Fiscal Fiscal 2013 2013Annual Annual Report Report 1
STARBUCKS CORPORATION
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Our Mission: To inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.
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STARBUCKS CORPORATION
DEAR SHAREHOLDERS, It is an honor to write you this year, not only because we have achieved record financial performance but because we have once again done so by living up to the heritage of our company, balancing profits with a social conscience. Our commitment to creating shareholder value through the lens of humanity is truly a cornerstone of Starbucks global strengtth, especially as we pursue the most ambitious agenda in our company’s history. Two years ago, we embarked on a strategic plan, the Blueprint for Profitable Growth, in which we would leverage multiple channels of distribution. I am proud to affirm that it is no longer theory but a true growth engine. The measure of our success can be seen in the past year’s performance: Starbucks consolidated global revenues reached a record $13.3 billion, a 14 percent increase, with revenue growth driven by a 7 percent rise in global comparable store sales and a 50 percent rise in revenue from Channel Development. Our operating income was $2 billion, a 16 percent increase, with our consolidated operating margin rising to 15 percent, up 20 basis points from last year. Starbucks record earningsper-share growth continued, up 10 percent in 2012 to $1.79 from last year’s $1.62. Through share repurchases and dividends, we returned approximately $1.1 billion to shareholders. While we are proud of our achievements, we have learned never to take our success for granted, which is why three primary attributes will continue to drive our every decision and action. First, we will remain committed to our coffee core. Second, we will Warm Regards, exercise relevant, timely, and courageous innovation. And third, we will ceaslessly honor our values. I firmly believe that the ability to adhere to these attributes is what defines the most enduring organizations of our time, and as I share them with Howard Schultz you in the context of highlights from Chairman, President and Starbucks past year, I think you will agree Chief Executive Officer that they are key to our ongoing success
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BOARD OF DIRECTORS: Our Commitment As part of Starbucks mission we are committed to maintaining our uncompromising principles while we grow. In this regard, our Board of Directors has adopted governance principles and committee charters to lead Starbucks governance practices. Currently, our board has 12 directors, a substantial majority of whom meet all of the independence requirements of NASDAQ速 and the U.S. Securities and Exchange Commission.
Howard Schultz
Starbucks founder, chairman, president, chief executive officer
William (Bill) Bradley Allen & Company LLC managing director
STARBUCKS CORPORATION
Kissinger Associates vice chairman
James Shennan, Jr.
Trinity Ventures general partner emeritus
Robert M. Gates
Clara Shih
Former Secretary of Defense
Hearsay Social, Inc. chief executive officer
Mellody Hobson
Javier Teruel
Ariel Investments, LLC president
Colgate-Palmolive Company retired vice chairman
Kevin Johnson
Myron Ullman, III
Juniper Networks, Inc. chief executive officer
J.C. Penney Company, Inc. chief executive officer
Olden Lee
Craig Weatherup
PepsiCo, Inc. retired executive
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Joshua Cooper Ramo
Pepsi-Cola Company retired chief executive officer
OUR STORY Our story began in 1971. Back then we were a roaster and retailer of whole bean and ground coffee, tea and spices with a single store in Seattle’s Pike Place Market. Today, we are privileged to connect with millions of customers every day with exceptional products and nearly 18,000 retail stores in 60 countries.
OUR FOLKLORE Starbucks is named after the first mate in Herman Melville’s Moby Dick. Our logo is also inspired by the sea –featuring a twin‐tailed siren from Greek mythology.
OUR COFFEE We’ve always believed in serving the best coffee possible. It’s our goal for all of our coffee to be grown under the highest standards of quality, using ethical sourcing practices. Our coffee buyers personally travel to coffee farms in Latin America, Africa and Asia to select the highest quality beans. And our master roasters bring out the balance and rich flavor of the beans through the signature Starbucks Roast.
