10-KPeriod: FY2013

STARBUCKS CORP Annual Report, Year Ended Sep 29, 2013

Filed November 18, 2013For Securities:SBUX

Summary

Starbucks Corporation's 2013 10-K filing highlights robust revenue growth, with total net revenues increasing by 12.0% to $14.9 billion. This growth was primarily driven by a 7% 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 billion 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.

Financial Highlights

57 data points
Beta

Revenue

$14.87B

57.1% Gross Margin

Net Income

$8.30M

0.1% Net Margin

EPS (Diluted)

$0.01

Total Assets

$11.52B

Cash & Equivalents

$2.58B

Free Cash Flow

$1.76B

Financial Statements
Beta
Revenue$14.87B
Cost of Revenue$6.38B
Gross Profit$8.48B
Operating Expenses$15.44B
Operating Income-$325.40M
Interest Expense$28.10M
Net Income$8.30M
EPS (Basic)$0.01
EPS (Diluted)$0.01
Shares Outstanding (Basic)1.50B
Shares Outstanding (Diluted)1.52B

Key Highlights

  • 1Total net revenues increased by 12.0% to $14.9 billion in fiscal 2013.
  • 2Global comparable store sales grew by 7%, driven by a 5% increase in transactions and a 2% increase in average ticket.
  • 3The Americas segment showed strong performance with 11% revenue growth and 7% comparable store sales growth.
  • 4China/Asia Pacific segment demonstrated significant growth with a 27% revenue increase and 9% comparable store sales growth.
  • 5A substantial $2.8 billion pretax litigation charge from the Kraft arbitration significantly impacted fiscal 2013 net earnings and EPS.
  • 6Cash flow from operations was strong at $2.9 billion, supporting capital expenditures and shareholder returns.
  • 7Starbucks continued its store expansion, with a net increase of 1,701 company-operated and licensed stores globally.

Frequently Asked Questions

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.

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.

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.

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.