• 34% Increase in Net Earnings
  • Announces Fiscal Year 2002 Targets
  • Starbucks Card to be Introduced this Holiday Season

Starbucks Corporation (Nasdaq:SBUX) yesterday announced revenues and earnings for the third quarter of fiscal 2001.

For the third quarter ended July 1, 2001, consolidated net revenues increased 19 percent to $663 million from $558 million for the third quarter of fiscal 2000. Retail revenues increased 20 percent to $559 million and specialty revenues increased 14 percent to $104 million. Comparable store sales increased 3 percent as compared with the third quarter of fiscal 2000.

Systemwide retail store sales, which include net revenues for both company-operated and licensed retail stores, increased 29 percent to $755 million for the third quarter of fiscal 2001 from $584 million for the same period in fiscal 2000.

Net earnings for the third fiscal quarter of 2001 increased 34 percent to $46.8 million compared to $34.9 million in the third fiscal quarter of 2000. Diluted earnings per share were $0.12 for the third quarter of 2001 compared to $0.09 for the third quarter of 2000.

For the 39 weeks ended July 1, 2001, consolidated net revenues increased 23 percent to $2.0 billion from $1.6 billion for the same period in fiscal 2000. Retail revenues increased 23 percent to $1.6 billion, and specialty revenues also increased 23 percent to $315 million. Comparable store sales for the 39-week period ended July 1, 2001, increased 6 percent as compared to the same 39-week period in fiscal 2000.

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Systemwide retail store sales, which include net revenues for both company-operated and licensed retail stores, increased 33 percent to $2.2 billion for the 39 weeks ended July 1, 2001 from $1.6 billion for the same period in fiscal 2000.

Net earnings increased 38 percent to $128.0 million for the 39-week period ended July 1, 2001 compared to $93.1 million for the same period in fiscal 2000. Diluted earnings per share were $0.32 for the 39-week period ended July 1, 2001 compared to $0.24 for the same period in fiscal 2000.

The Company reiterated its fiscal 2001 split-adjusted earnings per share target of $0.46 and its comparable store sales growth target of low single digits, with monthly anomalies, for the remainder of fiscal 2001. In addition:


  • The Company maintained its fiscal 2001 global store openings target of 1,200 new stores but adjusted the components of this target. In North America, the Company continues to plan to open at least 500 company-operated locations but lowered its licensed location target by 75, from 400 to 325 new stores. Internationally, the Company continues to plan to open 100 company-operated locations but increased its licensed target by 75, from 200 to 275 new stores;
  • The Company now expects total monthly revenue growth of approximately 20% for the remainder of fiscal 2001.

The Company further announced the following fiscal 2002 goals:


  • On a global basis, the Company plans to open at least 1,200 new stores in fiscal 2002. In North America, the Company plans to open at least 525 company-operated locations and 300 licensed locations. Internationally, the Company plans to open at least 100 locations in company-operated markets and 275 locations in licensed markets;
  • The Company expects total revenue growth of approximately 25% and comparable store sales growth in the low single digits, with monthly anomalies in fiscal 2002;
  • Earnings per share are expected to be in the range of $0.56 to $0.58 for fiscal 2002.

Additionally, the company continues to target $6.6 billion in revenues and more than 10,000 stores by fiscal year end 2005.

The Company also announced its plans to introduce the Starbucks Card, which will replace existing paper gift certificates and beverage books currently offered in Starbucks stores. Not only will the Card serve as a convenient tool for regular customers, but it is also expected to speed transaction times. Customers will be able to purchase a Starbucks Card for any amount up to $500. Cards are expected to be available in most company-operated stores in North America, and online at Starbucks.com, this holiday season.

“The introduction of the Starbucks Card delivers one of the most frequently requested items by Starbucks customers,” stated Orin Smith, Starbucks president and chief executive officer. “Additionally, the easy to use, creatively designed Card, is a perfect gift for anytime of the year and we expect it to be introduced just in time for this holiday season.”

                           STORE INFORMATION

Net stores opened
during the
39 weeks ended Stores open as of
July 1, 2001 July 1, 2001
———— ————
Continental North America:
Company-Operated Stores 387 2,833
Licensed Stores 257 787
—– —–
644 3,620
International:
Company-Operated Stores 82 255
Licensed Stores 208 560
—– —–
290 815

Total 934 4,435
===== =====

The Company will be holding a conference call today at 1:30 p.m. Pacific time, which will be hosted by Howard Schultz, chairman and chief global strategist, Orin Smith, president and chief executive officer and Michael Casey, executive vice president and chief financial officer.

