Senior Leadership Affirms Future Growth with 10,000 New Stores in Next
SEATTLE, March 21 /CNW/ - Today, Starbucks Coffee Company (Nasdaq: SBUX)
welcomed more than 5,000 shareholders as well as special guest, His Excellency
Paul Kagame, president of the Republic of Rwanda, to Seattle for its 2007
Annual Meeting. Thousands more participated through a live audio simulcast on
the web. Starbucks chairman, Howard Schultz, was joined on stage by president
and ceo, Jim Donald, and Martin Coles, president of Starbucks International,
to recap the Company's fiscal 2006 performance, highlight successes already
seen in fiscal 2007 and reaffirm Starbucks strategy, growth and vision for the
future. Schultz opened the meeting by discussing what it is that sets
Starbucks apart, resulting in recognition such as the No. 2 spot on Fortune
magazine's Most Admired Companies list.
"At the core of what we want to share with you today, is a sense of
optimism and the Company's commitment to its values and guiding principles as
we have grown," said Howard Schultz, chairman. "We have built an emotional
connection with both customers and partners resulting in a Starbucks
Experience that is as relevant in Europe and Asia as it is in Seattle."
Solid Results in '06, Reaffirming Commitment to Growth in '07 and Beyond
Jim Donald, president and ceo, recapped Starbucks financial results for
the 2006 fiscal year and the first quarter of fiscal 2007. He emphasized the
Company's track record of execution in fiscal 2006 as evidenced by a 22
percent increase in total net revenues to $7.8 billion; a net earnings
increase of 14 percent to $564 million; and an increased return on equity to
25 percent for the year. First quarter of fiscal 2007 saw a 22 percent
increase in net revenues to a record $2.4 billion and net earnings of $205
million, an increase of 18 percent when compared to the first quarter of
The Company is also successfully executing against its plans to increase
to 40,000 locations worldwide, with 10,000 new stores planned in the next four
years. Both fiscal 2006 and the first quarter of fiscal 2007 saw record store
openings, with 2,199 and 728 store openings respectively.
Starbucks fiscal 2007 targets capitalize on the previous year's
demonstrated success and drive home the focus on growth:
-- The net store growth target is a record 2,400 stores, including 700
internationally. This is an increase of nearly 20 percent when compared to the
store count from the end of fiscal 2006.
-- The comparable stores sales growth target continues to be in the
range of three to seven percent.
-- Total net revenue growth is expected to be approximately 20 percent.
-- Earnings per share is expected to be in the range of $0.87- $0.89
based on first quarter results and the current outlook for the balance of the
Performance Remains Strong in U.S. and Abroad
The Company's fiscal 2006 financial results were strong. Donald
highlighted U.S. successes in net revenues and operating income:
-- Total net revenues in the U.S. grew to $6.2 billion, up 21 percent
over fiscal 2005.
-- U.S. operating income increased to $955 million in fiscal 2006, an
increase of 17 percent when compared to fiscal 2005.
-- Company-operated retail revenues grew 21 percent to $5.5 billion.
-- U.S. specialty revenues grew by 22 percent to $683 million.
Martin Coles, president of Starbucks Coffee International, overviewed
Starbucks International's financial achievements:
-- $1.3 billion in total net revenues for fiscal 2006, an increase of 27
percent over fiscal 2005.
-- Eight percent comparable store sales growth and $108 million in
operating income for the year.
-- Fourteen consecutive quarters of profitability.
-- Acquisitions completed in fiscal 2006 of the remaining 95 percent
stake of Starbucks operations in Hawaii and Puerto Rico.
-- Acquisition of a 90 percent interest in the licensed operations in
Beijing in the first quarter of 2007. The Beijing transaction gives the
Company managing control of operations in this crucial mainland China market
ahead of the 2008 Olympics.
"Starbucks International continues to execute against our five-year
strategic plan and is clearly demonstrating that the Starbucks brand works
whether it's in Shanghai, Madrid, Mexico City, London or Los Angeles," said
Coles. "Great coffee, our third place, the human connection and our commitment
to community have universal relevance."
Strong Results in Global Consumer Products Group
In 2006, Starbucks customers responded positively to the Company's Global
Consumer Products Group (CPG) offerings. CPG is a collection of products in
both domestic and international markets, primarily packaged coffee and tea and
ready-to-drink products, which provides the Company the opportunity to extend
the Starbucks Experience to customers at any time and any place they choose.
Donald provided an overview of CPG's fiscal 2006 accomplishments:
-- Total net revenues were $305 million.
-- Operating income increased to $167 million compared to $131 million
in fiscal 2005.
-- Introduced Starbucks-branded coffees to two new countries, Korea and
-- Introduced Starbucks DoubleShot(R), as well as Starbucks bottled
Frappuccino(R) into Korea.
