Starbucks Reports Record Q1 Results and Reaffirms FY14 Growth Targets

  Starbucks Reports Record Q1 Results and Reaffirms FY14 Growth Targets

 Strong holiday sales and store traffic drive 12% revenue growth to a record
                                 $4.2 billion

 Consolidated operating margin expands to a record 19.2%; EPS rises 25% to a
                                 record $0.71

          Dollars loaded on Starbucks Cards jump 24% to $1.4 billion

Business Wire

SEATTLE -- January 23, 2014

Starbucks Corporation (NASDAQ: SBUX) today reported financial results for its
13-week fiscal first quarter ended December29, 2013.

Q1 Fiscal 2014 Highlights:

  *Consolidated net revenues increased 12% to $4.2 billion
  *Global comparable store sales grew 5%, driven by a 4% increase in traffic

       *Americas and U.S. comp growth of 5%, driven by a 4% increase in
         traffic
       *EMEA comp growth of 5%, the highest growth in 13 quarters, driven by
         a 3% increase in traffic
       *China/Asia Pacific comp growth of 8%, driven by a 7% increase in
         traffic

  *Consolidated operating income increased 29% to $814 million
  *Consolidated operating margin improved 260 basis points to 19.2%
  *Earnings per share increased 25% to $0.71 per share
  *Dollars loaded on Starbucks Cards globally reached $1.4 billion in the
    quarter; the My Starbucks Rewards program now has over 7 million active
    members in the U.S.
  *Opened 417 net new stores globally - bringing total store count to 20,184
    - including the 4,000^th store in CAP and the 2,000^th store in EMEA

“Holiday 2013 was the first in which many traditional brick and mortar
retailers experienced in-store foot traffic give way to online shopping in a
major way,” said Howard Schultz, chairman, president and ceo of Starbucks
Coffee Company. “As our solid traffic growth and record Q1 results
demonstrate, Starbucks unique combination of physical and digital assets
positions us as one of the very few consumer brands with a national and global
footprint to benefit from the seismic shift underway.”

“Starbucks strong Q1 results once again demonstrate the fundamental strength
of the Starbucks business, particularly noteworthy given the continued
economic challenges worldwide,” said Troy Alstead, cfo and group president.
“Successful holiday sales around the globe drove healthy growth in comparable
store sales which, combined with our best in class operations, drove another
quarter of record operating results. Our continued ability to execute at this
level gives us the confidence to reaffirm our aggressive growth targets for
fiscal 2014.”

                            
First Quarter Fiscal
2014 Summary
                                 
                                 Quarter Ended Dec 29, 2013
Comparable Store              Sales         Change in        Change in
Sales^(1)                        Growth          Transactions       Ticket
Consolidated                     5%            4%               1%
Americas                         5%              4%                 1%
EMEA                             5%              3%                 1%
CAP                           8%            7%               1%
^(1) Includes only Starbucks company-operated stores open 13 months or longer.


                                                                
Operating Results               Quarter Ended                    
($ in millions,                 Dec 29,            Dec 30,
except per share             2013             2012             Change
amounts)
Net New Stores                  417              212                205
Revenues ^(1)                   $4,239.6           $3,793.2           12%
Operating Income                $813.5             $630.6             29%
Operating Margin                19.2%              16.6%              260 bps
^(1)
EPS                          $0.71            $0.57            25%
^(1) Prior period results have been corrected to reflect an immaterial
reclassification of certain fees related to our foodservice operations; for
full revised FY12 and FY13 results, refer to http://investor.starbucks.com.


Consolidated net revenues were $4.2 billion in Q1 FY14, an increase of 12%
over Q1 FY13, driven primarily by 5% growth in global comparable store sales
and incremental revenues from 1,564 net new Starbucks store openings over the
past 12 months.

