Washington | 0-20322 | 91-1325671 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
2401 Utah Avenue South, Seattle, Washington 98134 |
(Address of principal executive offices) (Zip Code) |
(206) 447-1575 |
(Registrant’s telephone number, including area code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
Item 9.01 | Financial Statements and Exhibits. |
Exhibit No. | Description | |
STARBUCKS CORPORATION | |||
Dated: November 1, 2018 | |||
By: | /s/ Scott Maw | ||
Scott Maw | |||
executive vice president, chief financial officer |
• | Global comparable store sales increased 3%, driven by a 4% increase in average ticket |
◦ | Americas and U.S. comparable store sales increased 4% |
◦ | CAP and China comparable store sales increased 1% |
• | Consolidated net revenues of $6.3 billion, up 11% over the prior year |
◦ | Adjusted for an approximately 2% net benefit from streamline-driven activities, and approximately 1% headwind from unfavorable foreign currency translation, consolidated net revenues grew 9% over the prior year |
◦ | Streamline-driven activities include the consolidation of the acquired East China business, partially offset by licensing our CPG and foodservice businesses to Nestlé following the close of the deal on August 26, 2018, Teavana mall store closures, and the conversion of certain international retail operations from company-owned to licensed models |
• | GAAP operating margin, inclusive of restructuring and impairment charges, declined 270 basis points year-over-year to 15.2% |
◦ | Non-GAAP operating margin of 18.1% declined 190 basis points compared to the prior year |
• | GAAP Earnings Per Share of $0.56, up 4% over the prior year |
◦ | Non-GAAP EPS of $0.62, up 13% over the prior year |
• | Starbucks RewardsTM loyalty program grew to 15.3 million active members in the U.S., up 15% year-over-year |
• | Mobile Order and Pay represented 14% of U.S. company-operated transactions |
• | The company opened 604 net new stores in Q4 and now operates 29,324 stores across 78 markets |
• | The company returned $3.6 billion to shareholders through a combination of dividends and share repurchases |
• | Global comparable store sales increased 2%, driven by a 3% increase in average ticket |
◦ | Americas and U.S. comparable store sales increased 2% |
◦ | CAP comparable store sales increased 1% |
▪ | China comparable store sales increased 2% |
• | Consolidated net revenues of $24.7 billion, up 10% over the prior year |
◦ | Adjusted for an approximately 2% net benefit from streamline-driven activities, and approximately 1% benefit from favorable foreign currency translation, consolidated net revenues grew 8% over the prior year |
◦ | Streamline-driven activities include the consolidation of the acquired East China business, partially offset by Teavana mall store closures, the conversion of certain international retail operations from company-owned to licensed models, licensing our CPG and foodservice businesses to Nestlé following the close of the deal on August 26, 2018, and the sale of our Tazo brand in Q1 FY18 |
• | GAAP operating margin, inclusive of restructuring and impairment charges, declined 280 basis points year-over-year to 15.7% |
◦ | Non-GAAP operating margin of 18.0% declined 170 basis points compared to the prior year |
• | GAAP Earnings Per Share of $3.24, up 64% over the prior year |
◦ | Non-GAAP EPS of $2.42, up 17% over the prior year |
• | The company returned $8.9 billion to shareholders through a combination of dividends and share repurchases |
Quarter Ended Sep 30, 2018 | |||||
Comparable Store Sales(1) | Sales Growth | Change in Transactions | Change in Ticket | ||
Consolidated | 3% | (1)% | 4% | ||
Americas | 4% | (1)% | 5% | ||
CAP | 1% | (1)% | 2% | ||
EMEA(2) | 2% | 0% | 2% | ||
(1) Includes only Starbucks company-operated stores open 13 months or longer. Comparable store sales exclude the effect of fluctuations in foreign currency exchange rates. | |||||
(2) Company-operated stores represent 15% of the EMEA segment store portfolio as of September 30, 2018. |
Operating Results | Quarter Ended | Change | |||
($ in millions, except per share amounts) | Sep 30, 2018 | Oct 1, 2017 | |||
Net New Stores | 604 | 603 | 1 | ||
Revenues | $6,303.6 | $5,698.3 | 11% | ||
Operating Income | $956.6 | $1,022.5 | (6)% | ||
Operating Margin | 15.2% | 17.9% | (270) bps | ||
EPS | $0.56 | $0.54 | 4% |
Quarter Ended | Change | ||||
($ in millions) | Sep 30, 2018 | Oct 1, 2017 | |||
Net New Stores | 250 | 257 | (7) | ||
Revenues | $4,254.2 | $3,941.3 | 8% | ||
Operating Income | $928.5 | $901.5 | 3% | ||
Operating Margin | 21.8% | 22.9% | (110) bps |
Quarter Ended | Change | ||||
($ in millions) | Sep 30, 2018 | Oct 1, 2017 | |||
Net New Stores | 278 | 296 | (18) | ||
Revenues | $1,214.6 | $859.9 | 41% | ||
Operating Income | $232.2 | $201.7 | 15% | ||
Operating Margin | 19.1% | 23.5% | (440) bps |
Quarter Ended | Change | ||||
($ in millions) | Sep 30, 2018 | Oct 1, 2017 | |||
Net New Stores | 83 | 104 | (21) | ||
Revenues | $267.3 | $255.1 | 5% | ||
Operating Income | $10.8 | $29.0 | (63)% | ||
Operating Margin | 4.0% | 11.4% | (740) bps |
Quarter Ended | Change | ||||
($ in millions) | Sep 30, 2018 | Oct 1, 2017 | |||
Revenues | $539.3 | $576.5 | (6)% | ||
Operating Income | $190.8 | $265.4 | (28)% | ||
Operating Margin | 35.4% | 46.0% | (1,060) bps |
Year Ended Sep 30, 2018 | |||||
Comparable Store Sales(1) | Sales Growth | Change in Transactions | Change in Ticket | ||
Consolidated | 2% | (1)% | 3% | ||
Americas | 2% | (1)% | 3% | ||
CAP | 1% | (1)% | 2% | ||
EMEA(2) | 0% | (3)% | 3% | ||
