Starbucks Corp. reported financial results for its 13-week fiscal fourth quarter and 52-week fiscal year ended Sept. 30, 2012. Fourth quarter revenues increased 11 percent to a record $3.4 billion. In the fourth quarter the earnings per share (EPS) were $0.46, up 24 percent, after excluding non-route gains in the prior year.
When comparing with prior year results, note that fiscal 2011 included 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. A reconciliation of select fiscal year 2011 generally accepted accounting principles (GAAP) measures to non-GAAP measures is included at the end of this document.
Fiscal Fourth Quarter 2012 Highlights:
Total net revenues increased 11 percent to a fourth-quarter record of $3.4 billion. Global comparable store sales increased 6 percent driven by a 5 percent increase in traffic and a 1 percent increase in average ticket. Americas comparable store sales increased 7 percent driven by 5 percent growth in traffic and 2 percent growth in average ticket. Operating margin expanded 60 basis points to 15.4 percent over the prior year’s operating margin of 14.8 percent, which included a 100 basis point benefit from a non-routine gain in fourth quarter (Q4) for fiscal year 2011 ( FY11). Operating margin expanded 160 basis points when compared to prior year non-GAAP operating margin of 13.8 percent after excluding the non-routine gain in Q4 FY11
Earnings per share (EPS) was $0.46 per share compared to the prior year EPS of $0.47 per share, which included $0.10 relating to non-routine gains in Q4 FY11. Fourth quarter EPS of $0.46 grew 24 percent over Q4 FY11 non-GAAP EPS of $0.37 per share, which excluded the non-routine gains in Q4 FY11. EPS includes charges of $0.02 per share related to store portfolio optimization initiatives in Europe.
The board of directors declared a cash dividend of $0.21 per share, a 24 percent increase from $0.17 per share.
Fiscal Year 2012 Highlights:
For fiscal year 2012, total net revenues increased 14 percent reaching a record $13.3 billion. Global comparable store sales increased 7 percent driven by a 6 percent increase in traffic and a 1 percent increase in average ticket. Americas comparable store sales increased 8 percent driven by a 6 percent increase in traffic and a 2 percent increase in average ticket.
Channel Development revenue grew 50 percent to $1.3 billion and the company opened 1,063 net new stores globally in 2012.
Operating margin improved 20 basis points to 15.0 percent over the prior year’s operating margin of 14.8 percent, which included a non-routine gain in FY11, despite 160 basis points of impact due to higher commodity costs in FY12. Operating margin expanded 50 basis points when compared to prior year non-GAAP operating margin of 14.5 percent after excluding the non-routine gain from FY11.
EPS increased 10 percent to $1.79 per share compared to the prior year EPS of $1.62 per share, which included $0.10 relating to non-routine gains in FY11. EPS of $1.79 grew 18 percent over the prior year non-GAAP EPS of $1.52, excluding the non-routine gains in FY11.
In 2012, operating cash flow totaled $1.7 billion and Starbucks returned approximately $1.1 billion to shareholders through share repurchases and dividend payments.
“Our Q4 and overall 2012 fiscal year performance demonstrates the strength of our business and brand,” said Howard Schultz, chairman, president and chief executive officer, Starbucks Coffee Co., in a prepared statement. “The resiliency and relevance of our U.S. retail business, acceleration of the Channel Development business and expansion in Asia all contributed significantly to our strong results. I am incredibly proud of our 200,000 Starbucks partners around the world who have contributed to the success of the company and I am optimistic about achieving our aspirations for the future. “
“Our excellent fourth quarter and full fiscal year results reflect the strength of our business and the solid execution by our partners, specifically illustrated in the fourth quarter by strong traffic growth, continued momentum in Channel Development, and rapid earnings growth,” stated Troy Alstead, chief financial officer. “By delivering relevant innovation to our customers while increasing focus on execution and operating efficiencies, we drove sales growth and expanded profit margins. On the strength of our business in fiscal 2012 and the momentum we carry into the new fiscal year, we remain confident in our fiscal 2013 outlook of continued strong profitable growth on a global scale.”