Consolidated operating income increased 29% to $813.5 million, compared to
$630.6 million for the same period a year ago. Operating margin expanded 260
basis points to 19.2%, primarily driven by the absence of non-routine expenses
incurred in the Americas segment in the prior year quarter, lower commodity
costs, and a $20.2 million non-recurring benefit which contributed $0.02 to
EPS related to the Q4 FY13 litigation charge. Also contributing to margin
expansion was sales leverage.

                                                            
Q1 Americas Segment Results
                                                              
                                  Quarter Ended
($ in millions)                Dec 29, 2013   Dec 30, 2012   Change
Net New Stores                    142              87               55
Revenues                          $3,073.0         $2,840.7         8%
Operating Income                  $732.1           $590.3           24%
Operating Margin               23.8%          20.8%          300 bps


Net revenues for the Americas segment were $3.1 billion in Q1 FY14, an
increase of 8% over Q1 FY13. The increase was driven by a 5% increase in
comparable store sales and incremental revenues from 735 net new store
openings over the past 12 months.

Operating income increased to $732.1 million in Q1 FY14, growth of 24%
compared to $590.3 million for the same period a year ago. Operating margin
expanded 300 basis points to 23.8% primarily due to the absence of non-routine
expenses incurred in the prior year quarter related to the company's
leadership conference, litigation charges and the impact from Superstorm
Sandy. Also contributing to margin expansion were lower coffee costs and sales
leverage.

                                                        
Q1 EMEA Segment Results
                                                          
                              Quarter Ended
($ in millions)            Dec 29, 2013   Dec 30, 2012   Change
Net New Stores                64               7                57
Revenues                      $339.5           $306.1           11%
Operating Income              $33.5            $22.3            50%
Operating Margin           9.9%           7.3%           260 bps
                                                                

Net revenues for the EMEA segment were $339.5 million in Q1 FY14, an increase
of 11% over Q1 FY13. The increase was primarily due to incremental revenues
from 157 net new store openings over the past 12 months and a 5% increase in
comparable store sales.

Operating income increased to $33.5 million in Q1 FY14 from $22.3 million in
the prior year quarter. Operating margin expanded 260 basis points to 9.9%
primarily driven by the strategic acceleration of licensed store growth.

                                                             
Q1 China/Asia Pacific
Segment Results
                                                               
                                   Quarter Ended
($ in millions)                 Dec 29, 2013   Dec 30, 2012   Change
Net New Stores                     209              125              84
Revenues                           $266.9           $214.1           25%
Operating Income                   $81.1            $72.1            12%
Operating Margin                30.4%          33.7%          (330) bps
                                                                     

Net revenues for the China/Asia Pacific segment were $266.9 million in Q1
FY14, an increase of 25% over Q1 FY13. The increase was driven by incremental
revenues from 672 net new store openings over the past 12 months. An 8%
increase in comparable store sales also contributed to the net revenue growth.

Operating income of $81.1 million in Q1 FY14 increased 12% compared to the
same period a year ago. Operating margin declined 330 basis points to 30.4%
this quarter driven by a lower contribution from our Japan equity investee
primarily due to the weakening of the Yen against the US dollar, as well as a
shift in the composition of our store portfolio from licensed to
company-operated stores. This was partially offset by strong operating
performance throughout the rest of the region, particularly in China.

                                                           
Q1 Channel Development
Segment Results
                                                               
                                   Quarter Ended
($ in millions)                 Dec 29,        Dec 30,        Change
                                   2013             2012
Revenues ^(1)                      $401.0           $374.3           7%
Operating Income                   $118.8           $96.8            23%
Operating Margin ^(1)           29.6%          25.9%          370 bps
^(1) Prior period results have been corrected to reflect an immaterial
reclassification of certain fees related to our foodservice operations; for
full revised FY12 and FY13 results, refer to http://investor.starbucks.com.


Net revenues for the Channel Development segment were $401.0 million in Q1
FY14, an increase of 7% over Q1 FY13, driven by increased sales of premium
single serve products, partially offset by the packaged coffee price
reductions implemented in Q3 of FY13.

