10-KPeriod: FY2010

STARBUCKS CORP Annual Report, Year Ended Oct 3, 2010

Filed November 22, 2010For Securities:SBUX

Summary

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.

Financial Highlights

55 data points
Beta

Revenue

$10.71B

58.8% Gross Margin

Net Income

$945.60M

8.8% Net Margin

EPS (Diluted)

$0.62

Total Assets

$6.39B

Cash & Equivalents

$1.16B

Free Cash Flow

$1.26B

Financial Statements
Beta
Revenue$10.71B
Cost of Revenue$4.42B
Gross Profit$6.29B
Operating Expenses$9.44B
Operating Income$1.42B
Interest Expense$32.70M
Net Income$945.60M
EPS (Basic)$0.64
EPS (Diluted)$0.62
Shares Outstanding (Basic)1.49B
Shares Outstanding (Diluted)1.53B

Key Highlights

  • 1Consolidated 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.
  • 2Operating 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.
  • 3The company reported strong EPS of $1.24 in fiscal 2010, up from $0.52 in fiscal 2009, reflecting improved profitability.
  • 4Starbucks plans to open approximately 500 net new stores globally in fiscal 2011, with a majority expected to be licensed stores internationally.
  • 5The company initiated a quarterly cash dividend in fiscal 2010 and repurchased $286 million of common stock, demonstrating a commitment to returning capital to shareholders.
  • 6Starbucks 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.
  • 7The International segment is identified as a key growth area, with strategic focus on expansion in emerging markets like China and Brazil.

Frequently Asked Questions

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.

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.

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.

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.