Starbucks Corp. Reports 27 Percent Earnings Gain In Fourth Quarter

Starbucks Corp. reported financial results for its 13-week fiscal fourth quarter and 52-week fiscal year ended Oct. 2, 2011. These results include the impact of non-routine gains related to the sale of corporate real estate and the acquisition of the company’s joint venture operations in Switzerland and Austria. The comparable prior-year periods included 14 and 53 weeks, respectively, as fiscal 2010 contained an extra week. In addition, fiscal 2010 results also included the impact of restructuring charges. A reconciliation of select GAAP measures to non-GAAP measures is available at the end of this document.

Fiscal fourth quarter 2011 highlights are:

• Earnings per share (EPS) increased 27 percent to $0.47 in Q4 FY11, including $0.10 attributable to non-routine gains, compared to $0.37 per share in Q4 FY10, which included approximately $0.05 related to the extra week;
• EPS increased 16 percent to a record $0.37 from $0.32 per share, excluding the non-routine gains in Q4 FY11, and the impact of restructuring and the extra week in Q4 FY10;
• Total net revenues reached a record $3.0 billion, an increase of 7 percent from the 14-week period in FY10, and an increase of approximately 15 percent on a comparative 13-week basis;
• Global comparable store sales increased 9 percent on a comparative 13-week basis, driven by a 6 percent increase in traffic and a 3 percent increase in average ticket;
• Consolidated operating margin reached 14.8 percent, up 70 basis points over the prior-year period’s GAAP results;
• Operating margin expanded 60 basis points to 13.8 percent from 13.2 percent on a non-GAAP basis, which excludes the non-routine gain in Q4 FY11 and the impact of restructuring and the extra week in Q4 FY10;
• The board of directors declared a cash dividend of $0.17 per share, a 31% increase from $0.13 per share;
• The board also authorized the repurchase of up to an additional 20 million shares of the company’s common stock.

Full-year 2011 highlights are:

• EPS increased 31 percent to $1.62 in FY11, including $0.10 attributable to non-routine gains, compared to $1.24 per share in FY10;
•  EPS increased 24 percent to a record $1.52 from $1.23 per share, excluding the non-routine gains in Q4 FY11, and the impact of restructuring and the extra week in Q4 FY10;
• Total net revenues reached a record $11.7 billion, an increase of 9 percent from the 53-week period in FY10, and an increase of approximately 11 percent on a comparative 52-week basis;
• Global comparable store sales increased 8 percent on a comparative 52-week basis, driven by a 6 percent increase in traffic and a 2 percent increase in average ticket;
• Consolidated operating margin reached 14.8 percent, up 150 basis points over the prior-year period’s GAAP results;
• Consolidated operating margin increased 100 basis points to 14.5 percent from 13.5 percent on a non-GAAP basis, which excludes the non-routine gains in FY11 and the impact of restructuring and the extra week in FY10;
• U.S. operating margin improved 230 basis points to a record 19.4 percent on a GAAP basis; U.S. operating margin improved 220 basis points excluding the impact of restructuring and the extra week in FY10;
• International operating margin improved 350 basis points to a record 13.3 percent on a GAAP basis; International operating margin improved 270 basis points excluding the impact of restructuring and the extra week in FY10;
• Global CPG operating margin was 31.7 percent;
• Operating cash flow totaled $1.6 billion; Free cash flow of $1.1 billion;
• Starbucks returned approximately $945 million to shareholders through share repurchases and dividends, more than doubling the amount returned in FY10.