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Starbucks (SBUX) Howard S. Schultz on Q2 2016 Results - Earnings Call Transcript

Q2 2016 Earnings Call

April 21, 2016 5:00 pm ET


Durga Doraisamy - Director of Investor Relations

Howard S. Schultz - Chairman & Chief Executive Officer

Kevin R. Johnson - President, Chief Operating Officer & Director

Scott Harlan Maw - Executive Vice President and Chief Financial Officer

John Winchester Culver - Group President-China/Asia Pacific, Channel Development and Emerging Brands

Clifford Burrows - Group President-Americas, US & Teavana Region

Adam B. Brotman - Chief Digital Officer

Matthew Ryan - Executive Vice President, Global Chief Strategy Officer


David Palmer - RBC Capital Markets LLC

John William Ivankoe - JPMorgan Securities LLC

Joseph Terrence Buckley - Bank of America Merrill Lynch

Keith R. Siegner - UBS Securities LLC

John Glass - Morgan Stanley & Co. LLC

Andrew Charles - Cowen & Co. LLC

Nicole M. Miller Regan - Piper Jaffray & Co (Broker)

Jeffrey Bernstein - Barclays Capital, Inc.

David E. Tarantino - Robert W. Baird & Co., Inc. (Broker)

Jason West - Credit Suisse Securities (NYSE:USA) LLC (Broker)

Andrew Marc Barish - Jefferies LLC

Karen Holthouse - Goldman Sachs & Co.

Matthew DiFrisco - Guggenheim Securities LLC

R.J. Hottovy - Morningstar, Inc. (Research)


Good afternoon. My name is Connor, and I'll be your conference operator today. At this time, I would like to welcome everyone to Starbucks Coffee Company's Second Quarter Fiscal Year 2016 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you.

Ms. Doraisamy, you may begin your conference.

Durga Doraisamy - Director of Investor Relations

Good afternoon, everyone. This is Durga Doraisamy, Director of Investor Relations for Starbucks Coffee Company. Thank you for joining us today to discuss our second quarter 2016 results which will be led by Howard Schultz, Chairman and CEO; Kevin Johnson, President and COO; and Scott Maw, CFO. Joining us for Q&A are Cliff Burrows, Group President-U.S. and Americas; John Culver, Group President-China/Asia Pacific, Channel Development and Emerging Brands; Matt Ryan, Global Chief Strategy Officer; and Adam Brotman, Global Chief Digital Officer.

This conference call will include forward-looking statements which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Any such statements should be considered in conjunction with cautionary statements in our earnings release and risk factor discussions in our filings with the SEC, including our last annual report on Form 10-K. Starbucks assumes no obligation to update any of these forward-looking statements or information.

Please refer to our website at to find the reconciliation of non-GAAP financial measures referenced in today's call with their corresponding GAAP measures. This conference call is being webcast, and an archive of the webcast will be available on our website at – at

I would now turn the call over to Howard. Howard?

Howard S. Schultz - Chairman & Chief Executive Officer

Thank you, Durga, and welcome, everyone. I taped my conversation today before heading to Johannesburg, where earlier today we opened the first of approximately 150 stores in South Africa, Starbucks's 71st international market.

In Q2, Starbucks' powerful 24,000-store global retail operation again drove record financial and operating performance, including record revenues, record profits, a 7% increase in comp store sales in the U.S., a 6% increase in comp store sales globally, our 25th consecutive quarter of comp store growth at or above 5% and a stunning increase of 5% in transaction growth and 18% in revenue growth in China. And we remain on plan to end fiscal 2016 with approximately 25,000 stores globally. Our recent classes of new and remodeled retail stores continue to defy established consumer trends away from traditional bricks-and-mortar retailing and deliver record-breaking unit sales, unit economics and return on investment; very strong performance metrics that underscore the increasing power and relevance of the Starbucks brand around the world.