01—Abstract
Summary
Summary of the 10-K filed November 22, 2010. Cited figures are marked; the original filing is the authoritative source.
Starbucks Corporation's 2010 10-K filing highlights a significant turnaround and return to profitable growth following restructuring efforts in prior years.
The company demonstrated strong performance in fiscal year 2010, with a notable increase in consolidated net revenues and operating income. This improvement was driven by robust comparable store sales growth, particularly in the U.S. segment, and continued operational efficiencies. The report emphasizes the company's strategic focus on disciplined global store expansion, with a significant portion of new store openings planned internationally.
Starbucks is also actively diversifying its revenue streams by expanding its global consumer products business and leveraging new channels for its coffee and tea products. The company's financial health appears strong, with healthy operating cash flow and a solid liquidity position, enabling a return of capital to shareholders through share repurchases and the initiation of a quarterly dividend.
02—Key points
Key Highlights
- Consolidated net revenues increased by 9.5% to $10.7 billion in fiscal year 2010, driven by a 7% increase in global comparable store sales and operational efficiencies.
- Operating income saw a substantial increase, reaching $1.4 billion in fiscal 2010, with an operating margin of 13.3%, a significant improvement from 5.7% in fiscal 2009.
- The company reported strong EPS of $1.24 in fiscal 2010, up from $0.52 in fiscal 2009, reflecting improved profitability.
- Starbucks plans to open approximately 500 net new stores globally in fiscal 2011, with a majority expected to be licensed stores internationally.
- The company initiated a quarterly cash dividend in fiscal 2010 and repurchased $286 million of common stock, demonstrating a commitment to returning capital to shareholders.
- Starbucks is strategically phasing out its licensing relationship with Kraft Foods for packaged coffee and tea, signaling a shift towards greater control over its consumer products distribution.
- The International segment is identified as a key growth area, with strategic focus on expansion in emerging markets like China and Brazil.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2010, Starbucks Corp kept $0.09.
- Revenue$10.71B100.0%
- Cost of revenue−$4.42B41.2%
- Gross profit$6.29B58.8%
- Operating costs−$4.87B45.5%
- Operating income$1.42B13.3%
- Interest, other & tax−$473.8M4.4%
- Net income$945.6M8.8%
Where FY2010 revenue went
$10.71B- Operating costs: $4.87B, 45% of revenue
- Cost of revenue: $4.42B, 41% of revenue
- Net income: $945.6M, 8.8% of revenue
- Interest, other & tax: $473.8M, 4.4% of revenue
Kept 8.8% as net incomeNet income $945.6M · 8.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2010filed November 22, 2010Financial Statements
FY2010 against FY2009
| Line item | FY2010FY2009 | Change |
|---|---|---|
| Revenue | $10.71B$9.77B | +9.5% |
| Cost of Revenue | $4.42B$4.32B | +2.1% |
| Gross Profit | $6.29B$5.45B | +15.4% |
| Operating Expenses | $9.44B$9.33B | +1.1% |
| Operating Income | $1.42B$562.00M | +152.6% |
| Interest Expense | $32.70M$39.10M | −16.4% |
| Net Income | $945.60M$390.80M | +142.0% |
| EPS (Basic) | $0.64$0.27 | +139.6% |
| EPS (Diluted) | $0.62$0.26 | +138.5% |
| Shares Outstanding (Basic) | 1.49B1.48B | +0.8% |
| Shares Outstanding (Diluted) | 1.53B1.49B | +2.5% |
05—Questions
Frequently Asked Questions
What was the primary driver of Starbucks' improved financial performance in fiscal year 2010?
The primary driver was the strong resurgence in comparable store sales, particularly in the United States, coupled with the benefits of operational efficiencies and reduced restructuring charges implemented in prior years. This led to increased sales leverage and higher operating margins.
What are Starbucks' key strategic priorities for future growth?
Starbucks' key growth strategies include disciplined global store expansion, with a focus on international markets, particularly emerging economies. They are also expanding their global consumer products business, innovating with new product forms and channels, and leveraging their strong brand across various platforms.
How is Starbucks managing its supply chain and commodity price risks, particularly for coffee?
Starbucks controls its coffee purchasing, roasting, and distribution. They manage price volatility through a mix of fixed-price and price-to-be-fixed purchase commitments and commodity hedges. They also operate Farmer Support Centers to promote best practices and ensure a sustainable supply of high-quality coffee.
What is Starbucks' approach to returning capital to shareholders?
In fiscal year 2010, Starbucks returned capital to shareholders through share repurchases totaling $286 million and initiated a quarterly cash dividend, demonstrating a commitment to shareholder value.
06—Continue