Operating income grew 23% to $118.8 million in Q1 FY14 compared to $96.8
million for the same period a year ago. Operating margin increased 370 basis
points to 29.6% in Q1 FY14 primarily due to lower coffee costs.

                                                            
Q1 All Other
Segments Results
                                                                
                                    Quarter Ended
($ in millions)                  Dec 29,        Dec 30,        Change
                                    2013             2012
Net New Stores                      2                (7)              9
Revenues ^(1)                       $159.2           $58.0            174%
Operating Income                 $13.6          ($4.2)         nm
(Loss)
^(1) Prior period results have been corrected to reflect an immaterial
reclassification of certain fees related to our foodservice operations; for
full revised FY12 and FY13 results, refer to http://investor.starbucks.com.


Net revenues for All Other Segments were $159.2 million in Q1 FY14, an
increase of 174% over Q1 FY13, primarily due to the addition of Teavana retail
store revenues beginning in Q2 of FY13.

Q1 FY14 operating income increased to $13.6 million compared to a loss of $4.2
million for the same period a year ago driven by the acquisition of Teavana in
Q2 FY13.

Fiscal 2014 Targets

The company reaffirms and updates the following fiscal 2014 targets:

  *Revenue growth of 10% or greater
  *Global comparable store sales growth in the mid single digits
  *Consolidated operating margin improvement of approximately 150 to 200
    basis points over FY13:

       *Americas: moderate improvement over FY13
       *EMEA: operating margin improving toward the high single digits
       *CAP: operating margin percentage moving toward the low 30's
       *Channel Development: moderate improvement over FY13

  *Consolidated tax rate of approximately 34.5%
  *Earnings per share now expected to be in the range of $2.59 to $2.67:

       *Q2 EPS in the range of $0.54 to $0.55
       *Q3 EPS in the range of $0.64 to $0.66
       *Q4 EPS in the range of $0.70 to $0.75

  *Approximately 1,500 net new stores:

       *Americas: approximately 600
       *EMEA: approximately 150
       *CAP: approximately 750

  *Capital expenditures of approximately $1.2 billion

Company Updates

  *Starbucks continued to explore unique ways to connect with customers, such
    as its first Starbucks store on a train, opened in November inpartnership
    with SBB in Switzerland, while also opening its first store in Monaco in
    early December. The company now operates in 63 countries worldwide.
  *The company opened its second Teavana Fine Teas + Tea Bar in early
    December, bringing the elevated Tea Bar experience to Seattle’s University
    Village following the October opening of the first of this concept in New
    York City.
  *Starbucks raised $750 million in proceeds in December from a public
    offering of $400 million of 0.875% Senior Notes due 2016 and $350 million
    of 2.000% Senior Notes due 2018. The proceeds were used to fund a portion
    of the payment required by the previously announced arbitration award in
    the Kraft litigation matter.
  *Starbucks Cards were introduced at select locations in Mainland China in
    early January, marking an important expansion of the Starbucks Card
    program which launched 12 years ago and is now available in 28 countries
    worldwide.
  *In early November the company announced a strategic commitment to develop
    a comprehensive hiring platform for veterans and active duty spouses. The
    multi-year strategy is expected to lead to the hiring of at least 10,000
    veterans and spouses over the next 5 years.
  *The Board of Directors declared a cash dividend of $0.26 per share,
    payable on February 21, 2014 to shareholders of record as of February 6,
    2014.
  *The company repurchased 0.6 million shares of common stock in Q1 FY14;
    approximately 26 million shares remain available for purchase under
    previous authorizations.

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, president and ceo, and Troy
Alstead, cfo and group president, Global Business Services. 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
Friday, February 21, 2014.

The company’s consolidated statements of earnings, operating segment results,
and other additional information have been provided on the following pages in
accordance with current year classifications. This information should be
reviewed in conjunction with this press release. Please refer to the company’s
Annual Report on Form 10-K for the fiscal year ended September29, 2013 for
additional information.

