01—Abstract
Summary
Summary of the 10-K filed November 18, 2013. Cited figures are marked; the original filing is the authoritative source.
Starbucks Corporation's 2013 10-K filing highlights robust revenue growth, with total net revenues increasing by 12.0% to $14.9 billiona.
This growth was primarily driven by a 7%b increase in global comparable store sales, reflecting a 5% rise in transactions and a 2% increase in average ticket. The Americas segment remains the largest contributor, showing strong performance with 11% revenue growth and 7% comparable store sales growth. The company also saw significant expansion in its China/Asia Pacific segment, with a 27% revenue increase and 9% comparable store sales growth, signaling strong international momentum.
However, the fiscal year 2013 results were significantly impacted by a $2.8 billionc pretax charge related to the conclusion of a litigation with Kraft Foods Global, Inc. This charge resulted in a net earnings attributable to Starbucks of $8.3 million, or $0.01 per diluted share, a stark contrast to the $1.38 billion in net earnings or $1.79 per diluted share in fiscal 2012. Despite this one-time litigation impact, the company's operational performance, including strong cash flow generation, remains a positive indicator for future growth and shareholder returns.
02—Key points
Key Highlights
- Total net revenues increased by 12.0% to $14.9 billion in fiscal 2013.
- Global comparable store sales grew by 7%, driven by a 5% increase in transactions and a 2% increase in average ticket.
- The Americas segment showed strong performance with 11% revenue growth and 7% comparable store sales growth.
- China/Asia Pacific segment demonstrated significant growth with a 27% revenue increase and 9% comparable store sales growth.
- A substantial $2.8 billion pretax litigation charge from the Kraft arbitration significantly impacted fiscal 2013 net earnings and EPS.
- Cash flow from operations was strong at $2.9 billion, supporting capital expenditures and shareholder returns.
- Starbucks continued its store expansion, with a net increase of 1,701 company-operated and licensed stores globally.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2013, Starbucks Corp kept $0.00.
- Revenue$14.87B100.0%
- Cost of revenue−$6.38B42.9%
- Gross profit$8.48B57.1%
- Operating costs−$8.81B59.3%
- Operating income−$325.4M2.2%
- Interest, other & tax$333.7M2.2%
- Net income$8.3M0.1%
04—Financials
Financial Highlights
Figures from 10-KFY2013filed November 18, 2013Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $14.87B$13.28B | +12.0% |
| Cost of Revenue | $6.38B$5.81B | +9.8% |
| Gross Profit | $8.48B$7.46B | +13.7% |
| Operating Expenses | $15.44B$11.49B | +34.4% |
| Operating Income | -$325.40M$2.00B | −116.3% |
| Interest Expense | $28.10M$32.70M | −14.1% |
| Net Income | $8.30M$1.38B | −99.4% |
| EPS (Basic) | $0.01$0.92 | −98.9% |
| EPS (Diluted) | $0.01$0.90 | −98.9% |
| Shares Outstanding (Basic) | 1.50B1.51B | −0.7% |
| Shares Outstanding (Diluted) | 1.52B1.55B | −1.4% |
05—Questions
Frequently Asked Questions
What was the main factor impacting Starbucks' net earnings in fiscal year 2013?
The primary factor impacting Starbucks' net earnings in fiscal year 2013 was a significant pretax litigation charge of $2.8 billion related to the conclusion of an arbitration with Kraft Foods Global, Inc. This charge heavily reduced the company's reported net earnings and earnings per share for the year.
How did Starbucks' international segments perform?
Starbucks showed strong performance in its international segments. The China/Asia Pacific segment experienced robust revenue growth of 27% and a 9% increase in comparable store sales. The EMEA segment saw modest revenue growth of 2%, with a focus on shifting towards a licensed store model for improved profitability.
What is Starbucks' outlook for fiscal year 2014?
For fiscal year 2014, Starbucks projected mid-single-digit global comparable store sales growth, the opening of 1,500 new stores, and continued growth in the Channel Development business. The company also anticipated a 150 to 200 basis point improvement in consolidated operating margin (excluding the fiscal 2013 litigation charge) and strong EPS growth.
How is Starbucks managing its commodity price risk, particularly for coffee?
Starbucks manages its exposure to coffee price volatility through a combination of fixed-price and price-to-be-fixed purchase commitments, as well as using financial derivative instruments for hedging. The company also operates farmer support centers to promote best practices in coffee production, aiming to ensure a future supply of high-quality green coffee.
06—Continue