(1) Includes only Starbucks company-operated stores open 13 months or longer. Comparable store sales exclude the effect of fluctuations in foreign currency exchange rates. | |||||
(2) Company-operated stores represent 15% of the EMEA segment store portfolio as of September 30, 2018. |
Operating Results | Year Ended | Change | |||
($ in millions, except per share amounts) | Sep 30, 2018 | Oct 1, 2017 | |||
Net New Stores (1) | 1,985 | 2,254 | (269) | ||
Revenues | $24,719.5 | $22,386.8 | 10% | ||
Operating Income | $3,883.3 | $4,134.7 | (6)% | ||
Operating Margin | 15.7% | 18.5% | (280) bps | ||
EPS | $3.24 | $1.97 | 64% | ||
(1) Fiscal 2018 net new stores include the net closure of 313 Teavana-branded stores. |
• | Expects to add approximately 2,100 net new Starbucks stores globally |
• | Expects global comparable store sales growth near the lower end of our current 3% to 5% range |
• | Expects consolidated revenue growth of 5% to 7% |
◦ | Includes approximately 2% net negative impact related to streamline-driven activities |
• | Expects GAAP EPS in the range of $2.32 to $2.37 and non-GAAP EPS in the range of $2.61 to $2.66 |
• | In August, Starbucks began licensing its consumer packaged goods and foodservice businesses to Nestlé. The two companies will work closely together on the existing Starbucks range of roast and ground coffee, whole beans, single-serve, and instant coffee offerings. The Alliance will also capitalize on the experience and capabilities of both companies to bring new product offerings for coffee lovers globally. |
• | In August, the company announced a strategic partnership with Alibaba Group Holding Ltd. that will enable a seamless Starbucks Experience and transform the coffee industry in China. Collaborating across key businesses within the Alibaba ecosystem, including Ele.me, Hema, Tmall, Taobao and Alipay, Starbucks announced plans to pilot delivery services beginning September 2018, establish “Starbucks Delivery Kitchens” for delivery order fulfillment and integrate multiple platforms to co-create an unprecedented virtual Starbucks store – an unparalleled and even more personalized online Starbucks Experience for Chinese customers. |
• | In October, Starbucks announced Patrick Grismer has been appointed executive vice president and chief financial officer (cfo) effective November 30. Reporting to Kevin Johnson, Starbucks president and chief executive officer, Grismer succeeds Scott Maw, who will retire on November 30. Grismer joins Starbucks from his current position as cfo of Hyatt Hotels Corporation, which he has held since joining the company in March 2016. In this role, he was responsible for all facets of the global finance function, as well as corporate strategy, asset management, construction, procurement, and shared services. |
• | In October, the company announced its intention to fully license Starbucks operations in France, the Netherlands, Belgium, and Luxembourg to its longstanding strategic partner Alsea, S.A.B. de C.V., the largest independent chain restaurant operator in Latin America. Under the proposal, which is subject to relevant local laws, Alsea will have the rights to operate and develop Starbucks stores in these markets, building on Starbucks regional growth agenda that drives value through strategic licensed relationships. Starbucks also announced plans to introduce a new support structure in its head office in London to better serve an increasingly licensed strategy. |
• | In response to critically low coffee prices in Central America, Starbucks announced a commitment of up to $20 million to temporarily relieve impacted smallholder farmers with whom Starbucks does business, until the coffee market self-corrects and rises above the cost of production. These funds will go directly to smallholder farmers in Nicaragua, Guatemala, Mexico and El Salvador to subsidize farmer income during the upcoming harvest season in Central America. |
• | In September, Starbucks celebrated its expansion into Italy - the company's 78th market - by opening the Starbucks Reserve Roastery in Milan. Milan marks the first time Starbucks has established its retail presence in a new market with the Roastery format, of which only two others exist in the world: the Seattle Roastery, which opened in 2014, and the Roastery in Shanghai, which debuted in 2017. Following the opening of the Roastery, Starbucks will bring additional cafés to Milan with licensed partner Percassi beginning in late 2018. |
• | The company’s Board of Directors authorized an additional 120 million shares for repurchase under its ongoing share repurchase program. |
• | As part of the company's previously announced plan to return $25 billion to shareholders in the form of share buybacks and dividends through fiscal 2020, Starbucks announced that it is currently executing a $5 billion accelerated share repurchase program (ASR) of the Company’s common stock with the assistance of two financial institutions. The Company used proceeds from the recently completed transaction with Nestlé S.A. to execute the ASR, effective October 1, 2018. |
• | The company repurchased 58.5 million shares of common stock in Q4 FY18. |
• | The Board of Directors declared a cash dividend of $0.36 per share, payable on November 30, 2018, to shareholders of record as of November 15, 2018. |
Starbucks Contact, Investor Relations: | Starbucks Contact, Media: | |
Tom Shaw | Reggie Borges | |
206-318-7118 | 206-318-7100 | |
investorrelations@starbucks.com | press@starbucks.com |
Quarter Ended | Quarter Ended | ||||||||||||||||
Sep 30, 2018 | Oct 1, 2017 | % Change | Sep 30, 2018 | Oct 1, 2017 | |||||||||||||
As a % of total net revenues | |||||||||||||||||
