Starbucks Barclays Conf Presentation

8/9/2019 Starbucks Barclays Conf Presentation

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Starbucks Coffee Company

Barclays Capital Retail and Restaurants ConferenceApril 28, 2010


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Forward Looking Statements

This presentation contains forward-looking statements. Forward-looking statements are subject to various risks and uncertaintiesthat could cause our actual results to differ materially from thesestatements, and should be considered in conjunction withcautionary statements and risk factor discussions in our filingswith the SEC, including our last annual report on Form 10K andsubsequent reports on Form 10Q. Starbucks assumes noobligation to update any of these forward-looking statements orinformation.

Please refer to the appendix to find reconciliations of non-GAAP

financial measures noted in this presentation with theircorresponding GAAP measures.


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Starbucks Coffee Company


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Building for the Future

Deliver enhanced customer experience

Drive operational leverage

Deliver relevant innovation and profitablegrowth platforms through multiple channels


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Q2 Fiscal 2010 Highlights

Strong momentum continues Revenue of $2.5B; 9% growth

Comparable store sales growth of 7% 5th sequential quarter of improvement

Highest comp since Q206

Operating margin: GAAP = 13.4% compared to 1.8% prior year

Non-GAAP = 13.7% compared to 8.3% prior year

Earnings per share: GAAP = $0.28 vs. $0.03 in prior year Non-GAAP = $0.29 vs. $0.16 in prior year

Initiated first-ever cash dividend

Note: Non-GAAP reconciliations available in the appendix


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-10%

-5%

0%

5%

10%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

-10%

-5%

0%

5%

10%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

Comparable Store Sales

Return to growthU.S. Segment

FY2008 FY2009 FY2010International Segment

FY2008 FY2009 FY2010

(1%)(8%)4%) (5%) (10%) (1%)6%)

5%

0%3% 2%

(3%) (3%) (2%)

(8%)

0%4%

7%

4%7%

TransactionsTicket


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0.0%

5.0%

10.0%

15.0%

FY05 FY06 FY07 FY08 FY09 1H FY09 1H FY10 FY10

Outlook

GAAP Non-GAAP Outlook Range

Margin ImprovementDriven by cost discipline and powerful sales leverage

Consolidated Operating Margin

Notes: 1) Line on FY05 bar indicates operating margin including FAS 123 expensing of stock option compensation, 2) Non-GAAPreconciliations available in the appendix

8.1%9.2%

12% - 13%12.3%11.5%

11.2%

4.9% 5.7%

7.8%

13.7%

3.2%

13.2%


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$0.61

$0.71

$0.87

$0.43

$0.52

$0.12

$0.60

$0.00

$0.25

$0.50

$0.75

$1.00

$1.25

FY05 FY06 FY07 FY08 FY09 1H FY09 1H FY10 FY10

Outlook

GAAP EPS Non-GAAP EPS Outlook Range

Earnings per Share

Profitable growth in a challenging environment

$0.71

$0.80

Notes: 1) FY05 EPS was before the adoption of FAS 123R, 2) FY06 includes $0.02 expense related to the cumulative effect of anaccounting change, 3) Non-GAAP reconciliations available in the appendix, 4) FY10 outlook includes ~$0.04 due to a 53 rd week andexcludes ~$0.03 for restructuring

49% - 53%growth

$0.62

$0.32

$1.19-$1.22


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$0.16

$0.29

$0.00

$0.10

$0.20

$0.30

Q2 FY09 Q2 FY10

GAAP EPS Non-GAAP EPS

Profitable Growth

Record second quarter earnings

Note: Non-GAAP reconciliation available in the appendix

$0.28

$0.03


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$0.16

$0.29

$0.00

$0.10

$0.20

$0.30

Q2 FY09 Q2 FY10

GAAP EPS Non-GAAP EPS

Profitable Growth

Record second quarter earnings


$0.28

$0.03

Non-GAAP Net Earnings$121.1 Million $223.1 Million


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Revenue

$7,023 $7,532 $7,105

$3,641 $3,755

$0

$3,000

$6,000

$9,000

2007 2008 2009 1H FY09 1H FY10

$1,005

$454 $532

$184

$656

$0

$250

$500

$750

$1,000

$1,250

2007 2008 2009 1H FY09 1H FY10

14.3%

6.0%7.5%

5.0%

17.5%

0.0%

5.0%

10.0%

15.0%

20.0%

2007 2008 2009 1H FY09 1H FY10 Long-term

target

Operating Margin

Fiscal Year Fiscal 1HFiscal Year Fiscal 1H

United States

(in millions)