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 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, business momentum, the benefits to our
business from the shift to online shopping, growth and growth opportunities,
earnings per share, revenues, operating margins, profits, capital
expenditures, tax rates, comparable store sales and store openings and
closings. 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,
coffee, dairy and other raw material prices and availability, costs associated
with, and the successful execution of, the company's initiatives, strategies
and plans, the acceptance of the company's products by our customers,
fluctuations in U.S. and international economies and currencies, the impact of
competition, 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 29, 2013. The company assumes no obligation to update any
of these forward-looking statements.


STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited, in millions, except per share data)
                                                                   
                       Quarter Ended                                Quarter Ended
                       Dec 29,         Dec 30,         %            Dec 29,     Dec 30,
                       2013          2012          Change       2013      2012
                                                                    As a % of total
                                                                    net revenues ^(1)
Net revenues:
Company-operated       $ 3,343.8       $ 2,989.6       11.8   %     78.9  %     78.8  %
stores
Licensed stores        401.8           350.2           14.7         9.5         9.2
CPG, foodservice       494.0          453.4          9.0          11.7       12.0  
and other ^(1)
Total net              4,239.6         3,793.2         11.8         100.0       100.0
revenues
Cost of sales
including              1,795.1         1,620.7         10.8         42.3        42.7
occupancy costs
Store operating        1,175.1         1,089.5         7.9          27.7        28.7
expenses
Other operating        114.9           126.1           (8.9   )     2.7        3.3
expenses ^ (1)
Depreciation and
amortization           169.7           148.9           14.0         4.0         3.9
expenses
General and
administrative         242.6           231.9           4.6          5.7         6.1
expenses
Litigation             (20.2     )     —              nm           (0.5  )     —     
charge/(credit)
Total operating        3,477.2         3,217.1         8.1          82.0        84.8
expenses
Income from            51.1           54.5           (6.2   )     1.2        1.4   
equity investees
Operating income       813.5           630.6           29.0         19.2        16.6
Interest income        19.8            (2.9      )     nm           0.5         (0.1  )
and other, net
Interest expense       (14.5     )     (6.6      )     119.7        (0.3  )     (0.2  )
Earnings before        818.8           621.1           31.8         19.3        16.4
income taxes
Income taxes           278.1          188.7          47.4         6.6        5.0   
Net earnings
including              540.7           432.4           25.0         12.8        11.4
noncontrolling
interest
Net earnings
attributable to        —              0.2            (100.0 )     —          —     
noncontrolling
interest
Net earnings
attributable to        $ 540.7        $ 432.2        25.1   %     12.8  %     11.4  %
Starbucks
                                                                                
Net earnings per
common share -         $ 0.71         $ 0.57         24.6   %
diluted
Weighted avg.
shares                 766.2           761.3
outstanding -
diluted
                                                                                
Cash dividends
declared per           $ 0.26          $ 0.21
share
                                                                                
Supplemental
Ratios:
Store operating
expenses as a
percentage of                                                       35.1  %     36.4  %
company-operated
stores revenue
Effective tax
rate including                                                      34.0  %     30.4  %
noncontrolling
interest
                                                                                      
(1) Prior period results have been corrected to reflect an immaterial reclassification
of certain fees related to our foodservice operations; for full revised FY12 and FY13
results, refer to http://investor.starbucks.com.