Net revenues: | |||||||||||||||||
Company-operated stores | $ | 5,060.1 | $ | 4,477.0 | 13.0 | % | 80.3 | % | 78.6 | % | |||||||
Licensed stores | 683.6 | 617.6 | 10.7 | 10.8 | 10.8 | ||||||||||||
Other | 559.9 | 603.7 | (7.3 | ) | 8.9 | 10.6 | |||||||||||
Total net revenues | 6,303.6 | 5,698.3 | 10.6 | 100.0 | 100.0 | ||||||||||||
Cost of sales including occupancy costs | 2,604.6 | 2,352.1 | 10.7 | 41.3 | 41.3 | ||||||||||||
Store operating expenses | 1,841.6 | 1,639.8 | 12.3 | 29.2 | 28.8 | ||||||||||||
Other operating expenses | 156.7 | 114.4 | 37.0 | 2.5 | 2.0 | ||||||||||||
Depreciation and amortization expenses | 326.6 | 255.4 | 27.9 | 5.2 | 4.5 | ||||||||||||
General and administrative expenses | 460.0 | 402.7 | 14.2 | 7.3 | 7.1 | ||||||||||||
Restructuring and impairments | 45.2 | 33.3 | 35.7 | 0.7 | 0.6 | ||||||||||||
Total operating expenses | 5,434.7 | 4,797.7 | 13.3 | 86.2 | 84.2 | ||||||||||||
Income from equity investees | 87.7 | 121.9 | (28.1 | ) | 1.4 | 2.1 | |||||||||||
Operating income | 956.6 | 1,022.5 | (6.4 | ) | 15.2 | 17.9 | |||||||||||
Net gain resulting from divestiture of certain operations | 2.9 | 83.9 | (96.5 | ) | — | 1.5 | |||||||||||
Interest income and other, net | 36.2 | 67.7 | (46.5 | ) | 0.6 | 1.2 | |||||||||||
Interest expense | (63.8 | ) | (22.3 | ) | 186.1 | (1.0 | ) | (0.4 | ) | ||||||||
Earnings before income taxes | 931.9 | 1,151.8 | (19.1 | ) | 14.8 | 20.2 | |||||||||||
Income tax expense | 175.5 | 362.5 | (51.6 | ) | 2.8 | 6.4 | |||||||||||
Net earnings including noncontrolling interests | 756.4 | 789.3 | (4.2 | ) | 12.0 | 13.9 | |||||||||||
Net earnings/(loss) attributable to noncontrolling interests | 0.6 | 0.8 | (25.0 | ) | — | — | |||||||||||
Net earnings attributable to Starbucks | $ | 755.8 | $ | 788.5 | (4.1 | ) | 12.0 | % | 13.8 | % | |||||||
Net earnings per common share - diluted | $ | 0.56 | $ | 0.54 | 3.7 | % | |||||||||||
Weighted avg. shares outstanding - diluted | 1,348.7 | 1,451.2 | |||||||||||||||
Cash dividends declared per share | $ | 0.36 | $ | 0.30 | |||||||||||||
Supplemental Ratios: | |||||||||||||||||
Store operating expenses as a % of company-operated store revenues | 36.4 | % | 36.6 | % | |||||||||||||
Other operating expenses as a % of non-company-operated store revenues | 12.6 | % | 9.4 | % | |||||||||||||
Effective tax rate including noncontrolling interests | 18.8 | % | 31.5 | % |
Year Ended | Year Ended | ||||||||||||||||
Sep 30, 2018 | Oct 1, 2017 | % Change | Sep 30, 2018 | Oct 1, 2017 | |||||||||||||
As a % of total net revenues | |||||||||||||||||
Net revenues: | |||||||||||||||||
Company-operated stores | $ | 19,690.3 | $ | 17,650.7 | 11.6 | % | 79.7 | % | 78.8 | % | |||||||
Licensed stores | 2,652.2 | 2,355.0 | 12.6 | 10.7 | 10.5 | ||||||||||||
Other | 2,377.0 | 2,381.1 | (0.2 | ) | 9.6 | 10.6 | |||||||||||
Total net revenues | 24,719.5 | 22,386.8 | 10.4 | 100.0 | 100.0 | ||||||||||||
Cost of sales including occupancy costs | 10,174.5 | 9,034.3 | 12.6 | 41.2 | 40.4 | ||||||||||||
Store operating expenses | 7,193.2 | 6,493.3 | 10.8 | 29.1 | 29.0 | ||||||||||||
Other operating expenses | 539.3 | 500.3 | 7.8 | 2.2 | 2.2 | ||||||||||||
Depreciation and amortization expenses | 1,247.0 | 1,011.4 | 23.3 | 5.0 | 4.5 | ||||||||||||
General and administrative expenses | 1,759.0 | 1,450.7 | 21.3 | 7.1 | 6.5 | ||||||||||||
Restructuring and impairments | 224.4 | 153.5 | 46.2 | 0.9 | 0.7 | ||||||||||||
Total operating expenses | 21,137.4 | 18,643.5 | 13.4 | 85.5 | 83.3 | ||||||||||||
Income from equity investees | 301.2 | 391.4 | (23.0 | ) | 1.2 | 1.7 | |||||||||||
Operating income | 3,883.3 | 4,134.7 | (6.1 | ) | 15.7 | 18.5 | |||||||||||
Gain resulting from acquisition of joint venture (1) | 1,376.4 | — | nm | 5.6 | — | ||||||||||||
Net gain resulting from divestiture of certain operations (2) | 499.2 | 93.5 | nm | 2.0 | 0.4 | ||||||||||||
Interest income and other, net | 191.4 | 181.8 | 5.3 | 0.8 | 0.8 | ||||||||||||
Interest expense | (170.3 | ) | (92.5 | ) | 84.1 | (0.7 | ) | (0.4 | ) | ||||||||
Earnings before income taxes | 5,780.0 | 4,317.5 | 33.9 | 23.4 | 19.3 | ||||||||||||
Income tax expense | 1,262.0 | 1,432.6 | (11.9 | ) | 5.1 | 6.4 | |||||||||||
Net earnings including noncontrolling interests | 4,518.0 | 2,884.9 | 56.6 | 18.3 | 12.9 | ||||||||||||
Net earnings/(loss) attributable to noncontrolling interests | (0.3 | ) | 0.2 | nm | — | — | |||||||||||
Net earnings attributable to Starbucks | $ | 4,518.3 | $ | 2,884.7 | 56.6 | 18.3 | % | 12.9 | % | ||||||||
Net earnings per common share - diluted | $ | 3.24 | $ | 1.97 | 64.5 | % | |||||||||||
Weighted avg. shares outstanding - diluted | 1,394.6 | 1,461.5 | |||||||||||||||
Cash dividends declared per share | $ | 1.32 | $ | 1.05 | |||||||||||||
Supplemental Ratios: | |||||||||||||||||
Store operating expenses as a % of company-operated store revenues | 36.5 | % | 36.8 | % | |||||||||||||
Other operating expenses as a % of non-company-operated store revenues | 10.7 | % | 10.6 | % | |||||||||||||
Effective tax rate including noncontrolling interests | 21.8 | % | 33.2 | % |
(1) | Represents the gain resulting from the acquisition of our East China joint venture. |
(2) | Primarily includes the gains on the sales of our Tazo brand and Taiwan joint venture for $347.9 million and $156.6 million, respectively, in FY18. FY17 primarily represents the gain on the sale of our Singapore retail operations of $83.9 million. |
Sep 30, 2018 | Oct 1, 2017 | % Change | Sep 30, 2018 | Oct 1, 2017 | |||||||||||||
Quarter Ended | As a % of Americas total net revenues | ||||||||||||||||
Net revenues: | |||||||||||||||||
