Starbucks Corporation (Nasdaq:SBUX) yesterday announced that pro forma net earnings increased by 35 percent for both the fourth quarter and fiscal year ended October 1, 2000, which included 13 and 52 weeks, respectively. The same periods in fiscal 1999 included 14 and 53 weeks, respectively.
“Starbucks financial success and rapid domestic and international growth in fiscal 2000, positions us well to achieve our goal of becoming one of the most recognized and respected brands in the world,” said Howard Schultz, chairman and chief global strategist at Starbucks Coffee Company.
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The Company also announced the write-down of the majority of its equity positions in Kozmo.com, Inc., Cooking.com, Inc. and Talk City, Inc. In August 2000, the Company announced a pre-tax non-cash charge of $20.6 million representing 100 percent of the carrying value of its investment in Living.com Inc. Following a detailed review, Starbucks determined its remaining Internet investments had experienced an other than temporary impairment of $38.2 million. In total, Starbucks recorded a pre-tax, non-cash charge of $58.8 million ($42.3 million after-tax) for the 13-week period ending October 1, 2000 to write its Internet investments down to their fair values. After the write-down, the carrying cost of all Internet investments on the Starbucks balance sheet is $4.8 million. The write down of these investments does not affect Starbucks earnings target for fiscal year 2001 of $0.90 to $0.92 per share.
For the fourth quarter (13 weeks) ended October 1, 2000, consolidated net revenues were $582 million compared to consolidated net revenues of $475 million for the fourth quarter (14 weeks) of fiscal 1999. On a comparable 13 week basis, for the period ended October 1, 2000, consolidated net revenues increased 32 percent, retail revenues increased 29 percent to $487 million and specialty revenues increased 50 percent to $95 million. Comparable store sales increased 10 percent as compared with the same 13 week period of fiscal 1999.
Systemwide retail store revenue, which includes net revenues for both company-operated and licensed retail stores, increased to $625 million for the 13 weeks ended October 1, 2000 from $476 for the 14 weeks ended October 3, 1999.
Pro forma net earnings for the fourth quarter of fiscal 2000, excluding non-cash Internet investment losses, were $43.8 million or $0.22 per share, an increase of 35 percent, compared to $32.4 million or $0.17 per share for the fourth quarter of fiscal 1999. Net earnings, including the non-cash investment losses, were $1.5 million, or $0.01 per share, for the fourth quarter of fiscal 2000.
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By GlobalDataFor the 52 weeks ended October 1, 2000, consolidated net revenues were $2.2 billion compared to $1.7 billion for the 53 weeks ended October 3, 1999. On a comparable 52 week basis, for the period ended October 1, 2000, consolidated net revenues increased 32 percent, retail revenues increased 31 percent to $1.8 billion and specialty revenues increased 38 percent to $346 million. Comparable store sales increased 9 percent as compared to the same 52-week period in fiscal 1999.
Systemwide retail store revenues for the 52-week period ended October 1, 2000 increased to $2.3 billion compared to $1.6 billion for the 53-week period in fiscal 1999.
Pro forma net earnings for fiscal 2000, excluding the non-cash investment losses of $58.8 million, were $136.8 million or $0.71 per share, an increase of 35 percent, compared to $101.7 million or $0.54 per share for fiscal 1999. Net earnings, including the non-cash investment losses, were $94.6 million, or $0.49 per share, for fiscal 2000.
STORE INFORMATION
Stores opened during
the 52 weeks ended Stores open as of
Oct. 1, 2000 Oct. 1, 2000
------------ ------------
Continental North America:
Company-Operated Stores 417 2,446
Licensed Stores 361 530
--- ---
778 2,976
International:
Company-Operated Stores 73 173
Licensed Stores 184 352
--- ---
257 525
Total 1,035 3,501
===== =====
The Company also reiterated its fiscal 2001 goals:
- to open at least 1,100 new company-operated and licensed stores globally;
- to increase total revenues approximately 25 to 30 percent;
- to grow comparable store sales in the middle single digits, with monthly anomalies;
- to achieve earnings per share of $0.90 to $0.92 for the full fiscal 2001.
Starbucks Coffee Company is the leading retailer, roaster and brand of specialty coffee in the world. In addition to its more than 3,500 retail locations in North America, the United Kingdom, the Pacific Rim and the Middle East, Starbucks sells coffee and tea products through its specialty operations, including its online store at starbucks.com. Additionally Starbucks produces and sells bottled Frappuccino coffee drink and a line of superpremium ice creams through its joint venture partnerships and offers a line of innovative premium teas produced by its wholly owned subsidiary, Tazo Tea Company.
