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Starbucks Reports Record Fourth Quarter And Record Fiscal Year 2015 Results

The following excerpt is from the company's SEC filing.

Q4 Comp Sales Increase 8% Globally, 9% in the U.S.; Global Traffic Up 4%

Q4 Revenues Jump 18% to a Record $4.9 Billion; Operating Income Up 13% to a Record $969 Million

Q4 GAAP EPS Rises to a Record $0.43; Non-GAAP EPS Rises 16% to a Record $0.43 Per Share

Company Issues Strong Outlook for Fiscal 2016 and Increases Global Comp Store Sales Targets

Board of Directors Approves a 25% Increase in the Quarterly Dividend to $0.20 Per Share

SEATTLE;

October 29, 2015

– Starbucks Corporation (NASDAQ: SBUX) today reported financial results for its

13-week

fisc al

fourth

quarter and

-week fiscal year ended

September 27, 2015

. Fiscal 2014 and fiscal 2015 GAAP results include items which are excluded from non-GAAP results. Please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release for more information.

Highlights:

Global comparable store sales increased 8%, driven by a 4% increase in traffic

Americas comp sales increased 8%, driven by a 4% increase in traffic

China/Asia Pacific comp sales increased 6%, driven by a 6% increase in traffic

EMEA comp sales increased 5%, driven by a 3% increase in traffic

Consolidated net revenues up 18% over Q4 FY14, to $4.9 billion

Consolidated GAAP operating income up 13%, to $969.4 million

Non-GAAP operating income up 14% over Q4 FY14 non-GAAP operating income, to $981.3 million

Consolidated GAAP operating margin of 19.7% decreased 70 basis points from Q4 FY14

Non-GAAP operating margin of 20.0% decreased 50 basis points from Q4 FY14 non-GAAP operating margin

GAAP EPS of $0.43 up 10% over Q4 FY14 GAAP EPS

Non-GAAP EPS of $0.43 up 16% over Q4 FY14 non-GAAP EPS

Starbucks Mobile Order & Pay expanded to U.S. company-operated stores nationwide; became available on Android devices through the Starbucks® mobile app

Opened 524 net new stores globally in the quarter, including the first Starbucks stores in Panama and in Azerbaijan

Fiscal Year

Global comparable store sales increased 7%, driven by a 3% increase in traffic

Americas comp sales increased 7%, driven by a 3% increase in traffic

China/Asia Pacific comp sales increased 9%, driven by an 8% increase in traffic

EMEA comp sales increased 4%, driven by a 2% increase in traffic

Consolidated net revenues up 17% over FY14, to a record $19.2 billion

Consolidated GAAP operating income up 17% over FY14, to $3.6 billion

Non-GAAP operating income up 19% over FY14 non-GAAP operating income, to $3.7 billion

Consolidated GAAP operating margin increased 10 basis points over FY14, to 18.8%

Non-GAAP operating margin increased 50 basis points over FY14 non-GAAP operating margin, to 19.1%

GAAP EPS of $1.82 increased 35% over FY14 GAAP EPS

Non-GAAP EPS of $1.58 increased 19% over FY14 non-GAAP EPS

Company served over 60 million more customer occasions from its U.S. comp store base, and over 72 million more customer occasions from its global comp store base in fiscal 2015 over the prior year

Starbucks opened 1,677 net new stores in fiscal 2015, ending the year with 23,043 stores in 68 countries

“Starbucks record Q4 financial results, highlighted by stunning comp store sales increases of 8% globally, 9% in the U.S. driven by a 4% increase in global traffic, demonstrate the strength and relevance of the Starbucks brand around the world,” said Howard Schultz, Starbucks chairman and ceo. “And our results underscore the success of the

- more -

investments we continue to make in our people and business, in new beverage and food innovation and in groundbreaking technology innovation that is deepening our connection to customers everywhere,” Schultz added.

“Starbucks performance in Q4 reflected a continuation of the pattern of accelerating momentum we saw with each successive quarter of fiscal 2015,” said Scott Maw, Starbucks cfo. “And our Q4 results are particularly gratifying in that they were achieved despite the increase, and acceleration, of the significant partner and digital investments we are making to drive sustained, profitable growth around the world and into the future,” Maw added.

Fourth

Quarter Fiscal

Summary

Quarter Ended Sep 27, 2015

Comparable Store Sales

Sales Growth

Change in Transactions

Change in Ticket

Includes only Starbucks company-operated stores open 13 months or longer.

