01—Abstract
Summary
Summary of the 10-K filed November 17, 2017. Cited figures are marked; the original filing is the authoritative source.
Starbucks Corporation's 2017 10-K report details a year of continued global expansion and strategic investments.
The company achieved a 5% increase in total net revenues, reaching $22.4 billiona, driven by 2,320 net new store openings and a 3% growth in global comparable store sales. However, operating income saw a slight decline of 1% to $4.1 billion, with operating margins decreasing to 18.5% due to increased investments in employees and digital platforms, particularly in the Americas segment, along with restructuring and impairment charges related to the Teavana business. Despite margin pressures, diluted earnings per share (EPS) increased by 4% to $1.97, supported by improved sales leverage and a gain on the sale of Singapore retail operations.
Starbucks also demonstrated a strong commitment to shareholder returns, repurchasing shares and paying dividends totaling $3.5 billionb. The company is strategically repositioning its EMEA segment towards a licensed model and is focused on key growth initiatives for fiscal 2018, including accelerating U.S. comparable store sales, driving digital innovation, and expanding its presence in China. The report highlights the company's robust financial health, demonstrated through strong cash flow from operations and significant capital expenditures aimed at future growth.
02—Key points
Key Highlights
- Total net revenues increased by 5% to $22.4 billion in fiscal 2017.
- Global comparable store sales grew by 3%, driven by a 3% increase in average ticket.
- Operating income decreased by 1% to $4.1 billion, with operating margin declining to 18.5% due to investments and charges.
- Diluted EPS increased by 4% to $1.97.
- The company returned $3.5 billion to shareholders through share repurchases and dividends.
- Starbucks continued its global store expansion, with 2,320 net new store openings.
- Restructuring and impairment charges of $153.5 million were primarily related to the Teavana business.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Starbucks Corp kept $0.13.
- Revenue$22.39B100.0%
- Cost of revenue−$7.07B31.6%
- Gross profit$15.32B68.4%
- Operating costs−$11.19B50.0%
- Operating income$4.13B18.5%
- Interest, other & tax−$1.25B5.6%
- Net income$2.88B12.9%
Where FY2017 revenue went
$22.39B- Operating costs: $11.19B, 50% of revenue
- Cost of revenue: $7.07B, 32% of revenue
- Net income: $2.88B, 13% of revenue
- Interest, other & tax: $1.25B, 5.6% of revenue
Kept 13% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed November 17, 2017Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $22.39B$21.32B | +5.0% |
| Cost of Revenue | $7.07B$8.51B | −17.0% |
| Gross Profit | $15.32B$12.81B | +19.6% |
| Operating Expenses | $18.64B$17.46B | +6.8% |
| Operating Income | $4.13B$4.17B | −0.9% |
| Interest Expense | $92.50M$81.30M | +13.8% |
| Net Income | $2.88B$2.82B | +2.4% |
| EPS (Basic) | $1.99$1.91 | +4.2% |
| EPS (Diluted) | $1.97$1.90 | +3.7% |
| Shares Outstanding (Basic) | 1.45B1.47B | −1.5% |
| Shares Outstanding (Diluted) | 1.46B1.49B | −1.7% |
05—Questions
Frequently Asked Questions
What was Starbucks' revenue growth in fiscal year 2017?
Starbucks reported a 5% increase in total net revenues, reaching $22.4 billion for the fiscal year ended October 1, 2017. This growth was primarily attributed to new store openings and a 3% increase in comparable store sales.
What factors impacted Starbucks' operating margin in fiscal year 2017?
Starbucks' operating margin decreased by 110 basis points to 18.5% in fiscal year 2017. This was primarily due to increased investments in employees and digital initiatives, particularly in the Americas segment, restructuring and impairment charges related to the Teavana business, and the absence of a 53rd week in the fiscal year, partially offset by sales leverage.
How did Starbucks return capital to shareholders in fiscal year 2017?
Starbucks returned $3.5 billion to shareholders in fiscal year 2017 through a combination of share repurchases and dividend payments. This reflects the company's commitment to shareholder value.
What strategic initiatives is Starbucks focusing on for fiscal year 2018?
For fiscal year 2018, Starbucks plans to focus on key operational priorities including accelerating U.S. comparable store sales, driving innovation in food and beverages, enhancing its digital platform, driving long-term growth in China, elevating the Starbucks Experience through Siren Retail, and gaining share in the at-home coffee market. They also plan strategic actions like acquiring full ownership of their East China joint venture.
06—Continue