Success Due to Doing Business Differently
"Starbucks is successful because we are able to achieve fiscal
performance while maintaining a different approach to business. We operate in
a way that drives financial strength, and reflects our understanding of the
impact we have on our world," said Donald. "Starbucks opportunity continues to
expand. We have set and delivered against aggressive growth targets, we keep
to our commitments and we stay on task. These ingredients add up to a great
future for the Company."
During the meeting, Schultz, Donald and Coles each emphasized Starbucks
strong commitment to global initiatives that make a difference for people
around the world.
"Conducting business in a socially and environmentally responsible manner
is an integral part of our guiding principles and our continued success," said
Donald. "Starbucks commitment and passion to improve the world can be seen
through our programs around the globe."
Fiscal 2006 was a milestone year for Starbucks and the role it plays in
communities around the world. Among the achievements Donald noted were:
-- $36.1 million in contributions to charities and nonprofit
organizations worldwide in 2006.
-- Two new multi-year clean water initiatives in Sumatra, Indonesia and
Menge Woreda, Ethiopia, with commitments of $1 million from the Ethos Water
-- The China Education Project, which is training more than 3,000
teachers during a three-year period.
Emphasizing Starbucks continuing dedication, Donald also highlighted two
new water initiatives announced less than one week ago. Projects in both India
and Kenya received commitments of $1 million from the Ethos Water Fund to help
improve access to water and sanitization in communities in both nations.
Starbucks strongly believes in the importance of building
mutually-beneficial relationships with coffee farmers and coffee communities.
The success of the farmers who supply Starbucks coffee is a critical component
of the Company's own success as it helps ensure the continued availability of
the highest quality coffee. Starbucks focus is on taking an integrated
approach to building relationships with coffee communities.
The significant progress made in socially and environmentally responsible
coffee purchasing was a key feature of Donald's presentation. Among the
milestones in fiscal 2006:
-- 155 million pounds purchased from Coffee and Farmer Equity
(C.A.F.E.)-verified suppliers. This represents 53 percent of Starbucks green
-- 18 million pounds of Fair Trade Certified(TM) coffee purchased - or
six percent of the Company's total coffee purchases - making Starbucks the
largest purchaser of Fair Trade Certified(TM) coffee in North America.
-- Continued offering of Starbucks Black Apron Exclusives(TM), which
celebrate exceptional and rarified coffees and provide the producing farmers
with cash awards. Farmers use these funds to make infrastructure investments
that enable them to improve coffee quality and increase their potential for
Donald also laid out Starbucks future goal for purchasing C.A.F.E.
Practices coffee. "We recognize our responsibility to the communities in which
we operate and to the farms and communities where we source our coffee,"
stated Donald. "By 2013, we intend to purchase 80 percent of our coffee from
verified C.A.F.E. Practices suppliers."
Still in the "Early Days" of Growth
Schultz summed up the message of the Annual Meeting by returning to a
theme he has shared many times before. "I've stood here before you in the past
and said that we are in the early chapters of Starbucks growth. I continue to
believe that today. These are still the early days."
Starbucks Coffee Company provides an uplifting experience that enriches
people's lives one moment, one human being, one extraordinary cup of coffee at
a time. To share in the experience, visit www.starbucks.com.
Starbucks Corporate Social Responsibility Annual Report Available Today
Today, Starbucks also launched its sixth Corporate Social Responsibility
(CSR) Annual Report, a review of the Company's social, environmental and
economic sustainability performance and initiatives for fiscal 2006. Online
now at www.starbucks.com/csrannualreport, the Report offers the most
comprehensive information available about Starbucks coffee-buying practices,
growth and community impacts, environment and climate change strategy, health
and wellness initiatives, and workplace practices. Using videos, photos, and
flash technology this year's Report is more interactive and engaging than ever
before. In April, the abridged version of the Report, focused on the Company's
most material CSR issues, will also be available online in Spanish, Japanese,
simplified Chinese, traditional Chinese and Arabic.
This release includes forward-looking statements about trends in or
expectations regarding: store openings, comparable store sales, net revenue,
and earnings per share results. These forward-looking statements 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, dairy and other raw material prices and availability,
successful execution of internal performance and expansion plans, fluctuations
in U.S. and international economies and currencies, the impact of initiatives
by competitors, the effect of legal proceedings, and other risks detailed in
the Company's filings with the Securities and Exchange Commission, including
the "Risk Factors" section of Starbucks Annual Report on Form 10-K for the
fiscal year ended Oct. 1, 2006. The Company assumes no obligation to update
any of these forward-looking statements.
For further information:
For further information: Starbucks Coffee Company 206-318-7100