Operating Results

($ in millions, except per share amounts)

Sep 28, 2014

Net New Stores

$4,914.8

$4,180.8

$854.9

Operating Margin

(70) bps

Consolidated net revenues were

, an increase of 18% over

. The increase was primarily driven by incremental revenues from the acquisition of Starbucks Japan, an 8% increase in global comparable store sales and the opening of 1,606 net new stores over the past 12 months.

Consolidated operating income grew 13% to

, up from $854.9 million in

. Consolidated operating margin decreased 70 basis points to 19.7% primarily driven by investments in our store partners (employees) in the Americas segment and the impact of our ownership change in Starbucks Japan, and was partially offset by sales leverage.

Americas Segment Results

($ in millions)

$3,383.8

$3,041.1

$840.6

$743.0

40 bps

Net revenues for the Americas segment were

$3.4 billion

. The increase was driven by 8% growth in comparable store sales and incremental revenues from 612 net new store openings over the past 12 months.

Operating income of

$840.6 million

grew 13% versus

$743.0 million

. Operating margin of

expanded 40 basis points due to sales leverage and was partially offset by investments in our store partners (employees).

China/Asia Pacific Segment Results

$652.2

$309.9

$129.8

$103.8

(1,360) bps

Net revenues for the China/Asia Pacific segment grew 110% over Q4 FY14 to

$652.2 million

. The increase was primarily driven by incremental revenues from the acquisition of Starbucks Japan. Also contributing were incremental revenues from 767 net new store openings over the past 12 months and a 6% increase in comparable store sales.

Operating income grew 25% over Q4 FY14 to

$129.8 million

. Operating margin declined 1,360 basis points to

due to the impact of our ownership change in Starbucks Japan, which drove a 1,550 basis point decline. The remaining 190 basis point expansion was primarily driven by operational savings.

EMEA Segment Results

$308.3

$321.8

510 bps

Net revenues for the EMEA segment were

$308.3 million

, a 4% decrease versus

. The decrease was primarily driven by unfavorable foreign currency translation. Partially offsetting the decrease were incremental revenues from the opening of 238 net new licensed stores over the past 12 months and a 5% increase in comparable store sales.

Operating income increased 37% to

$53.1 million

$38.8 million

. Operating margin expanded 510 basis points to

, primarily due to sales leverage driven by the ongoing shift in the portfolio towards more licensed stores, and the gains on sales of

primarily store assets to licensees in the region.

Channel Development Segment Results

$456.7

$399.1

$197.3

$171.5

20 bps

Net revenues for the Channel Development segment grew 14% over Q4 FY14 to

$456.7 million

, primarily driven by increased sales of packaged coffee and premium single-serve products.

$197.3 million

increased 15% compared to

. Operating margin increased 20 basis points to

, primarily driven by increased income from our North American Coffee Partnership and leverage on cost of sales. The increase was partially offset by higher coffee costs and increased marketing spend.

All Other Segments Results

$113.8

$108.9

Operating Loss

$(17.7)

$(13.8)

Year to Date Financial Results

Net New Stores

$19,162.7

$16,447.8

$3,601.0

$3,081.1

Net new stores include the closure of 132 Target Canada licensed stores in the second quarter of fiscal 2015.

Fiscal 2016 Targets

Starbucks fiscal year 2016 will include an extra week in the fourth quarter, as fiscal 2016 is a 53-week year for the company.

The company provides the following FY16 targets, which are based on actual FY15 non-GAAP results as presented in this press release and projected FY16 non-GAAP results where noted. Projected FY16 non-GAAP adjustments relate to the acquisition of Starbucks Japan; please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release.

Approximately 1,800 net new store openings in the fiscal year:

Americas: approximately 700, half licensed

China/Asia Pacific: approximately 900, two-thirds licensed

EMEA: approximately 200, primarily licensed

Full year consolidated revenue growth of 10%+ on a 52 week basis, the 53rd week expected to add approximately 2%

Global comparable store sales growth somewhat above mid-single digits

FY16 operating margin is expected to increase slightly versus prior year:

Americas: expect moderate improvement over prior year

China/Asia Pacific: expected to be flat to down slightly versus prior year

EMEA: expected to approach 15%

Channel Development: expect moderate improvement versus prior year

Expecting a consolidated tax rate between 34% and 35%

Full Year FY16 Earnings Per Share, including the 53rd week in Q4 FY16:

GAAP EPS in the range of $1.84 to $1.86

Non-GAAP EPS in the range of $1.87 to $1.89

Q1 FY16 Earnings Per Share:

GAAP EPS in the range of $0.43 to $0.44

Non-GAAP EPS in the range of $0.44 to...


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