Fiscal Year Fiscal 1H

Operating Income (in millions)

$778*$730*

$345*

$666*

9.7%*11.0%*

Highteens

9.5%*

17.7%*

Healthy business provides foundation for Starbucks growth

GAAP

Non-GAAP



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Revenue

$1,696$2,103 $1,920

$929 $1,125

$0

$500

$1,000

$1,500

$2,000

$2,500

2007 2008 2009 1H FY09 1H FY10

$138$110

$93

$19

$84

$0

$50

$100

$150

2007 2008 2009 1H FY09 1H FY10

8.1%

5.2% 4.8%

2.0%

7.5%

0.0%

5.0%

10.0%

15.0%

20.0%

2007 2008 2009 1H FY09 1H FY10 Long-term

target

Operating Margin


Fiscal Year Fiscal 1Hr

International

(in millions)



$120*$137*

$36*

$102*

6.5%*6.2%*

MidtoHighteens

3.9%*

9.0%*

On the path to an enormous opportunity

GAAP

Non-GAAP



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Revenue

$692 $748 $750

$379 $377

$0

$200

$400

$600

$800

2007 2008 2009 1H09 1H10

$249 $279$296

$138 $135$0

$70

$140

$210$280

$350

2007 2008 2009 1H09 1H10

35.9% 39.6% 36.4% 35.8%37.3%

0.0%

15.0%

30.0%

45.0%

2007 2008 2009 1H09 1H10 Long-term

target

Operating Margin

35%



Consumer Products Group

(in millions)



High margin, high return business with growth ahead


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OWNERSHIPCHANNEL

FY 2005

FY 2009

GEOGRAPHY

37 markets

50 markets65%25%

10%

76%

16%8%

47%

41%

53%

59%

CPG Op Income*

International Op Income*

U.S. Op Income*

Licensed Stores

Company-operated Stores

Diversifying Our Business

As we expand our reach

* Non-GAAP


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AND INNOVATEBEYOND STARBUCKSSTORES

SEATTLES BEST COFFEE

U.S. AND INTERNATIONAL STARBUCKS VIA

PACKAGED GOODS

Building for the Future

Investing for disciplined and profitable growth


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Innovation: New Store Designs

Locally relevant, sustainable and fresh designsDisney Village Paris University Village Seattle

1st

& Pike Seattle


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Innovation: VIATM Ready Brew

Single serve coffee on-the-go and at-home


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US:

Compete in single serve market

Grow Starbucks 4% share in the65B cup Brewed Coffee category

Create new usage occasions

International:

Take share from the $23B global

instant and single serve category

Instant coffee represents a higher mixof retail coffee sales Internationally:

U.K. = 80%

Japan = 53%

Russia = 85%

At home25 billion cups

Away from home3.7 billion cups(restaurant, specialtycoffee houses)

On the go37 billion cups(e.g., office, travel)

3%Starbucks share

13%Starbucks share

4% Starbucksshare

Innovation: VIATM Ready Brew

Single serve coffee on-the-go and at-home


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Seattles Best Coffee

Creating a $1 Billion global business


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Seattles Best Coffee

Meaningful multi-channel growth opportunity

Today

GrowthOpportunity

Innovation PipelineFranchising

RETAIL PACKAGEDGOODS

SERVING THROUGHOTHERS

New Partnerships


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$923

$643

$1,132

$771

$1,331

$1,080

$1,259

$985

$1,389

$446

$0

$500

$1,000

$1,500

FY05 FY06 FY07 FY08 FY09 FY10 Outlook

Cash from Operations Capital Expenditure

Operating Cash Flow Remains Strong

FY10 Free Cash Flow expected to be at least $1B

millions

9% 5%1%0%0%apex % of

net revenues

~$500

>$1.5

Billion


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DIVIDEND

Improving Shareholder Return

Through the distribution of excess cash

SHARE REPURCHASE

InitiatedQ2 2010

$0.10 pershare paidquarterly

Firstdistribution

April 23, 2010

Shareholders of recordon Apri l 7, 2010

Targeted 35% - 40%payout ratio

15 mil lion sharesnewly authorized

21 mil lion sharesavailable forrepurchase


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Investment Highlights

ABUNDANTMULTI-CHANNELGLOBAL GROWTHOPPORTUNITIES

RELEVANTPRODUCTINNOVATION

ESTABLISHEDBLUE-CHIPPARTNERSHIPS

CSRLEADERSHIP

ROBUSTFREE CASH FLOWGENERATION

UNPARALLELEDATTRACTIVE & LOYALCUSTOMERDEMOGRAPHIC

GLOBALLYDIVERSIFIEDEARNINGS

EXPERIENCEDMANAGEMENT

UNDISPUTEDCOFFEE AUTHORITY& MARKET LEADER

ICONICBRAND WITHGLOBAL FOOTPRINT

GROWTHOPPORTUNITIES

LEVERAGABLEPLATFORM

SOLIDFOUNDATION


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Starbucks Coffee CompanyAppendix