                                                              
Segment Results
(in millions)
                                                                        
Americas
                                                             
                      Dec 29,       Dec 30,       %          Dec       Dec 30,
                                                              29,
                       2013        2012        Change    2013    2012
Quarter Ended                                                 As a % of
                                                              Americas
                                                             total net
                                                              revenues
Net revenues:
Company-operated       $ 2,787.0     $ 2,586.4     7.8    %   90.7  %   91    %
stores
Licensed stores          274.3         239.2       14.7       8.9       8.4
CPG, foodservice        11.7        15.1       (22.5  )   0.4      0.5   
and other
Total net                3,073.0       2,840.7     8.2        100.0     100.0
revenues
Cost of sales
including                1,164.2       1,092.5     6.6        37.9      38.5
occupancy costs
Store operating          999.6         959.8       4.1        32.5      33.8
expenses
Other operating          25.3          30.0        (15.7  )   0.8       1.1
expenses
Depreciation and
amortization             112.3         105.4       6.5        3.7       3.7
expenses
General and
administrative          39.5        62.7       (37.0  )   1.3      2.2   
expenses
Total operating         2,340.9     2,250.4    4.0        76.2     79.2  
expenses
Operating income       $ 732.1      $ 590.3      24.0   %   23.8  %   20.8  %
Supplemental
Ratios:
Store operating
expenses as a
percentage of                                                 35.9  %   37.1  %
company-operated
stores revenue
                                                                              

                                                             
EMEA
                                                                 
                         Dec 29,     Dec 30,     %          Dec 29,    Dec 30,
                         2013      2012      Change    2013      2012
Quarter Ended                                               As a % of EMEA
                                                            total net revenues
Net revenues:
Company-operated         $ 269.0     $ 252.7     6.5    %   79.2   %   82.6  %
stores
Licensed stores            60.6        43.9      38.0       17.8       14.3
CPG, foodservice          9.9       9.5      4.2        2.9       3.1   
and other
Total net revenues         339.5       306.1     10.9       100.0      100.0
Cost of sales
including                  168.2       152.5     10.3       49.5       49.8
occupancy costs
Store operating            96.4        90.3      6.8        28.4       29.5
expenses
Other operating            11.6        8.4       38.1       3.4        2.7
expenses
Depreciation and
amortization               14.6        14.2      2.8        4.3        4.6
expenses
General and
administrative            16.0      18.4     (13.0  )   4.7       6.0   
expenses
Total operating            306.8       283.8     8.1        90.4       92.7
expenses
Income from equity        0.8       —        nm         0.2       —     
investees
Operating income         $ 33.5     $ 22.3     50.2   %   9.9    %   7.3   %
Supplemental
Ratios:
Store operating
expenses as a
percentage of                                               35.8   %   35.7  %
company-operated
stores revenue
                                                                             

                                                            
China / Asia
Pacific (CAP)
                                                                 
                         Dec 29,     Dec 30,     %          Dec        Dec 30,
                                                            29,
                         2013      2012      Change    2013     2012
Quarter Ended                                               As a % of CAP
                                                            total net revenues
Net revenues:
Company-operated         $ 201.6     $ 150.5     34.0   %   75.5   %   70.3  %
stores
Licensed stores           65.3      63.6     2.7        24.5      29.7  
Total net revenues         266.9       214.1     24.7       100.0      100.0
Cost of sales
including                  132.7       106.5     24.6       49.7       49.7
occupancy costs
Store operating            51.3        39.4      30.2       19.2       18.4
expenses
Other operating            10.6        10.2      3.9        4.0        4.8
expenses
Depreciation and
amortization               10.3        7.4       39.2       3.9        3.5
expenses
General and
administrative            14.0      12.6     11.1       5.2       5.9   
expenses
Total operating            218.9       176.1     24.3       82.0       82.3
expenses
Income from equity        33.1      34.1     (2.9   )   12.4      15.9  
investees
Operating income         $ 81.1     $ 72.1     12.5   %   30.4   %   33.7  %
Supplemental
Ratios:
Store operating
expenses as a
percentage of                                               25.4   %   26.2  %
company-operated
stores revenue
                                                                             

