SEATTLE – Starbucks Corporation released on Thursday, after the closing bell, its 13-week fiscal third quarter and 39-week fiscal year for the period ended June 29, 2014.
Q3 Fiscal 2014 Highlights:
– Consolidated net revenue growth accelerated to 11%; net revenues totaled a Q3 record $4.2 billion
– Global comparable store sales increased 6%, marking the 18th consecutive quarter of global comp growth of 5% or greater – Americas comp sales increased 6%; U.S. comp sales increased 7%; EMEA comp sales increased 3%; China/Asia Pacific comp sales increased 7%
– Consolidated operating income increased 25%, to a Q3 record $769 million
– Consolidated operating margin expanded 200 bps, to a Q3 record 18.5%, primarily driven by sales leverage
– Channel Development revenues increased 13%; operating margin expanded 800 bps to 37.1%
– Earnings per share increased 22% to a Q3 record $0.67 per share
– The Company opened 344 net new stores globally, ending the quarter with 20,863 stores across 64 countries
Updated Fiscal 2014 Targets
Following the strong performance year-to-date, the company is updating the following fiscal 2014 targets:
– Consolidated operating margin improvement now targeted at 200 bps over FY13, when excluding the Kraft litigation charge in fiscal 2013
Channel Development now targeting approximately 600 bps improvement over FY13
– Earnings per share now expected to be in the range of $2.70 to $2.72; or $2.65 to $2.67 when excluding an estimated net benefit of $0.05 for certain FY14 non-GAAP adjustments.
Q4 EPS now in the range of $0.76 to $0.78; or $0.73 to $0.75 when excluding a $0.03 estimated net benefit as described in the above referenced reconciliation
– Net new stores now expected to be approximately 1,550
Americas: increased from 600 to 650
Fiscal 2015 Targets
The company introduces initial fiscal 2015 targets as follows:
– Revenue growth of 10% or greater
– Global comparable store sales growth in the mid single digits
– An additional 1,600 net new stores globally
– Earnings per share growth of 15%-20% over FY14 calculated based on Non-GAAP earnings per share
“Starbucks Q3 represents another quarter of outstanding operating performance in which each of our segments contributed to record results,” said Howard Schultz, chairman, president and ceo of Starbucks Coffee Company. “The increasing power of the Starbucks brand, the success of our best-in-class mobile, social and digital technologies and our greatest asset – over 300,000 partners who deliver the Starbucks Experience to over 70 million customers around the world each week – position us to continue growing our business around the world and into the future.”
“Starbucks record Q3 results demonstrate both the power of our innovation and the opportunities for growth, globally and in the U.S., that lie ahead. Importantly, record revenues and operating margin reflect an acceleration of top-line growth and meaningful contributions from all operating regions and our Channel Development segment,” said Scott Maw, Starbucks cfo. “Our Q3 results give us confidence in our ability to deliver on our full year fiscal 2014 targets and support the strong 2015 revenue and profit growth targets we introduced today, despite continued challenging economic and consumer headwinds in many of the global markets in which we operate.”
Non-GAAP Disclosure
In addition to the GAAP results provided in this release, the company provides expected non-GAAP earnings per share for Q4 fiscal 2014 and full year fiscal 2014. These non-GAAP financial measures are not in accordance with, or an alternative for, generally accepted accounting principles in the United States. The GAAP measure most directly comparable to non-GAAP earnings per share is diluted net earnings per share.
The expected Q4 fiscal 2014 and full year fiscal 2014 non-GAAP earnings per share being furnished exclude the estimated non-routine net benefit related to the sale of certain retail operations that may close in the fourth quarter of fiscal 2014. The full year fiscal 2014 non-GAAP earnings per share being furnished also exclude the benefit recognized from a litigation credit in Q1 fiscal 2014. The company’s management believes that providing these non-GAAP financial measures better enables investors to understand and evaluate the company’s prospective operating performance. More specifically, management excludes these two non-routine benefits because it believes that the impacts of these benefits do not reflect expected future gains or expenses beyond fiscal 2014 and do not contribute to a meaningful evaluation of the company’s future operating performance or comparisons to the company’s past operating performance.
These non-GAAP financial measures may have limitations as analytical tools, and these measures should not be considered in isolation or as a substitute for analysis of the company’s results as reported under GAAP. Other companies may calculate these non-GAAP financial measures differently than the company does, limiting the usefulness of those measures for comparative purposes.
Source: Starbucks Corporation