Company-operated stores | $ | 3,784.7 | $ | 3,524.1 | 7.4 | % | 89.0 | % | 89.4 | % | |||||||
Licensed stores | 466.0 | 414.7 | 12.4 | 11.0 | 10.5 | ||||||||||||
Other | 3.5 | 2.5 | 40.0 | 0.1 | 0.1 | ||||||||||||
Total net revenues | 4,254.2 | 3,941.3 | 7.9 | 100.0 | 100.0 | ||||||||||||
Cost of sales including occupancy costs | 1,606.3 | 1,477.4 | 8.7 | 37.8 | 37.5 | ||||||||||||
Store operating expenses | 1,455.0 | 1,326.0 | 9.7 | 34.2 | 33.6 | ||||||||||||
Other operating expenses | 40.8 | 32.6 | 25.2 | 1.0 | 0.8 | ||||||||||||
Depreciation and amortization expenses | 160.6 | 154.3 | 4.1 | 3.8 | 3.9 | ||||||||||||
General and administrative expenses | 50.6 | 45.4 | 11.5 | 1.2 | 1.2 | ||||||||||||
Restructuring and impairments | 12.4 | 4.1 | nm | 0.3 | 0.1 | ||||||||||||
Total operating expenses | 3,325.7 | 3,039.8 | 9.4 | 78.2 | 77.1 | ||||||||||||
Operating income | $ | 928.5 | $ | 901.5 | 3.0 | % | 21.8 | % | 22.9 | % | |||||||
Supplemental Ratios: | |||||||||||||||||
Store operating expenses as a % of company-operated store revenues | 38.4 | % | 37.6 | % | |||||||||||||
Other operating expenses as a % of non-company-operated store revenues | 8.7 | % | 7.8 | % | |||||||||||||
Year Ended | |||||||||||||||||
Net revenues: | |||||||||||||||||
Company-operated stores | $ | 14,905.1 | $ | 13,996.4 | 6.5 | % | 89.1 | % | 89.6 | % | |||||||
Licensed stores | 1,814.0 | 1,617.3 | 12.2 | 10.8 | 10.4 | ||||||||||||
Other | 13.1 | 6.3 | 107.9 | 0.1 | — | ||||||||||||
Total net revenues | 16,732.2 | 15,620.0 | 7.1 | 100.0 | 100.0 | ||||||||||||
Cost of sales including occupancy costs | 6,301.2 | 5,695.0 | 10.6 | 37.7 | 36.5 | ||||||||||||
Store operating expenses | 5,747.9 | 5,320.2 | 8.0 | 34.4 | 34.1 | ||||||||||||
Other operating expenses | 150.0 | 130.8 | 14.7 | 0.9 | 0.8 | ||||||||||||
Depreciation and amortization expenses | 638.3 | 614.9 | 3.8 | 3.8 | 3.9 | ||||||||||||
General and administrative expenses | 247.0 | 201.4 | 22.6 | 1.5 | 1.3 | ||||||||||||
Restructuring and impairments | 33.4 | 4.1 | nm | 0.2 | — | ||||||||||||
Total operating expenses | 13,117.8 | 11,966.4 | 9.6 | 78.4 | 76.6 | ||||||||||||
Operating income | $ | 3,614.4 | $ | 3,653.6 | (1.1 | )% | 21.6 | % | 23.4 | % | |||||||
Supplemental Ratios: | |||||||||||||||||
Store operating expenses as a % of company-operated store revenues | 38.6 | % | 38.0 | % | |||||||||||||
Other operating expenses as a % of non-company-operated store revenues | 8.2 | % | 8.1 | % |
Sep 30, 2018 | Oct 1, 2017 | % Change | Sep 30, 2018 | Oct 1, 2017 | |||||||||||||
Quarter Ended | As a % of CAP total net revenues | ||||||||||||||||
Net revenues: | |||||||||||||||||
Company-operated stores | $ | 1,119.3 | $ | 770.0 | 45.4 | % | 92.2 | % | 89.5 | % | |||||||
Licensed stores | 93.0 | 88.7 | 4.8 | 7.7 | 10.3 | ||||||||||||
Other | 2.3 | 1.2 | 91.7 | 0.2 | 0.1 | ||||||||||||
Total net revenues | 1,214.6 | 859.9 | 41.2 | 100.0 | 100.0 | ||||||||||||
Cost of sales including occupancy costs | 509.3 | 370.2 | 37.6 | 41.9 | 43.1 | ||||||||||||
Store operating expenses | 313.4 | 226.6 | 38.3 | 25.8 | 26.4 | ||||||||||||
Other operating expenses | 4.3 | 3.8 | 13.2 | 0.4 | 0.4 | ||||||||||||
Depreciation and amortization expenses | 116.1 | 53.3 | 117.8 | 9.6 | 6.2 | ||||||||||||
General and administrative expenses | 65.8 | 62.9 | 4.6 | 5.4 | 7.3 | ||||||||||||
Total operating expenses | 1,008.9 | 716.8 | 40.8 | 83.1 | 83.4 | ||||||||||||
Income from equity investees | 26.5 | 58.6 | (54.8 | ) | 2.2 | 6.8 | |||||||||||
Operating income | $ | 232.2 | $ | 201.7 | 15.1 | % | 19.1 | % | 23.5 | % | |||||||
Supplemental Ratios: | |||||||||||||||||
Store operating expenses as a % of company-operated store revenues | 28.0 | % | 29.4 | % | |||||||||||||
Other operating expenses as a % of non-company-operated store revenues | 4.5 | % | 4.2 | % | |||||||||||||
Year Ended | |||||||||||||||||
Net revenues: | |||||||||||||||||
Company-operated stores | $ | 4,096.9 | $ | 2,906.0 | 41.0 | % | 91.6 | % | 89.7 | % | |||||||
Licensed stores | 365.7 | 327.4 | 11.7 | 8.2 | 10.1 | ||||||||||||
Other | 11.0 | 6.8 | 61.8 | 0.2 | 0.2 | ||||||||||||
Total net revenues | 4,473.6 | 3,240.2 | 38.1 | 100.0 | 100.0 | ||||||||||||
Cost of sales including occupancy costs | 1,898.3 | 1,396.2 | 36.0 | 42.4 | 43.1 | ||||||||||||
Store operating expenses | 1,148.7 | 845.5 | 35.9 | 25.7 | 26.1 | ||||||||||||
Other operating expenses | 22.9 | 21.2 | 8.0 | 0.5 | 0.7 | ||||||||||||
Depreciation and amortization expenses | 412.1 | 202.2 | 103.8 | 9.2 | 6.2 | ||||||||||||
General and administrative expenses | 241.6 | 207.1 | 16.7 | 5.4 | 6.4 | ||||||||||||
Total operating expenses | 3,723.6 | 2,672.2 | 39.3 | 83.2 | 82.5 | ||||||||||||
Income from equity investees | 117.4 | 197.0 | (40.4 | ) | 2.6 | 6.1 | |||||||||||
Operating income | $ | 867.4 | $ | 765.0 | 13.4 | % | 19.4 | % | 23.6 | % | |||||||
Supplemental Ratios: | |||||||||||||||||
Store operating expenses as a % of company-operated store revenues | 28.0 | % | 29.1 | % | |||||||||||||
Other operating expenses as a % of non-company-operated store revenues | 6.1 | % | 6.3 | % |
Sep 30, 2018 | Oct 1, 2017 | % Change | Sep 30, 2018 | Oct 1, 2017 | |||||||||||||
Quarter Ended | As a % of EMEA total net revenues | ||||||||||||||||
Net revenues: | |||||||||||||||||
Company-operated stores | $ | 142.5 | $ | 141.4 | 0.8 | % | 53.3 | % | 55.4 | % | |||||||
Licensed stores | 124.6 | 113.7 | 9.6 | 46.6 | 44.6 | ||||||||||||
Other | 0.2 | — | nm | 0.1 | — | ||||||||||||
Total net revenues | 267.3 | 255.1 | 4.8 | 100.0 | 100.0 | ||||||||||||
Cost of sales including occupancy costs | 138.5 | 134.0 | 3.4 | 51.8 | 52.5 | ||||||||||||