                                                             
Channel
Development
                                                                 
                         Dec 29,      Dec 30,     %          Dec       Dec 30,
                                                             29,
                         2013       2012      Change    2013    2012
Quarter Ended                                                As a % of
                                                             Channel
                                                             Development
                                                             total net
                                                             revenues ^(1)
Net revenues:
CPG                      $  306.4     $ 288.3     6.3    %   76.4  %   77.0  %
Foodservice                94.6      86.0     10.0       23.6     23.0  
^(1)
Total net                   401.0       374.3     7.1        100.0     100.0
revenues
Cost of sales               245.6       235.2     4.4        61.2      62.8
Other operating             48.0        57.6      (16.7  )   12.0      15.4
expenses ^(1)
Depreciation
and                         0.4         0.3       33.3       0.1       0.1
amortization
expenses
General and
administrative             5.4       4.8      12.5       1.3      1.3   
expenses
Total operating             299.4       297.9     0.5        74.7      79.6
expenses
Income from
equity                     17.2      20.4     (15.7  )   4.3      5.5   
investees
Operating                $  118.8    $ 96.8     22.7   %   29.6  %   25.9  %
income

^(1) Prior period results have been corrected to reflect an immaterial
reclassification of certain fees related to our foodservice operations; for
full revised FY12 and FY13 results, refer to http://investor.starbucks.com.


                                                             
All Other Segments
                                                                     
                                     Dec 29,          Dec 30,        %
                                     2013           2012         Change
Quarter Ended
Net revenues:
Company-operated stores              $   86.2         $  —           nm
Licensed stores                          1.6             3.5         (54.3  )
CPG, foodservice and                    71.4          54.5       31.0
other ^(1)
Total net revenues                       159.2           58.0        174.5
Cost of sales including                  82.8            36.3        128.1
occupancy costs
Store operating expenses                 27.8            —           nm
Other operating expenses                 19.6            19.9        (1.5   )
^(1)
Depreciation and                         3.7             1.0         270.0
amortization expenses
General and                             11.7          5.0        134.0
administrative expenses
Total operating expenses                145.6         62.2       134.1
Operating income/(loss)              $   13.6        $  (4.2  )     nm

^(1) Prior period results have been corrected to reflect an immaterial
reclassification of certain fees related to our foodservice operations; for
full revised FY12 and FY13 results, refer to http://investor.starbucks.com.


                           Supplemental Information

The following supplemental information is provided for historical and
comparative purposes.

                                                                
Fiscal First Quarter 2014 U.S.
Supplemental Data
                                                                  
                                      Quarter Ended
($ in millions)                    Dec 29, 2013   Dec 30, 2012   Change
Revenues                              $2,722.8         $2,503.9         9%
Comparable Store Sales Growth         5%               7%               
^(1)
Change in Transactions                4%               4%               
Change in Ticket                   1%             2%             
^(1) Includes only Starbucks company-operated stores open 13 months or longer


                                                               
Store Data:
                             Net stores opened
                             (closed) during the                    
                             period
                             Quarter Ended                 Stores open as of
                             Dec 29,       Dec 30,       Dec 29,     Dec 30,
                             2013            2012          2013        2012
Americas
Company-operated             27              26            8,105       7,828
stores
Licensed stores              115            61           5,530       5,072
                             142            87           13,635      12,900
EMEA
Company-operated             3               (20   )       856         862
stores
Licensed stores              61             27           1,177       1,014
                             64             7            2,033       1,876
CAP
Company-operated             61              47            967         713
stores
Licensed stores              148            78           3,124       2,706
                             209            125          4,091       3,419
All Other Segments
Company-operated             7               3             364         17
stores
Licensed stores              (5    )         (10   )       61          66
                             2              (7    )       425         83
                                                                    
Total Company                417            212          20,184      18,278


Contact:

Starbucks Corporation
Investor Relations:
JoAnn DeGrande / Greg Smith, 206-318-7118
investorrelations@starbucks.com
or
Media:
Jim Olson, 206-318-7100
press@starbucks.com
 
Press spacebar to pause and continue. Press esc to stop.