ 0.34 20.6 % Starbucks Japan acquisition-related items - other(1) 0.01 — Non-GAAP net earnings per share $ 0.42 $ 0.34 23.5 %China/Asia Pacific (CAP)
Operating income, as reported (GAAP) $ 150.0 $ 100.8 48.8 % Starbucks Japan amortization expense of acquired intangibles 11.0 — Non-GAAP operating income $ 161.0 $ 100.8 59.7 % Operating margin, as reported (GAAP) 23.0 % 35.0 % (1,200 ) bps Starbucks Japan amortization expense of acquired intangibles 1.7 — Non-GAAP operating margin 24.7 % 35.0 % (1,030 ) bps(1) Includes ongoing amortization expense of acquired intangible assets and transaction and integration costs.
Quarter EndedSep 27, 2015
Sep 28, 2014
Consolidated
(Projected)
(As Reported)
Change
Diluted net earnings per share (GAAP) $0.38 - $0.39 $ 0.39 (3 %) - 0% Net benefit from transactions in Q4 2014(1) — (0.02 ) Starbucks Japan acquisition-related items - other(2) 0.01 — Debt extinguishment-related items(3) 0.03 — Non-GAAP net earnings per share $0.42 - $0.43 $ 0.37 14 % - 16% Year EndedSep 27, 2015
Sep 28, 2014
Consolidated
(Projected)
(As Reported)
Change
Diluted net earnings per share (GAAP) $1.77 - $1.78 $ 1.35 31 % - 32% Litigation credit — (0.01 ) Net benefit from transactions in Q4 2014(1) — (0.02 ) Starbucks Japan acquisition-related items - gain(4) (0.26 ) — Starbucks Japan acquisition-related items - other(2) 0.03 — Debt extinguishment-related items(3) 0.03 — Non-GAAP net earnings per share $1.57 - $1.58 $ 1.33 18 % - 19%(1) 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 2014 related to the acquisition of Starbucks Japan.
(2) Includes ongoing amortization expense of acquired intangible assets and transaction and integration costs.
(3) Represents the loss on extinguishment of debt ($61.1M), which is comprised of the cost of the optional redemption provision, unamortized debt issuance costs, and unamortized discount associated with the $550 million of 6.250% 2017 Senior Notes redeemed in Q4 2015, as well as the related unamortized interest rate hedge loss ($2.0M), which will be recorded in interest expense.
(4) Gain represents the fair value adjustment of Starbucks preexisting 39.5% ownership interest in Starbucks Japan upon acquisition.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150723006370/en/
StarbucksInvestor Relations:JoAnn DeGrande, 206-318-7118investorrelations@starbucks.comorMedia:Alisha Damodaran, 206-318-7100press@starbucks.com
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