Store operating expenses | 55.7 | 63.1 | (11.7 | ) | 20.8 | 24.7 | |||||||||||
Other operating expenses | 15.8 | 11.8 | 33.9 | 5.9 | 4.6 | ||||||||||||
Depreciation and amortization expenses | 8.2 | 8.2 | — | 3.1 | 3.2 | ||||||||||||
General and administrative expenses | 11.7 | 9.0 | 30.0 | 4.4 | 3.5 | ||||||||||||
Restructuring and impairments | 26.6 | — | nm | 10.0 | — | ||||||||||||
Total operating expenses | 256.5 | 226.1 | 13.4 | 96.0 | 88.6 | ||||||||||||
Operating income | $ | 10.8 | $ | 29.0 | (62.8 | )% | 4.0 | % | 11.4 | % | |||||||
Supplemental Ratios: | |||||||||||||||||
Store operating expenses as a % of company-operated store revenues | 39.1 | % | 44.6 | % | |||||||||||||
Other operating expenses as a % of non-company-operated store revenues | 12.7 | % | 10.4 | % | |||||||||||||
Year Ended | |||||||||||||||||
Net revenues: | |||||||||||||||||
Company-operated stores | $ | 575.6 | $ | 551.0 | 4.5 | % | 54.9 | % | 57.5 | % | |||||||
Licensed stores | 471.3 | 407.7 | 15.6 | 45.0 | 42.5 | ||||||||||||
Other | 1.1 | — | nm | 0.1 | — | ||||||||||||
Total net revenues | 1,048.0 | 958.7 | 9.3 | 100.0 | 100.0 | ||||||||||||
Cost of sales including occupancy costs | 559.2 | 508.6 | 9.9 | 53.4 | 53.1 | ||||||||||||
Store operating expenses | 226.0 | 214.1 | 5.6 | 21.6 | 22.3 | ||||||||||||
Other operating expenses | 62.8 | 51.3 | 22.4 | 6.0 | 5.4 | ||||||||||||
Depreciation and amortization expenses | 31.7 | 30.6 | 3.6 | 3.0 | 3.2 | ||||||||||||
General and administrative expenses | 51.7 | 41.7 | 24.0 | 4.9 | 4.3 | ||||||||||||
Restructuring and impairments | 55.1 | 17.9 | 207.8 | 5.3 | 1.9 | ||||||||||||
Total operating expenses | 986.5 | 864.2 | 14.2 | 94.1 | 90.1 | ||||||||||||
Operating income | $ | 61.5 | $ | 94.5 | (34.9 | )% | 5.9 | % | 9.9 | % | |||||||
Supplemental Ratios: | |||||||||||||||||
Store operating expenses as a % of company-operated store revenues | 39.3 | % | 38.9 | % | |||||||||||||
Other operating expenses as a % of non-company-operated store revenues | 13.3 | % | 12.6 | % |
Sep 30, 2018 | Oct 1, 2017 | % Change | Sep 30, 2018 | Oct 1, 2017 | |||||||||||||
Quarter Ended | As a % of Channel Development net revenues | ||||||||||||||||
Net revenues | $ | 539.3 | $ | 576.5 | (6.5 | )% | |||||||||||
Cost of sales | 314.3 | 311.9 | 0.8 | 58.3 | 54.1 | ||||||||||||
Other operating expenses | 92.0 | 58.9 | 56.2 | 17.1 | 10.2 | ||||||||||||
Depreciation and amortization expenses | 0.1 | 0.7 | (85.7 | ) | — | 0.1 | |||||||||||
General and administrative expenses | 3.3 | 2.9 | 13.8 | 0.6 | 0.5 | ||||||||||||
Total operating expenses | 409.7 | 374.4 | 9.4 | 76.0 | 64.9 | ||||||||||||
Income from equity investees | 61.2 | 63.3 | (3.3 | ) | 11.3 | 11.0 | |||||||||||
Operating income | $ | 190.8 | $ | 265.4 | (28.1 | )% | 35.4 | % | 46.0 | % | |||||||
Year Ended | |||||||||||||||||
Net revenues | $ | 2,297.3 | $ | 2,256.6 | 1.8 | % | |||||||||||
Cost of sales | 1,252.3 | 1,209.3 | 3.6 | 54.5 | 53.6 | ||||||||||||
Other operating expenses | 286.5 | 260.4 | 10.0 | 12.5 | 11.5 | ||||||||||||
Depreciation and amortization expenses | 1.3 | 3.0 | (56.7 | ) | 0.1 | 0.1 | |||||||||||
General and administrative expenses | 13.9 | 11.3 | 23.0 | 0.6 | 0.5 | ||||||||||||
Total operating expenses | 1,554.0 | 1,484.0 | 4.7 | 67.6 | 65.8 | ||||||||||||
Income from equity investees | 183.8 | 194.4 | (5.5 | ) | 8.0 | 8.6 | |||||||||||
Operating income | $ | 927.1 | $ | 967.0 | (4.1 | )% | 40.4 | % | 42.9 | % |
Sep 30, 2018 | Oct 1, 2017 | % Change | ||||||||
Quarter Ended | ||||||||||
Net revenues: | ||||||||||
Company-operated stores | $ | 13.6 | $ | 41.5 | (67.2 | )% | ||||
Licensed stores | — | 0.5 | nm | |||||||
Other | 14.6 | 23.5 | (37.9 | ) | ||||||
Total net revenues | 28.2 | 65.5 | (56.9 | ) | ||||||
Cost of sales including occupancy costs | 36.2 | 58.6 | (38.2 | ) | ||||||
Store operating expenses | 17.5 | 24.1 | (27.4 | ) | ||||||
Other operating expenses | 3.8 | 7.3 | (47.9 | ) | ||||||
Depreciation and amortization expenses | 41.6 | 38.9 | 6.9 | |||||||
General and administrative expenses | 328.6 | 282.5 | 16.3 | |||||||
Restructuring and impairments | 6.2 | 29.2 | (78.8 | ) | ||||||
Total operating expenses | 433.9 | 440.6 | (1.5 | ) | ||||||
Operating loss | $ | (405.7 | ) | $ | (375.1 | ) | 8.2 | % | ||
Year Ended | ||||||||||
Net revenues: | ||||||||||
Company-operated stores | $ | 112.7 | $ | 197.3 | (42.9 | )% | ||||
Licensed stores | 1.2 | 2.6 | (53.8 | ) | ||||||
Other | 54.5 | 111.4 | (51.1 | ) | ||||||
Total net revenues | 168.4 | 311.3 | (45.9 | ) | ||||||
Cost of sales including occupancy costs | 163.5 | 225.2 | (27.4 | ) | ||||||
Store operating expenses | 70.6 | 113.5 | (37.8 | ) | ||||||
Other operating expenses | 17.1 | 36.6 | (53.3 | ) | ||||||
Depreciation and amortization expenses | 163.6 | 160.7 | 1.8 | |||||||
General and administrative expenses | 1,204.8 | 989.2 | 21.8 | |||||||
Restructuring and impairments | 135.9 | 131.5 | 3.3 | |||||||
Total operating expenses | 1,755.5 | 1,656.7 | 6.0 | |||||||
Operating loss | $ | (1,587.1 | ) | $ | (1,345.4 | ) | 18.0 | % |
Sep 30, 2018 | Oct 1, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 8,756.3 | $ | 2,462.3 | |||
Short-term investments | 181.5 | 228.6 | |||||
Accounts receivable, net | 693.1 | 870.4 | |||||
Inventories | 1,400.5 | 1,364.0 | |||||
Prepaid expenses and other current assets | 1,462.8 | 358.1 | |||||
Total current assets | 12,494.2 | 5,283.4 | |||||
Long-term investments | 267.7 | 542.3 | |||||
Equity and cost investments | 334.7 | 481.6 | |||||
Property, plant and equipment, net | 5,929.1 | 4,919.5 | |||||
Deferred income taxes, net | 134.7 | 795.4 | |||||
