Starbucks 2000 Annual Report Download - page 6

Cautionary Statement Pursuant to the Private Securties Litigation Reform Act of 1995
Certain statements set forth in this Annual Report, including anticipated store and market openings,
planned capital expenditures and trends in or expectations regarding the Company’s operations,
constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform
Act of 1995. Such 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 and other raw
materials prices and availability, successful execution of internal performance and expansion plans, the
impact of competition, the effect of legal proceedings and other risks detailed herein and in the
Company’s annual and quarterly filings with the Securities and Exchange Commission.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
general
Starbucks presently derives approximately 84% of net revenues from its Company-operated retail stores.
The remaining 16% of net revenues is derived from the Company’s specialty operations, which include
sales to wholesale accounts and licensees, royalty and license fee income and sales through its direct-to-
consumer business. The Company’s fiscal year ends on the Sunday closest to September 30. Fiscal year
2000 had 52 weeks, fiscal 1999 had 53 weeks, and fiscal year 1998 had 52 weeks. The fiscal year ending
on September 30, 2001, will include 52 weeks.
The Company’s consolidated net revenues increased 29% from $1.7 billion in fiscal 1999 (53 weeks) to
$2.2 billion in fiscal 2000 (52 weeks), primarily due to the Company’s store expansion program and
comparable store sales increases. Comparable store sales increased by 9%, 6% and 5% in fiscal 2000,
1999 and 1998, respectively. As part of its expansion strategy of clustering stores in existing markets,
Starbucks has experienced a certain level of cannibalization of existing stores by new stores as store
concentration has increased. However, management believes such cannibalization has been justified by
the incremental sales and return on new store investments. This cannibalization, as well as increased
competition and other factors, may put downward pressure on the Company’s comparable store sales
growth in future periods.
The following table sets forth the percentage relationship to total net revenues, unless otherwise
indicated, of certain items included in the Company’s consolidated statements of earnings:
Fiscal year ended Oct 1, 2000 Oct 3, 1999 Sept 27, 1998
(52 Wks) (53 Wks) (52 Wks)
STATEMENTS OF EARNINGS DATA
Net revenues:
Retail 84.1% 84.7% 84.2%
Specialty 15.9 15.3 15.8
Total net revenues 100.0 100.0 100.0
Cost of sales and related occupancy costs 44.0 44.1 44.2
Gross margin 56.0 55.9 55.8
Joint venture income 0.9 0.2 0.1
Store operating expenses (1) 38.7 38.2 38.0
Other operating expenses (2) 22.7 21.3 21.6
Depreciation and amortization 6.0 5.8 5.5
General and administrative expenses 5.1 5.3 5.9
Merger expenses - - 0.7
Operating income 9.8 9.3 8.3
Interest and other income, net 0.3 0.5 0.6
Internet-related investment losses 2.7 - -
Earnings before income taxes 7.4 9.8 8.9
Income taxes 3.0 3.7 3.7
Net earnings 4.4% 6.1% 5.2%
(1) Shown as a percentage of retail revenues.
(2) Shown as a percentage of specialty revenues.
P. 22 starbucks coffee company