OUR PARTNERS We offer the finest coffees in the world, grown, prepared and served by the finest people. Our employees, who we call partners, are at the heart of the Starbucks Experience. We believe in treating our partners with respect and dignity. We are proud to offer two landmark programs for our partners: comprehensive health coverage for eligible full‐ and part‐time partners and equity in the company through Bean Stock.
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OUR STORES Our stores are a neighborhood gathering place for meeting friends and family. Our customers enjoy quality service, an inviting atmosphere and an exceptional cup of coffee.
TOTAL STORES: 17,651 As the equity of our brand thrives around the world, we anticipate having 20,000 stores on six continents by 2014. Additionally, over the next five years, we plan toopen 3,000 new stores in the Americas region alone.
Countries in which Starbucks is now present: Argentina, Aruba, Australia, Austria, Bahamas, Bahrain, Belgium, Brazil, Bulgaria, Canada, Chile, China, Costa Rica, Curacao, Cyprus, Czech Republic, Denmark, Egypt, El Salvador, England, Finland, France, Germany, Greece, Guatemala, Hong Kong/Macau, Hungary, Indonesia, Ireland, Japan, Jordan, Kuwait, Lebanon, Malaysia, Mexico, Morocco, New Zealand, Netherlands, Northern Ireland, Oman, Peru, Philippines, Poland, Portugal, Qatar, Romania, Russia, Saudi Arabia, Scotland, Singapore, South Korea, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, United Arab Emirates, United States and Wales.
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STARBUCKS CORPORATION
OUR PRODUCTS Starbucks offers a range of exceptional products that customers enjoy in our stores, at home, and on the go.
Coffee: More than 30 blends and single‐origin premium coffees. Handcrafted Beverages: Fresh‐brewed coffee, hot and iced espresso beverages, Frappuccino® coffee and noncoffee blended beverages, smoothies and Tazo® teas.
Merchandise: Coffee‐ and tea‐brewing equipment, mugs and accessories, packaged
goods, music, books and gifts.
Fresh Food: Baked pastries, sandwiches, salads, oatmeal, yogurt parfaits and fruit cups.
CONSUMER PRODUCTS • Coffee and Tea: Whole bean and ground coffee (Starbucks and Seattle’s Best Coffee
brands), Starbucks VIA® Ready Brew, Starbucks® K‐Cup® portion packs, Tazo® tea filterbags and tea latte concentrates.
• Ready‐to‐Drink (RTD): Starbucks® bottled Frappuccino® coffee drinks, Starbucks
Discoveries® chilled cup coffees, Starbucks Doubleshot® espresso drinks, Starbucks Doubleshot® Energy+Coffee drinks; Seattle’s Best Coffee® Iced Lattes, Starbucks Refreshers™ beverages, Tazo® bottled iced and juiced teas.
• Starbucks® Ice Cream: Super‐premium coffee and coffee‐free flavors.
BRAND PORTFOLIO Starbucks Coffee, Seattle’s Best Coffee, Tazo Tea, Evolution Fresh, La Boulange, and Torrefazione Italia Coffee.
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BEING A RESPONSIBLE COMPANY Ethical Sourcing: We take a holistic approach to ethically sourcing the highest quality
coffee. This includes responsible purchasing practices, supporting farmer loans and forest conservation programs. When we buy coffeethis way, it helps foster a better future for farmers and a more stable climate for the planet. It also helps create a long‐term supply of the high‐quality beans we’ve been carefully blending, roasting and packing fresh for more than 40 years.
Environmental Stewardship: We share our customers’ commitment to the environment. And we believe in the importance of caring for our planet and encouraging others to do the same. It is our goal that by 2015, 100% of our cups will be reusable or recyclable. We will also work to significantly reduce our environmental footprint through energy and water conservation, recycling and green construction.
Community Involvement: From the neighborhoods where our stores are located to the
ones where our coffee is grown – we believe in fostering thriving communities. Bringing people together, inspiring change and making a difference in people’s lives – it’s all part of being a good neighbor. By 2015, we hope to contribute one million volunteer hours each year to our communities. So it is our vision that together we will elevate our partners, customers, suppliers and neighbors to use our scale for good. To be innovators, leaders and contributors to an inclusive society and a healthy environment so that Starbucks and everyone we touch can endure and thrive.