Other long-term assets | 412.2 | 362.8 | |||||
Other intangible assets | 1,042.2 | 441.4 | |||||
Goodwill | 3,541.6 | 1,539.2 | |||||
TOTAL ASSETS | $ | 24,156.4 | $ | 14,365.6 | |||
LIABILITIES AND EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 1,179.3 | $ | 782.5 | |||
Accrued liabilities | 2,298.4 | 1,934.5 | |||||
Insurance reserves | 213.7 | 215.2 | |||||
Stored value card liability and current portion of deferred revenue | 1,642.9 | 1,288.5 | |||||
Current portion of long-term debt | 349.9 | — | |||||
Total current liabilities | 5,684.2 | 4,220.7 | |||||
Long-term debt | 9,090.2 | 3,932.6 | |||||
Deferred revenue | 6,775.7 | 4.4 | |||||
Other long-term liabilities | 1,430.5 | 750.9 | |||||
Total liabilities | 22,980.6 | 8,908.6 | |||||
Shareholders’ equity: | |||||||
Common stock ($0.001 par value) — authorized, 2,400.0 shares; issued and outstanding, 1,309.1 and 1,431.6 shares, respectively | 1.3 | 1.4 | |||||
Additional paid-in capital | 41.1 | 41.1 | |||||
Retained earnings | 1,457.4 | 5,563.2 | |||||
Accumulated other comprehensive loss | (330.3 | ) | (155.6 | ) | |||
Total shareholders’ equity | 1,169.5 | 5,450.1 | |||||
Noncontrolling interests | 6.3 | 6.9 | |||||
Total equity | 1,175.8 | 5,457.0 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 24,156.4 | $ | 14,365.6 |
Fiscal Year Ended | Sep 30, 2018 | Oct 1, 2017 | Oct 2, 2016 | ||||||||
OPERATING ACTIVITIES: | |||||||||||
Net earnings including noncontrolling interests | $ | 4,518.3 | $ | 2,884.9 | $ | 2,818.9 | |||||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 1,305.9 | 1,067.1 | 1,030.1 | ||||||||
Deferred income taxes, net | 714.9 | 95.1 | 265.7 | ||||||||
Income earned from equity method investees | (242.8 | ) | (310.2 | ) | (250.2 | ) | |||||
Distributions received from equity method investees | 226.8 | 186.6 | 223.3 | ||||||||
Gain resulting from acquisition of joint venture | (1,376.4 | ) | — | — | |||||||
Net gain resulting from divestiture of certain retail operations | (499.2 | ) | (93.5 | ) | (6.1 | ) | |||||
Stock-based compensation | 250.3 | 176.0 | 218.1 | ||||||||
Goodwill impairments | 37.6 | 87.2 | — | ||||||||
Other | 89.0 | 68.9 | 45.1 | ||||||||
Cash provided by changes in operating assets and liabilities: | |||||||||||
Accounts receivable | 131.0 | (96.8 | ) | (55.6 | ) | ||||||
Inventories | (41.2 | ) | 14.0 | (67.5 | ) | ||||||
Accounts payable | 391.6 | 46.4 | 46.9 | ||||||||
Deferred revenue | 7,109.4 | 130.8 | 180.4 | ||||||||
Other operating assets and liabilities | (677.4 | ) | (4.7 | ) | 248.8 | ||||||
Net cash provided by operating activities | 11,937.8 | 4,251.8 | 4,697.9 | ||||||||
INVESTING ACTIVITIES: | |||||||||||
Purchases of investments | (191.9 | ) | (674.4 | ) | (1,585.7 | ) | |||||
Sales of investments | 459.0 | 1,054.5 | 680.7 | ||||||||
Maturities and calls of investments | 45.3 | 149.6 | 27.9 | ||||||||
Acquisitions, net of cash acquired | (1,311.3 | ) | — | — | |||||||
Additions to property, plant and equipment | (1,976.4 | ) | (1,519.4 | ) | (1,440.3 | ) | |||||
Net proceeds from the divestiture of certain operations | 608.2 | 85.4 | 69.6 | ||||||||
Other | 5.6 | 54.3 | 24.9 | ||||||||
Net cash used by investing activities | (2,361.5 | ) | (850.0 | ) | (2,222.9 | ) | |||||
FINANCING ACTIVITIES: | |||||||||||
Proceeds from issuance of long-term debt | 5,584.1 | 750.2 | 1,254.5 | ||||||||
Repayments of long-term debt | — | (400.0 | ) | — | |||||||
Proceeds from issuance of common stock | 153.9 | 150.8 | 160.7 | ||||||||
Cash dividends paid | (1,743.4 | ) | (1,450.4 | ) | (1,178.0 | ) | |||||
Repurchase of common stock | (7,133.5 | ) | (2,042.5 | ) | (1,995.6 | ) | |||||
Minimum tax withholdings on share-based awards | (62.7 | ) | (82.8 | ) | (106.0 | ) | |||||
Other | (41.2 | ) | (4.4 | ) | (8.4 | ) | |||||
Net cash used by financing activities | (3,242.8 | ) | (3,079.1 | ) | (1,872.8 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | (39.5 | ) | 10.8 | (3.5 | ) | ||||||
Net increase/(decrease) in cash and cash equivalents | 6,294.0 | 333.5 | 598.7 | ||||||||
CASH AND CASH EQUIVALENTS: | |||||||||||
Beginning of period | 2,462.3 | 2,128.8 | 1,530.1 | ||||||||
End of period | $ | 8,756.3 | $ | 2,462.3 | $ | 2,128.8 | |||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | |||||||||||
Cash paid during the period for: | |||||||||||
Interest, net of capitalized interest | $ | 137.1 | $ | 96.6 | $ | 74.7 | |||||
Income taxes, net of refunds | $ | 1,176.9 | $ | 1,389.1 | $ | 878.7 |
Quarter Ended | |||||
($ in millions) | Sep 30, 2018 | Oct 1, 2017 | Change | ||
Revenues | $3,903.0 | $3,585.9 | 9% | ||
Comparable Store Sales Growth(1) | 4% | 2% | |||
Change in Transactions | (1)% | 0% | |||
Change in Ticket | 5% | 2% | |||
(1) Includes only Starbucks company-operated stores open 13 months or longer. |
Net stores opened/(closed) and transferred during the period | |||||||||||||||||
Quarter Ended | Year Ended | Stores open as of | |||||||||||||||
Sep 30, 2018 | Oct 1, 2017 | Sep 30, 2018 | Oct 1, 2017 | Sep 30, 2018 | Oct 1, 2017 | ||||||||||||
Americas: | |||||||||||||||||
Company-operated stores | 94 | 112 | 271 | 394 | 9,684 | 9,413 | |||||||||||
Licensed stores | 156 | 145 | 624 | 558 | 7,770 | 7,146 | |||||||||||
Total Americas | 250 | 257 | 895 | 952 | 17,454 | 16,559 | |||||||||||
China/Asia Pacific(1): | |||||||||||||||||
Company-operated stores | 180 | (28 | ) | 2,089 | 259 | 5,159 | 3,070 | ||||||||||
Licensed stores | 98 | 324 | (1,038 | ) | 777 | 3,371 | 4,409 | ||||||||||
Total China/Asia Pacific | 278 | 296 | 1,051 | 1,036 | 8,530 | 7,479 | |||||||||||
EMEA: | |||||||||||||||||
Company-operated stores | (6 | ) | (4 | ) | (12 | ) | (21 | ) | 490 | 502 | |||||||
