01—Abstract
Summary
Summary of the 10-K filed November 20, 2009. Cited figures are marked; the original filing is the authoritative source.
Starbucks Corporation's 2009 10-K filing reveals a challenging year marked by significant restructuring efforts and a focus on cost reduction and operational efficiency.
The company experienced a revenue decline of 5.9% to $9.77 billiona, largely driven by a 6.7% decrease in Company-operated retail revenues due to a 6% decline in comparable store sales in the US and a 2% decline internationally. This period reflects the impact of a difficult economic environment on consumer discretionary spending. Despite revenue headwinds, Starbucks demonstrated a commitment to improving its financial health by executing on its strategic initiatives.
The company significantly reduced its cost structure, realizing approximately $580 millionb in cost reductions through store closures, headcount reductions, and operational efficiencies. These efforts, coupled with a renewed focus on customer experience and product innovation (like the launch of VIA Ready Brew), led to an improvement in operating margin to 5.7% from 4.9% in the prior year. The company also strengthened its financial foundation, ending the year with no short-term debt and substantial cash reserves, positioning it to navigate the ongoing economic challenges and invest in future growth.
02—Key points
Key Highlights
- Total net revenues decreased by 5.9% to $9.77 billion in fiscal 2009, reflecting a challenging economic environment.
- Company-operated retail revenues declined by 6.7%, primarily due to a 6% decrease in comparable store sales in the US and a 2% decrease internationally.
- Starbucks successfully implemented significant cost reduction initiatives, achieving approximately $580 million in savings through store rationalization, workforce adjustments, and operational efficiencies.
- Operating income increased by 11.5% to $562.0 million, and the operating margin improved to 5.7% from 4.9% in the prior year, driven by cost efficiencies.
- Earnings Per Share (EPS) diluted increased to $0.52 in fiscal 2009 from $0.43 in fiscal 2008.
- The company reduced its short-term borrowings to zero by the end of fiscal 2009, ending the year with over $650 million in cash and liquid investments.
- Starbucks continued its global expansion, albeit at a slower pace, with a net decrease of 385 Company-operated stores but a net increase of 89 internationally, and a net increase of 305 licensed stores internationally.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, Starbucks Corp kept $0.04.
- Revenue$9.77B100.0%
- Cost of revenue−$4.32B44.2%
- Gross profit$5.45B55.8%
- Operating costs−$4.89B50.0%
- Operating income$562.0M5.7%
- Interest, other & tax−$171.2M1.8%
- Net income$390.8M4.0%
Where FY2009 revenue went
$9.77B- Operating costs: $4.89B, 50% of revenue
- Cost of revenue: $4.32B, 44% of revenue
- Net income: $390.8M, 4.0% of revenue
- Interest, other & tax: $171.2M, 1.8% of revenue
Kept 4.0% as net incomeNet income $390.8M · 4.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2009filed November 20, 2009Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $9.77B$10.38B | −5.9% |
| Cost of Revenue | $4.32B$4.65B | −6.9% |
| Gross Profit | $5.45B$5.74B | −5.0% |
| Operating Expenses | $9.33B$9.99B | −6.6% |
| Operating Income | $562.00M$503.90M | +11.5% |
| Interest Expense | $39.10M$53.40M | −26.8% |
| Net Income | $390.80M$315.50M | +23.9% |
| EPS (Basic) | $0.27$0.21 | +23.3% |
| EPS (Diluted) | $0.26$0.21 | +20.9% |
| Shares Outstanding (Basic) | 1.48B1.46B | +1.0% |
| Shares Outstanding (Diluted) | 1.49B1.48B | +0.6% |
05—Questions
Frequently Asked Questions
What were the main drivers of Starbucks' financial performance in fiscal year 2009?
The main drivers were the challenging economic environment impacting consumer discretionary spending, leading to decreased comparable store sales, and the company's strategic response through significant cost reduction initiatives and operational efficiencies. The company also launched new products like VIA Ready Brew.
How did Starbucks address the decline in revenues and improve profitability?
Starbucks implemented a comprehensive restructuring plan that included closing approximately 1,000 Company-operated stores globally, reducing headcount in its support organization, and improving in-store operational efficiencies. These measures helped reduce costs and improve operating margins, allowing for profitability despite lower revenue.
What is Starbucks' outlook for fiscal year 2010 based on this filing?
The company projected revenue growth in the low-to-mid single digits, driven by modestly positive comparable store sales, a 53rd fiscal week, and approximately 300 net new store openings (primarily licensed stores). Starbucks also expected a significant improvement in its consolidated operating margin due to its reduced cost structure and operational efficiencies.
What is the company's financial health and liquidity position at the end of fiscal year 2009?
Starbucks maintained a strong financial position, ending fiscal 2009 with no short-term debt outstanding and over $650 million in cash and liquid investments. Cash flow from operations was robust, enabling the company to reduce borrowings and fund ongoing business investments.
06—Continue