2016
FISCAL
ANNUAL REPORT
STARBUCKS
2016 was one for the books-our journey together in making it to where we are, we couldn't have done it without you. Starbucks is proud to serve its customers from its frappuccino, to our grinded black beans coffee. Lets review this year and the milestones we made.
Starbucks is the premier roaster, marketer and retailer of specialty coffee in the world, operating in 75 countries. We purchase and roast high-quality coffees that we sell, along with handcrafted coffee, tea and other beverages and a variety of fresh food items, including snack offerings, through company-operated stores. We also sell a variety of coffee and tea products and license our trademarks through other channels such as licensed stores, grocery and foodservice accounts.
Our objective is to maintain Starbucks standing as one of the most recognized and respected brands in the world. To achieve this, we are continuing the disciplined expansion of our global store base, adding stores in both existing, developed markets.
In addition, by leveraging the experience gained through our traditional store model, we continue to offer consumers new coffee and other products in a variety of forms, across new categories, diverse channels and alternative store formats.
Starbucks®stores offer a choice of coffee and tea beverages, as well as other premium coffee, tea and related products,including distinctively packaged roasted whole bean and ground coffees, a variety of premium single-serve and ready-to-drink coffee and tea products, juices and bottled water.
Each Starbucks® store varies its product mix depending upon the size of the store and its location. To complement the in-store experience, our company-operated Starbucks® stores in the U.S., Canada and certain other international markets also provide customers free access to wireless internet.
As of Oct 2016 in Americas
As of Oct 2016 in Americas
Revenue from company-operated stores accounted for 79% of total net revenues during fiscal 2016. Our retail objective is to bethe leading retailer and brand of coffee and tea in each of our target markets by selling the finest quality coffee, tea and relatedproducts, as well as complementary food and snack offerings, and by providing each customer with a unique Starbucks Experience.
The Starbucks Experience is built upon superior customer service, as well as clean and well-maintained stores that reflect the personalities of the communities in which they operate, thereby building a high degree of customer loyalty.
Our strategy for expanding our global retail business is to increase our market share in a disciplined manner, by selectively opening additional stores in new and existing markets, as well as increasing sales in existing stores, to support our long-term strategic objective to maintain Starbucks standing as one of the most recognized and respected brands in the world.
Revenues from our licensed stores accounted for 10% of total net revenues in fiscal 2016. Licensed stores generally have a lower gross margin and a higher operating margin than company-operated stores. Under the licensed model, Starbucks receives a reduced share of the total store revenues, but this is more than offset by the reduction in our share of costs as these are primarily incurred by the licensee.
In our licensed store operations, we leverage the expertise of our local partners and share our operating and store developmentexperience. Licensees provide improved, and at times the only, access to desirable retail space. Most licensees are prominentretailers with in-depth market knowledge and access. As part ofthese arrangements, we sell coffee, tea, food and related products to licensees for resale to customers and receiveroyalties and license fees from the licensees.
Starbucks common stock is traded on NASDAQ, under the symbol "SBUX."
The following graph shows the quarterly high and low sale prices per share of Starbucks common stock as reported by 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, as adjusted to give effect to the two-for-one stock split discussed in Note 1, Summary of Significant Accounting Policies, included in Item 8 of Part II of this 10-K:
Blue represents lowest sale prices, Green represents highest sale prices.
Blue represents lowest sale prices, Green represents highest sale prices.
The following graph depicts the total return to shareholders from October 2, 2011 through October 2, 2016, relative to the performance of the Standard & Poor’s 500 Index, the NASDAQ Composite Index and the Standard & Poor’s 500 Consumer Discretionary Sector, a peer group that includes Starbucks.
Starbucks Cooperation
S&P Consumer Discretionary
NASDAQ Composite
S&P 500
Total net revenues increased $2.2 billion, or 11%, over fiscal 2015, primarily due to increased revenues from company-operated stores (contributing $1.6 billion). The growth in company-operated store revenues was primarily driven by 5% growth in comparable store sales ($793 million), incremental revenues from 693 net new Starbucks® company-operated store openings over the past 12 months ($724 million), the impact of the extra week in fiscal 2016 ($324 million) and incremental revenues from the impact of our ownership change in Starbucks Japan ($105 million).
In the year of 2017, we expect to continue our momentum, as we follow through these 7 principles for Growth, which include:
But most importantly, we expect to continue our high grade Customer Service to the best of our ability and preformance, as we serve each customer uniquely to their own taste and needs, making a name for ourselves and working along side by side with others.