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At Starbucks, we have always believed in the importance of building a great, enduring company that strikes a balance between profitability and a social conscience.
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STARBUCKS CORPORATION
Ethical Sourcing: GOAL: Ensure 100% of our coffee is ethically sourced by 2015. PROGRESS: 93% of our coffee was ethically sourced in 2012, including 90% through Coffee and Farmer Equity (C.A.F.E.) Practices. Total coffee purchases
428
545
Total ethically sourced coffee purchases
367
509
% ethically sourced
86%
93%
(in millions of lbs)
(in millions of lbs)
We define ethically sourced as coffee that is third-party verified or certified, either through C.A.F.E. Practices, Fairtrade or another externally audited system.
Farmer Support: GOAL: Invest in farmers & their communities by increasing farmer loans to $20 million by 2015. PROGRESS: We increased our loan commitments to $15.9 million with a $1.3 million investment to the Fairtraide Access Fund.
Loan Amount 2011
$14.7 m
Loan Amount 2012
$15.9 m
Goal Amount 2015
$20 m
Commitment is defined as being made either by public declaration of intent or signed contract.
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SHAREHOLDER INFORMATION MARKET INFORMATION AND DIVIDEND POLICY Starbucks common stock is traded on NASDAQ, under the symbol “SBUX.” The following table shows the quarterly high and low sale prices per share of Starbucks common stock as reportedby NASDAQ for each quarter during the last two fiscal years and the quarterly cash dividend declared per share of our common stock during the periods indicated: $
$
$
2012: 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter 2011: 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter
Low
Cash Dividends Declared
$54.28
$43.04
$0.21
$62.00
$51.03
$0.17
$56.55
$45.28
$0.17
$46.50
$35.12
$0.17
$42.00
$33.72
$0.17
$40.26
$34.61
$0.13
$38.21
$30.75
$0.13
$33.15
$23.37
$0.13
High
As of November 9, 2012, we had approximately 18,500 shareholders of record. This does not include persons whose stock is in nominee or “street name” accounts through brokers.
OPERATING INCOME BY SEGMENT, EXCLUDING OTHER
The following graph depicts the total return to shareholders from September 30, 2007 through September 30, 2012:
21%
18%
United States 11%
9% 68%
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STARBUCKS CORPORATION
International 73%
Global CPG
PERFORMANCE COMPARISON GRAPH
The following graph depicts the total return to shareholders from September 30, 2007 through September 30, 2012. All indices shown in the graph have been reset to a base of 100 as of September 30, 2007, and assume an investment of $100 on that date and the reinvestment of dividends paid since that date. The stock price performance shown in the graph is not necessarily indicative of future price performance. $250
$200
$150
$100
$50
$0 9/30/08
9/28/09
9/27/10
10/3/11
10/2/12
9/30/13
Starbucks Corporation
SBUX
9/30/2008
9/28/2009
9/27/2010
10/3/2011
10/2/2012
9/30/13
100.00
57.10
75.69
99.93
145.94
201.33
Starbucks Coffee Company Investor Relations, Mailstop: EX4 PO Box 34067 Seattle, WA 98124-1067 (206) 318-7118 http://investor.starbucks.com
Updated Financial Information
Please visit http://investor.starbucks.com to find the latest financial information publicly available for the company.
Annual Meeting of Shareholders March 20, 2014 10:00 a.m. PDT Marion Oliver McCaw Hall Seattle, WA Live webcast at:
http://investor.starbucks.com
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*The information displayed in this report is in no way reflecting true statistics or association of Starbucks Corporation. Starbucks logo is property of Starbucks Corporation and by no means claimed as original work. Design and printing of the document has only been done for educational purposes by Alexandra Contreras for Chapman University. 12
STARBUCKS CORPORATION