Morgan Stanley Global Consumer and Retail Conference

November 18, 2015

Scott Maw, Starbucks cfo

Forward Looking Statements

This presentation contains forwardlooking statements. Forwardlooking
statements are subject to various risks and uncertainties that could cause
our actual results to differ materially from these statements and should be
considered in conjunction with cautionary statements and risk factor
discussions in our filings with the SEC, including our last annual report on
Form 10K. Starbucks assumes no obligation to update any of these
forwardlooking statements or information.

Please refer to the footnote within a particular slide or to the table at the end of
this presentation to find reconciliations of nonGAAP financial measures noted
in this presentation with their corresponding GAAP measures.

2015 Starbucks Coffee Company . All Rights Reserved.

Investing in

Growth

Profitable GROWTH
Consolidated Revenue (in billions)

Consolidated Operating Margin* (%)

13% CAGR

410 BPS
$19.2

$13.3

FY12

$14.9

FY13

$16.4

16.5%

15.0%

FY14

FY15

Consolidated Operating Income* (in billions)

23% CAGR

FY12

FY13

19.1%

FY14

FY15

Earnings Per Share*

21% CAGR

$3.7
$3.1

$1.58
$1.33

$2.5

$1.10

$2.0

FY12

18.6%

$0.90

FY13

FY14

FY15

FY12

FY13

FY14

FY15

* FY13, FY14 and FY15 operating margin, operating income and earnings per share figures are Non-GAAP; operating margin, operating income and earnings per share growth rates are based
on Non-GAAP figures; a reconciliation of GAAP to non-GAAP measures can be found at the end of this presentation.

STRONG Top Line Growth

Global Comparable Store Sales Growth

8%
1%

6%

6%

2%

2%

4%

4%

8%

7%

7%

7%
6%

7%
2%

5%

5%

1%
4%

6%
5%

5%

3%
4%

3%

4%
2%

3%
4%

3%

4%

4%

4%

Q3

Q4

3%

2%

1%
Q1

Q2

Q3

FY 13

Q4

Q1

Q2

Q3

Q4

Q2

FY 15

FY 14

Transaction Growth

Q1

Ticket Growth

Playing The LONG GAME

Uniquely Positioned at the Intersection of Physical and Digital

Win with
Partners

Coffee, Tea and

Occasions

Extend the
Store Portfolio

Expand CPG

Loyalty/Digital

Win with Partners - Investing for Growth

Partner / Digital
Partner / Digital
Four Years of College
Food Benefit
Enhanced Pay

Expanded College
Additional Pay
International Markets

On-shift Beverage
2 Years of College
Competitive Pay

Partner Benefits
Partner Benefits

Stock Compensation
Health Care
Pre-FY15

FY15

YOY Incremental Investment

~$145M

FY16

~$100M - $125M

Coffee, Tea and Occasions

Unparalleled

super- premium
tea expertise

Bringing premiumization
to the coffee category

Creating and fulfilling

new occasions
in our stores

Coffee Leadership
Starbucks
Innovation
Reserve

Agronomy
Starbucks Reserve

Teavana Elevating the Tea Category

Driving

REVENUE growth
Contributing to
COMP growth
Increasing ATTACH

Occasions Growth Through INNOVATION

LUNCH

AFTERNOON

EVENINGS

GO BIG ON LUNCH

REFRESHMENTS AND SNACKS

EXTEND THE 3RD PLACE

MORNING

U.S.

OWN THE MORNING

Average transaction growth in the last 5 years*:

Morning

+22%

Lunch/Mid-day

* Average transactions per store per day, U.S. company operated , growth from FY10-FY15

+30%

Afternoon/Evening

+19%

New Stores - Growth Through Global Expansion

In FY07,

70% of 2,500+ net new stores

were INSIDE the U.S.

New Stores - Growth Through Global Expansion

FY15 Equity Ownership:
Company Operated Market
JV/ Licensed Market

In FY16,

70% of 1,800 net new stores

will be OUTSIDE the U.S.

New Stores - Growth Through Global Expansion

In FY16,

70% of 1,800 net new stores

will be OUTSIDE the U.S.

SIGNIFICANT opportunity
in China

& Japan

New Stores Growth Through Store Formats

Starbucks Reserve

Express Store

Drive Thru Only

Mobile Trucks

Extend CPG Globally

OPPORTUNITY

UNIQUE ASSETS

INNOVATION

INTERNATIONAL RTD

Share leader in
premium
Roast & Ground
and
K-Cups

$6B China Coffee &

Energy Market

U.S.

~500 Signature Aisles in

grocery stores
80% of U.S. Coffee
occasions occur outside
of coffee shops

+21M stars earned by My

Starbucks Rewards
members down the aisle

Partnership with Tingyi

$4B Latin America

Coffee & Energy Market
Partnership with PepsiCo

A UNIQUE and POWERFUL Digital Ecosystem

Broad Store and Customer
Network

Robust Card Program

Convenience

35% of transactions (pre-paid)

Service

1 in 7 adults in the U.S. received a

Frequency

$5+ Billion in Card Loads in FY15

Starbucks Card in Holiday 2015

Unparalleled Loyalty
Program

10M active members in the U.S.

High Value, Efficient Cost

And We Are Just GETTING STARTED

Mobile

Opportunity

Speed, Relevance, Convenience

Mobile
Order &
Pay

Stores

Delivery

Card

Stars Everywhere
Loyalty
21% of transactions as of October

Engaged Customers & Partners

Store Locator, Menu, Messages

Speed, Convenience

INCREASING Operating Cash Flow

Operating Cash Flow (in billions)

29%
CAGR

$3.7
$3.4 *

$2.9

$1.8

FY12

FY13

FY14

FY15

* Non-GAAP measure; FY14 GAAP operating cash flows of $608 million have been adjusted to exclude the $2.8 billion cash payment elated to the Kraft arbitration matter.