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Reconciliation of Selected GAAP Measures

to Non-GAAP Measures13 w ee k s 1 3 W e ek s 2 6 w ee k s 2 6 w ee k s 5 2 w ee k s 5 2 w eek s 53 w eek sQ 2 F Y 0 9 Q 2 F Y 1 0 Q 2 F Y 0 9 Q 2 F Y 1 0 F Y 0 8 F Y 0 9 F Y 1 0

C o n s o l id a te d

O pe ra t ing m a rgin a s rep o r te d (G A A P ) 1 .8 % 13 .4 % 3.2 % 1 3.2 % 4 .9% 5 .7 % 12 % -1 3 %R e s tru c tu r ing c h a rg e s 6 .5 % 0.3 % 4.6 % 0 .5 % 2 .6% 3 .4 % < 1 %

O the r t ra s n fo rm at io n c h arg e s - - - - 0 .6% -N o n-G A A P o pe ra t ing m a rgin 8 .3 % 13 .7 % 7.8 % 1 3.7 % 8 .1% 9 .2 % 12 % -1 3 %

D ilu ted E P S , as re p or te d (G A A P ) 0.0 3 0 .28 0 .12 0 .60 0 . 4 3 0 . 5 2 1 .1 6 -1 .1 9

R e s tru c tu r ing c h a rg e s , n et o f ta x 0.1 3 0 .01 0 .20 0 .02 0 . 2 2 0 . 2 8 0 . 0 3O the r t ra n s fo rm at io n c h arg e s , n e t o f ta x - - - - 0 . 0 6 -N o n-G A A P E P S 0.1 6 0 .29 0 .32 0 .62 0 . 7 1 0 . 8 0 1 .1 9 -1 .2 2

N e t e a rnin g s a s re p o r te d (G A A P ) 25 .0 2 1 7 .3 89 .3 4 5 8 .8

R e s tru c tu r ing c h a rg e s , n et o f ta x 96 .1 5. 8 1 4 4 .9 18 .6O the r t ra n s fo rm at io n c h arg e s , n e t o f ta x - - - -N o n-G A A P n et e a rn in g s 1 21 .1 2 2 3 .1 2 3 4 .2 4 7 7 .4

N e t c a s h p ro v id e d b y o p e ra t in g a c t i v it ie sN e t a d d i ti on s t o p ro p e r t y , p la n t a n d e q u ip m e n t

Fre e c as h flo w > $ 1B **

U S

O pe ra t ing in c o m e a s re po r te d (G A A P ) 1 84 6 56 4 5 4 5 3 2R e s tru c tu r ing c h a rg e s 1 61 9 2 1 1 2 4 6

O the r t ra n s fo rm at io n c h arg e s - - 6 5 -N o n-G A A P o pe ra t ing in c o m e 3 4 5 66 6 7 30 7 78

O pe ra t ing m a rgin a s r ep o r te d (G A A P ) 5 .0% 1 7 .5% 6 .0 % 7 .5 %

R e s tru c tu r ing c h a rg e s 4 .4% 0 .2% 2 .8 % 3 .5 %O the r t ra s n fo rm at io n c h arg e s - - 0 .9 % -N o n-G A A P o pe ra t ing m a rgin 9 .5% 1 7 .7% 9 .7 % 11 .0 % hig h te en s **

I n t e rn a t i o n a l

O pe ra t ing in c o m e a s re po r te d (G A A P ) 19 84 1 1 0 9 3R e s tru c tu r ing c h a rg e s 17 17 1 9 2 7

O the r t ra n s fo rm at io n c h arg e s - - 8 -N o n-G A A P o pe ra t ing in c o m e 36 1 02 1 3 7 1 2 0

O pe ra t ing m a rgin a s rep o r te d (G A A P ) 2 .0% 7 .5% 5 .2 % 4 .8 %

R e s tru c tu r ing c h a rg e s 1 .8% 1 .5% 0 .9 % 1 .4 %O the r t ra s n fo rm at io n c h arg e s - - 0 .4 % -N o n-G A A P o pe ra t ing m a rgin 3 .9% 9 .0% 6 .5 % 6 .2 % hig h te en s **

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