Licensed stores | 89 | 108 | 358 | 353 | 2,830 | 2,472 | |||||||||||
Total EMEA | 83 | 104 | 346 | 332 | 3,320 | 2,974 | |||||||||||
Corporate and Other(2): | |||||||||||||||||
Company-operated stores | 3 | (54 | ) | (282 | ) | (68 | ) | 8 | 290 | ||||||||
Licensed stores | (10 | ) | — | (25 | ) | 2 | 12 | 37 | |||||||||
Total Corporate and Other | (7 | ) | (54 | ) | (307 | ) | (66 | ) | 20 | 327 | |||||||
Total Company | 604 | 603 | 1,985 | 2,254 | 29,324 | 27,339 | |||||||||||
(1) China/Asia Pacific store data includes the transfer of 1,477 licensed stores in East China to company-operated retail stores as a result of the purchase of our East China joint venture in the first quarter of fiscal 2018. | |||||||||||||||||
(2) As of September 30, 2018, Corporate and Other included 12 licensed Teavana-branded stores. |
Non-GAAP Exclusion | Rationale |
East China acquisition-related gain | Management excludes the gain on the purchase of our East China joint venture as this incremental gain is specific to the purchase activity and for reasons discussed above. |
Sale of Taiwan joint venture operations | Management excludes the gain related to the sale of our Taiwan joint venture operations as this incremental gain is specific to the sale activity and for reasons discussed above. |
Sale of Tazo brand | Management excludes the net gain on the sale of our assets associated with our Tazo brand and associated transaction costs as these items do not reflect future gains, losses, costs or tax benefits and for reasons discussed above. |
Sale of Brazil retail operations | Management excludes the net loss related to the sale of our Brazil retail operations and associated transaction costs as these items do not reflect future losses, expenses or tax impacts and for reasons discussed above. |
Restructuring, impairment and optimization costs | Management excludes restructuring charges and business process optimization costs related to strategic shifts in its Teavana, EMEA, U.S., e-commerce and other business units. Additionally, management excludes expenses related to divesting certain lower margin businesses and assets, such as closure of certain company-operated stores and Switzerland goodwill impairment. Management excludes these items for reasons discussed above. These expenses are anticipated to be completed within a finite period of time. |
CAP transaction and integration-related costs | Management excludes transaction and integration costs and amortization of the acquired intangible assets for reasons discussed above. Additionally, the majority of these costs will be recognized over a finite period of time. |
Sale of Singapore retail operations | Management excludes the net gain related to the sale of our Singapore retail operations as these items do not reflect future gains, losses or tax impacts and for reasons discussed above. |
Sale of Germany retail operations | Management excludes the net gain, associated costs and changes in estimated indemnifications related to the sale of our Germany retail operations as these items do not reflect future gains, losses or tax impacts and for reasons discussed above. |
The Starbucks Foundation donation | Management excludes the company's largest donation to a non-profit organization for reasons discussed above. |
2018 U.S. stock award | Management excludes the announced incremental 2018 stock-based compensation award for reasons discussed above. |
Nestlé transaction related costs | Management excludes the transaction related costs associated with Nestlé for reasons discussed above. |
Other tax matters | On December 22, 2017, the Tax Cuts and Jobs Act was signed into U.S. law. Management excludes the estimated transition tax on undistributed foreign earnings and the re–measurement of deferred tax assets and liabilities due to the reduction of the U.S. federal corporate income tax rate for reasons discussed above. |
($ in millions) | Quarter Ended | ||||||||
Consolidated | Sep 30, 2018 | Oct 1, 2017 | Change | ||||||
Operating income, as reported (GAAP) | $ | 956.6 | $ | 1,022.5 | (6.4)% | ||||
Restructuring, impairment and optimization costs (1) | 50.0 | 44.6 | |||||||
CAP transaction and integration-related items (2) | 63.1 | 21.2 | |||||||
2018 U.S. stock award (3) | 24.1 | — | |||||||
Nestlé transaction related costs | 49.3 | — | |||||||
The Starbucks Foundation donation | — | 50.0 | |||||||
Non-GAAP operating income | $ | 1,143.1 | $ | 1,138.3 | 0.4% | ||||
Operating margin, as reported (GAAP) | 15.2 | % | 17.9 | % | (270) bps | ||||
Restructuring, impairment and optimization costs (1) | 0.8 | 0.8 | |||||||
CAP transaction and integration-related items (2) | 1.0 | 0.4 | |||||||
2018 U.S. stock award (3) | 0.4 | — | |||||||
Nestlé transaction related costs | 0.8 | — | |||||||
The Starbucks Foundation donation | — | 0.9 | |||||||
Non-GAAP operating margin | 18.1 | % | 20.0 | % | (190) bps | ||||
Diluted net earnings per share, as reported (GAAP) | $ | 0.56 | $ | 0.54 | 3.7% | ||||
Restructuring, impairment and optimization costs (1) | 0.04 | 0.03 | |||||||
CAP transaction and integration-related items (2) | 0.05 | 0.01 | |||||||
2018 U.S. stock award (3) | 0.02 | — | |||||||
Sale of Singapore retail operations | — | (0.06 | ) | ||||||
Nestlé transaction related costs | 0.04 | — | |||||||
The Starbucks Foundation donation | — | 0.03 | |||||||
Other tax matters (4) | 0.01 | — | |||||||
Income tax effect on Non-GAAP adjustments (5) | (0.09 | ) | (0.02 | ) | |||||
Non-GAAP net earnings per share | $ | 0.62 | $ | 0.55 | 12.7% |