Starbucks Coffee Company is the leading retailer, roaster and brand of specialty coffee in the world. In addition to its more than 4,400 retail locations in North America, the United Kingdom, Continental Europe, the Pacific Rim and the Middle East, Starbucks sells coffee and tea products through its specialty operations, including its online store at www.starbucks.com. Additionally, Starbucks produces and sells bottled Frappuccino® coffee drink and a line of superpremium ice creams through its joint venture partnerships. The Company’s other brands enhance the Starbucks Experience through best-of-class products: Tazo Tea Company offers a line of innovative premium teas, and Hear Music produces and distributes a line of exceptional compact discs.

                  CONSOLIDATED STATEMENT OF EARNINGS

Three Months Ended Three Months Ended
—————— ——————
July 1, July 2, July 1, July 2,
2001 2000 2001 2000
(13 weeks) (13 weeks) (13 weeks) (13 weeks)
———- ———- ———- ———-
Systemwide retail
store sales (a) $ 755,000 $ 584,000
Net revenues
Retail $ 558,920 $ 466,716 84.3% 83.7%
Specialty 103,849 90,800 15.7% 16.3%
———- ———- —— ——
Total net revenues 662,769 557,516 100.0% 100.0%
Cost of sales and
related occupancy 271,350 243,066 40.9% 43.6%
———- ———- —— ——
Gross margin 391,419 314,450 59.1% 56.4%
Joint venture
income 6,732 4,339 1.0% 0.8%
Store operating
expense 226,614 185,515 (b) 40.5% (b) 39.7%
Other operating
expense 22,695 17,659 (c) 21.9% (c) 19.4%
Depreciation and
amortization 41,884 33,260 6.3% 6.0%
General and
administrative 35,651 28,049 5.4% 5.0%
———- ———-
Operating income 71,307 54,306 10.8% 9.7%
Interest/other
income, net 2,910 1,555 0.4% 0.3%
———- ———- —— ——
Earnings before
income taxes 74,217 55,861 11.2% 10.0%
Income taxes 27,460 20,948 4.1% 3.8%
———- ———- —— ——
Net earnings $ 46,757 $ 34,913 7.1% 6.2%
========== ==========
Earnings per
share-diluted $0.12 $0.09
Shares used in
calculation 394,482 387,762

(a) Systemwide retail store sales include net revenues for both
Company-operated and licensed retail stores.

(b) Calculated as a percentage of retail revenues.

(c) Calculated as a percentage of specialty revenues.

CONSOLIDATED STATEMENT OF EARNINGS

Nine Months Ended Nine Months Ended
—————– —————–
July 1, July 2, July 1, July 2,
2001 2000 2001 2000
(39 weeks) (39 weeks) (39 weeks) (39 weeks)
———- ———- ———- ———-
Systemwide retail
store sales (a) $2,156,000 $1,625,000
Net revenues
Retail $1,644,604 $1,336,532 83.9% 83.9%
Specialty 314,840 256,984 16.1% 16.1%
———- ———- —— ——
Total net revenues 1,959,444 1,593,516 100.0% 100.0%
Cost of sales and
related occupancy 834,748 709,020 42.6% 44.5%
———- ———- —— ——
Gross margin 1,124,696 884,496 57.4% 55.5%
Joint venture
income 17,704 11,555 0.9% 0.7%
Store operating
expense 644,912 518,971 (b) 39.2% (b) 38.8%
Other operating
expense 68,266 55,616 (c) 21.7% (c) 21.6%
Depreciation and
amortization 118,043 94,501 6.0% 5.9%
General and
administrative 112,961 82,817 5.8% 5.2%
———- ———-
Operating income 198,218 144,146 10.1% 9.0%
Interest/other
income, net 6,183 5,211 0.3% 0.3%
———- ———- —— ——
Earnings before
income taxes 204,401 149,357 10.4% 9.3%
Income taxes 76,439 56,289 3.9% 3.5%
———- ———- —— ——
Net earnings $ 127,962 $ 93,068 6.5% 5.8%
========== ==========
Earnings per
share-diluted $0.32 $0.24
Shares used in
calculation 394,617 384,198

(a) Systemwide retail store sales include net revenues for both
Company-operated and licensed retail stores.

(b) Calculated as a percentage of retail revenues.

(c) Calculated as a percentage of specialty revenues.

Selected Balance Sheet Data:
(in millions) July 1, 2001 Oct. 1, 2000
—————————- ———— ————
(audited)
Cash and Short-term Investments $ 274 $ 132
Long-term Debt $ 7 $ 7
Equity $ 1,355 $ 1,148







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