01—Abstract
Summary
Summary of the 10-K filed November 16, 2012. Cited figures are marked; the original filing is the authoritative source.
Starbucks Corporation's 2012 10-K filing demonstrates robust financial performance and strategic expansion.
The company reported a 13.7% increase in total net revenues to $13.3 billiona, driven by a solid 7% growth in global comparable store sales and significant 50% revenue growth in the Channel Development segment, boosted by the successful launch of K-Cup® portion packs. Operating income rose to $2.0 billion, with an improved operating margin of 15.0%, reflecting increased sales leverage which helped offset higher commodity costs. Earnings per diluted share (EPS) also saw a notable increase to $1.79 from $1.62 in the prior year.
The company continued its disciplined global store growth, adding a net of 1,063 stores across its segments, with the Americas remaining the largest revenue contributor. The China/Asia Pacific (CAP) segment showed particularly strong revenue growth of 31%b, signaling its increasing importance. Starbucks also continued to return value to shareholders through share repurchases and increased dividends, underscoring a commitment to shareholder returns amidst continued investment in store renovations and new product innovation, such as the Verismo™ system.
02—Key points
Key Highlights
- Total net revenues increased by 13.7% to $13.3 billion in fiscal 2012.
- Global comparable store sales grew by 7%, with the Americas showing an 8% increase and CAP showing a 15% increase.
- Channel Development segment revenue surged by 50%, largely due to the introduction of K-Cup® portion packs.
- Operating income increased to $2.0 billion, and operating margin improved to 15.0% from 14.8% in fiscal 2011.
- Diluted EPS rose to $1.79, up from $1.62 in fiscal 2011.
- Starbucks repurchased 12.3 million shares and increased its cash dividend, demonstrating a commitment to shareholder returns.
- The company added a net of 1,063 stores globally, expanding its retail footprint.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, Starbucks Corp kept $0.10.
- Revenue$13.28B100.0%
- Cost of revenue−$5.81B43.8%
- Gross profit$7.46B56.2%
- Operating costs−$5.47B41.2%
- Operating income$2.00B15.0%
- Interest, other & tax−$613.6M4.6%
- Net income$1.38B10.4%
Where FY2012 revenue went
$13.28B- Cost of revenue: $5.81B, 44% of revenue
- Operating costs: $5.47B, 41% of revenue
- Net income: $1.38B, 10% of revenue
- Interest, other & tax: $613.6M, 4.6% of revenue
Kept 10% as net incomeNet income $1.38B · 10%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed November 16, 2012Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $13.28B$11.70B | +13.5% |
| Cost of Revenue | $5.81B$4.92B | +18.3% |
| Gross Profit | $7.46B$6.78B | +10.0% |
| Operating Expenses | $11.49B$10.18B | +12.9% |
| Operating Income | $2.00B$1.73B | +15.6% |
| Interest Expense | $32.70M$33.30M | −1.8% |
| Net Income | $1.38B$1.25B | +11.1% |
| EPS (Basic) | $0.92$0.83 | +10.2% |
| EPS (Diluted) | $0.90$0.81 | +10.5% |
| Shares Outstanding (Basic) | 1.51B1.50B | +0.8% |
| Shares Outstanding (Diluted) | 1.55B1.54B | +0.4% |
05—Questions
Frequently Asked Questions
What were the key drivers of revenue growth in fiscal year 2012?
Revenue growth was primarily driven by a 7% increase in global comparable store sales, a 50% revenue increase in the Channel Development segment (bolstered by K-Cup® sales), and a 20% growth in licensed store revenue. New store openings also contributed to the overall revenue increase.
How did commodity costs affect Starbucks' financial performance?
Higher commodity costs, particularly for coffee, negatively impacted operating income by approximately $214 million. However, the company was able to mitigate this impact through increased sales leverage and operational efficiencies, leading to an overall expansion in operating margin.
What is the significance of the restructuring of Starbucks' operating segments?
Starbucks reorganized into four reportable operating segments: Americas, Europe, Middle East, and Africa (EMEA), China/Asia Pacific (CAP), and Channel Development. This alignment with a three-region leadership structure aims to accelerate global growth and improve management's ability to evaluate financial results and make key operating decisions.
What is Starbucks' strategy for returning capital to shareholders?
Starbucks returned approximately $1.1 billion to shareholders in fiscal 2012 through share repurchases ($593 million) and dividends ($513 million). The company's board authorized an additional 25 million shares for repurchase in November 2012, indicating an ongoing commitment to capital return.
What are the main risks highlighted in the filing?
Key risks include sensitivity to customer spending driven by economic conditions, intense competition, reliance on the performance of its Americas segment, potential disruption in the supply chain, increases in commodity costs (especially coffee and dairy), and the importance of brand value and consumer trust. International expansion also carries risks related to foreign currency fluctuations and varying economic and regulatory conditions.
06—Continue