(1) | Represents costs associated with our restructuring efforts, primarily asset impairments related to certain company-operated store closures in the U.S. and Canada, as well as business process optimization costs, largely consulting fees in FY18. FY17 represents goodwill and other asset impairment charges associated with our Teavana-branded stores and goodwill impairment related to our Switzerland retail business. |
(2) | Includes transaction costs for the acquisition of our East China joint venture and the divestiture of our Taiwan joint venture; ongoing amortization expense of acquired intangible assets associated with the acquisition of East China and Starbucks Japan; and the related post-acquisition integration costs, such as incremental information technology and compensation-related costs. |
(3) | Represents incremental stock-based compensation award for U.S. partners (employees). |
(4) | Represents the estimated impact of the U.S. Tax Cuts and Jobs Act, specifically the transition tax on undistributed foreign earnings and re-measurement of deferred taxes. |
(5) | Income tax effect on non-GAAP adjustments was determined based on the nature of the underlying items and their relevant jurisdictional tax rates. |
Year Ended | |||||||||
Consolidated | Sep 30, 2018 | Oct 1, 2017 | Change | ||||||
Operating income, as reported (GAAP) | $ | 3,883.3 | $ | 4,134.7 | (6.1%) | ||||
Restructuring, impairment and optimization costs (1) | 239.0 | 164.8 | |||||||
CAP transaction and integration-related items (2) | 224.2 | 61.6 | |||||||
2018 U.S. stock award (3) | 45.8 | — | |||||||
Sale of Brazil retail operations | 1.6 | — | |||||||
Sale of Singapore retail operations | — | 1.4 | |||||||
Nestlé transaction related costs | 61.3 | — | |||||||
The Starbucks Foundation donation | — | 50.0 | |||||||
Sale of Tazo brand | 2.2 | — | |||||||
Non-GAAP operating income | $ | 4,457.4 | $ | 4,412.5 | 1.0% | ||||
Operating margin, as reported (GAAP) | 15.7 | % | 18.5 | % | (280) bps | ||||
Restructuring, impairment and optimization costs (1) | 1.0 | 0.7 | |||||||
CAP transaction and integration-related items (2) | 0.9 | 0.3 | |||||||
2018 U.S. stock award (3) | 0.2 | — | |||||||
Sale of Brazil retail operations | — | — | |||||||
Nestlé transaction related costs | 0.3 | — | |||||||
The Starbucks Foundation donation | — | 0.2 | |||||||
Sale of Tazo brand | — | — | |||||||
Non-GAAP operating margin | 18.0 | % | 19.7 | % | (170) bps | ||||
Diluted net earnings per share (GAAP) | $ | 3.24 | $ | 1.97 | 64.5% | ||||
East China acquisition gain | (0.99 | ) | — | ||||||
Sale of Taiwan joint venture operations | (0.11 | ) | — | ||||||
Sale of Tazo brand | (0.25 | ) | — | ||||||
Restructuring, impairment and optimization costs (1) | 0.17 | 0.11 | |||||||
CAP transaction and integration-related items (2) | 0.16 | 0.04 | |||||||
Sale of Brazil retail operations | 0.01 | — | |||||||
Sale of Singapore retail operations | — | (0.06 | ) | ||||||
Sale of Germany retail operations | — | (0.01 | ) | ||||||
The Starbucks Foundation donation | — | 0.03 | |||||||
2018 U.S. stock award (3) | 0.03 | — | |||||||
Nestlé transaction related costs | 0.04 | — | |||||||
Other tax matters (4) | 0.13 | — | |||||||
Income tax effect on Non-GAAP adjustments (5) | (0.02 | ) | (0.04 | ) | |||||
Non-GAAP net earnings per share | $ | 2.42 | $ | 2.06 | 17% |
(1) | Represents restructuring, impairment and business optimization costs and inventory write-offs related to these efforts recorded within cost of sales including occupancy costs. |
(2) | Includes transaction costs for the acquisition of our East China joint venture and the divestiture of our Taiwan joint venture; ongoing amortization expense of acquired intangible assets associated with the acquisition of our East China joint venture and Starbucks Japan; and the related post-acquisition integration costs, such as incremental information technology and compensation-related costs. |
(3) | Represents incremental stock-based compensation award for U.S. partners (employees). |
(4) | Represents the estimated impact of the U.S. Tax Cuts and Jobs Act, specifically the transition tax on undistributed foreign earnings and re-measurement of deferred taxes. |
(5) | Income tax effect on non-GAAP adjustments was determined based on the nature of the underlying items and their relevant jurisdictional tax rates. |
Year Ended | ||
Consolidated | Sep 29, 2019 | |
(Projected) | ||
Diluted net earnings per share (GAAP) | $ 2.32 - 2.37 | |
Restructuring, impairment and optimization costs (1) | 0.09 | |
CAP transaction and integration-related items (2) | 0.23 | |
2018 U.S. stock award (3) | 0.05 | |
Nestlé transaction related costs | — | |
Other | 0.01 | |
Income tax effect on Non-GAAP adjustments (4) | (0.09 | ) |
Non-GAAP net earnings per share | $ 2.61 - 2.66 |
(1) | Represents restructuring, impairment and business optimization costs and inventory write-offs related to these efforts recorded within cost of sales including occupancy costs. |
(2) | Includes transaction costs for the acquisition of our East China joint venture and the divestiture of our Taiwan joint venture; ongoing amortization expense of acquired intangible assets associated with the acquisition of our East China joint venture and Starbucks Japan; and the related post-acquisition integration costs, such as incremental information technology and compensation-related costs. |
(3) | Represents incremental stock-based compensation award for U.S. partners (employees). |
(4) | Income tax effect on non-GAAP adjustments was determined based on the nature of the underlying items and their relevant jurisdictional tax rates. |
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