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements, including anticipated store openings, trends in or expectations regarding the Company’s operations and financial results, are based on currently available operating, financial and competitive information and are subject to various risks and uncertainties. Actual future results and trends may differ materially depending on a variety of factors including but not limited to, coffee and other raw material prices and availability, successful execution of internal performance and expansion plans, the impact of competition, the effect of legal proceedings and other risks detailed in the Company’s filings with the Securities and Exchange Commission.
CONSOLIDATED STATEMENT OF EARNINGS
Three Months Ended Twelve Months Ended
------------------ -------------------
Oct. 1, Oct. 3, Oct. 1, Oct. 3,
2000 1999 2000 1999
(13 weeks) (14 weeks) (52 weeks) (53 weeks)
---------- ---------- ---------- ----------
(In thousands, except earnings per share)
Systemwide retail store
revenues (a) $625,000 $476,000 $2,250,000 $1,633,000
======== ======== ========== ==========
Net revenues
Retail $487,074 $405,922 $1,823,607 $1,423,389
Specialty 94,918 68,971 345,611 256,756
------ ------ ------- -------
Total net revenues 581,992 474,893 2,169,218 1,680,145
Cost of sales
and related occupancy 250,783 199,734 953,560 741,010
------- ------- ------- -------
Gross margin 331,209 275,159 1,215,658 939,135
Joint venture income 8,745 3,166 20,300 3,192
Store operating expense 185,927 161,498 704,898 543,572
Other operating expense 22,805 17,049 78,374 54,566
Depreciation and
amortization 35,731 26,949 130,232 97,797
General and
administrative 27,385 22,276 110,202 89,681
------ ------ ------- ------
Operating income 68,106 50,553 212,252 156,711
Interest/other income,
net 1,899 1,657 7,110 7,315
Non-cash Internet
investment losses 58,792 0 58,792 0
------ - ------ -
Earnings before
income taxes 11,213 52,210 160,570 164,026
Income taxes 9,717 19,843 66,006 62,333
----- ------ ------ ------
Net earnings $1,496 $32,367 $94,564 $101,693
====== ======= ======= ========
Earnings per share
-diluted $0.01 $0.17 $0.49 $0.54
Shares used in
calculation 195,294 188,172 192,999 188,531
Pro Forma Information (b):
Pro forma net
earnings $43,753 $32,367 $136,821 $101,693
======= ======= ======== ========
Pro forma earnings per share
- diluted $0.22 $0.17 $0.71 $0.54
Selected Balance Sheet
Data (in millions): Oct. 1, 2000 Oct. 3, 1999
------------ ------------
Cash and Short-term Investments $ 133 $ 118
Long-term Debt $ 7 $ 7
Equity $1,148 $ 961
(a) Systemwide retail store revenues include net revenues for both
company-operated and licensed retail stores.
(b) Pro forma information excludes non-cash, pre-tax investment
losses of $58.8 million ($42.3 million after-tax)
CONSOLIDATED STATEMENT OF EARNINGS
Three Months Ended Twelve Months Ended
------------------ -------------------
Oct. 1, Oct. 3, Oct. 1, Oct. 3,
2000 1999 2000 1999
(13 weeks) (14 weeks) (52 weeks) (53 weeks)
---------- ---------- ---------- ----------
Net revenues
Retail 83.7% 85.5% 84.1% 84.7%
Specialty 16.3% 14.5% 15.9% 15.3%
----- ----- ----- -----
Total net revenues 100.0% 100.0% 100.0% 100.0%
Cost of sales
and related occupancy 43.1% 42.1% 44.0% 44.1%
----- ----- ----- -----
Gross margin 56.9% 57.9% 56.0% 55.9%
Joint venture income 1.5% 0.7% 0.9% 0.2%
Store operating
expense (a) 38.2% 39.8% 38.7% 38.2%
Other operating
expense (b) 24.0% 24.7% 22.7% 21.3%
Depreciation and
amortization 6.1% 5.7% 6.0% 5.8%
General and
administrative 4.7% 4.7% 5.1% 5.3%
Operating income 11.7% 10.6% 9.8% 9.3%
Interest/other income,
net 0.3% 0.4% 0.3% 0.5%
Non-cash Internet
investment losses 10.1% 0.0% 2.7% 0.0%
----- ---- ---- ----
Earnings before
income taxes 1.9% 11.0% 7.4% 9.8%
Income taxes 1.6% 4.2% 3.0% 3.7%
---- ---- ---- ----
Net earnings 0.3% 6.8% 4.4% 6.1%
==== ==== ==== ====
Pro forma net earnings 7.5% 6.8% 6.3% 6.1%
==== ==== ==== ====
(a) Calculated as a percentage of retail revenues.
(b) Calculated as a percentage of specialty revenues.
