10-Q/APeriod: Q3 FY2004

STARBUCKS CORP Quarterly Report (Amendment) for Q3 Ended Jun 27, 2004

Filed August 10, 2004For Securities:SBUX

Summary

Starbucks Corporation's (SBUX) Form 10-Q/A filing for the quarter ending June 26, 2004, highlights strong financial performance across all business segments. The company reported a significant 27.2% increase in total net revenues year-over-year, exceeding its own growth targets. This growth was driven by both new store openings and robust comparable store sales growth in Company-operated markets, which rose by an impressive 11%. Notably, the company achieved its 150th consecutive month of positive comparable store sales growth and the eighth consecutive month of double-digit growth, underscoring its consistent ability to attract and retain customers. Profitability also saw improvement, with operating income margin increasing to 11.7% from 10.2% in the prior year, leading to a 43.5% increase in net earnings. The International operating segment also contributed positively for the fourth consecutive quarter, demonstrating its growing importance to the overall business.

Key Highlights

  • 1Total net revenues increased by 27.2% in Q3 fiscal 2004 compared to Q3 fiscal 2003, surpassing the company's target.
  • 2Comparable store sales in Company-operated markets grew by 11% in Q3 fiscal 2004.
  • 3Marked 150 consecutive months of positive comparable store sales growth and 8 consecutive months of double-digit growth.
  • 4Operating income as a percentage of total net revenues improved to 11.7% from 10.2% year-over-year.
  • 5Net earnings increased by 43.5% in Q3 fiscal 2004 compared to the prior year's third quarter.
  • 6The International operating segment reported positive operating results for the fourth consecutive quarter.
  • 7Company reiterates long-term growth targets of approximately 20% annual revenue growth and 20-25% annual earnings per share growth.

Frequently Asked Questions

This filing is an amendment to the previous 10-Q for the quarter ending June 27, 2004. The amendment clarifies a reference in the 'Management's Overview' section, changing 'international Company-operated markets' to 'International operating segment' for accuracy.

Starbucks targets 3-7% comparable store sales growth over the next three to five years by focusing on improving customer service, introducing new products, and enhancing speed of service through training, technology, and process improvements.

Starbucks projects maintaining approximately 20% annual revenue growth and 20-25% annual earnings per share growth for the next three to five years, driven by new store development and continued comparable store sales growth.

Management believes that the current double-digit comparable store sales growth is not sustainable over the long term. However, they are confident in new store development opportunities globally and in executing their retail strategy to achieve the targeted 3-7% comparable store sales growth.