INCREASING Cash Returned to Shareholders

Cash Returns (in billions)

$2.4

$1.6

$1.1

DIVIDENDS

$1.2
$0.8

$0.5

$0.6

$0.6

$0.5

FY12

FY13

TSR FY11 to FY15:

$1.0

SHARE
REPURCHASES

$1.4

+380%

$0.8

FY14

FY15

Dividends paid in FY15

+22%

Coffee Cost Trend 3 Years

Monthly SBUX Rate

FY 14

C Price + SBUX Differential

FY 15

SBUX Average P&L Rate

FY 16

Consistent High Growth Over the Long Term

COMP
GROWTH

REVENUE
GROWTH

Non-GAAP
EPS*

ROIC**

>25%
Mid-Single
Digits

FY16

Somewhat above
Mid-Single Digits

10%+

10%
53rd

week will add an

incremental ~2%

Growth of
15-20%

$1.87 to $1.89
Including 53rd week

Increasing
50-100 bps
per year

Up
50-100 BPS

*Based on Non-GAAP EPS. A reconciliation of GAAP to Non-GAAP measures can be found at the end of this presentation.
** ROIC defined as NOPAT/Average Invested Capital. NOPAT adjusted for implied lease interest expense; average invested capital includes present value of minimum lease obligations
and excludes cash, cash equivalents and short- and long-term investments.

Q&A

2015 Starbucks Coffee Company . All Rights Reserved.

GAAP/Non-GAAP Reconciliation
Non-GAAP EPS RECONCILIATION

FY13

GAAP
Litigation charge resulting from Kraft Arbitration
Gain on sale of equity in Mexico joint venture
Gain on sale of equity in Chile and Argentina joint ventures
Non-GAAP
GAAP
Litigation credit resulting from Kraft Arbitration
Net benefit from transactions in Q4 2014 (1)
Non-GAAP
GAAP
Starbucks Japan acquisition-related items - gain (2)
Starbucks Japan acquisition-related items - other (3)
Debt extinguishment-related items (4)
Tax benefit from domestic manufacturing deduction (5)
Non-GAAP
GAAP

$0.01
1.12
(0.02)
(0.02)
$1.10

Starbucks Japan acquisition-related items - other

Non-GAAP

FY14

FY16
Projected

FY15

(1)

the sale of our Australia retail operations and transaction costs incurred in Q4 FY14
related to the acquisition of Starbucks Japan.
(2)

$1.35
(0.01)
(0.02)
$1.33

Starbucks Japan acquisition-related items - other

Non-GAAP

(2)

Gain represents the fair value adjustment of Starbucks preexisting 39.5%

ownership interest in Starbucks Japan upon acquisition.

(3)

Includes ongoing amortization expense of acquired intangible assets and transaction and integration

costs, such as incremental IT and compensation-related costs associated with the acquisition.
(4)

Represents the loss on extinguishment of debt ($61.1M), which is comprised of the cost
of the optional redemption provision, unamortized debt issuance costs, and unamortized

$1.82
(0.26)
0.03
0.03
(0.04)
1.58

discount associated with the $550 million of 6.250% 2017 Senior Notes redeemed in Q4 FY15,
as well as the related unamortized interest rate hedge loss ($2.0M), which was recorded in
interest expense.
(5)

Represents the incremental benefit related to additional domestic manufacturing

deductions to be claimed in our U.S. consolidated tax returns for FY10 through FY14 and

$1.84 - $1.86

(3)

Non-GAAP OPERATING INCOME RECONCILIATION

GAAP
Litigation charge resulting from Kraft Arbitration
Non-GAAP
GAAP
Litigation credit resulting from Kraft Arbitration
Costs from transactions in Q4 2014 (1)
Non-GAAP
GAAP

The net benefit from transactions in Q4 2014 relates primarily to a $0.02 gain

on the sale of our Malaysia equity method investment, partially offset by a loss on

through Q3 FY15.

0.03
$1.87 - $1.89

FY13
$ (325.4)
2,784.1
$2,458.7

FY14

FY15

$3,081.1
(20.2)
2.4
$3,063.3
$3,601.0
54.6
$3,655.6

Non-GAAP OPERATING MARGIN % RECONCILIATION

GAAP
Litigation charge resulting from Kraft Arbitration
Non-GAAP
GAAP
Litigation credit resulting from Kraft Arbitration
Costs from transactions in Q4 2014 (1)
Non-GAAP
GAAP
Starbucks Japan acquisition-related items - other (2)
Non-GAAP

FY13
(2.2)%
18.7%
16.5%

FY14

FY15

18.7%
(0.1)%
0.0%
18.6%
18.8%
0.3%
19.1%

(1)

(1)

Includes a portion of the transaction costs incurred in Q4 FY14 related to the acquisition of

Starbucks Japan and costs related to the sale of our Australia retail operations in Q4 FY14. The

Includes a portion of the transaction costs incurred in Q4 FY14 related to the acquisition of
Starbucks Japan and costs related to the sale of our Australia retail operations in Q4 FY14. The remaining
majority of the impact from these transactions is included in net interest income and other.

remaining majority of the impact from these transactions is included in net interest income and other.
(2)

(2)

Includes ongoing amortization expense of acquired intangible assets and transaction and
integration costs.

Includes ongoing amortization expense of acquired intangible assets and transaction and integration costs.