Starbucks 2006 Annual Report Download - page 14

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www.starbucks.com/csr beginning March 14, 2007. To request a printed copy of the report, which will be available in late
March 2007, please call 1-800-23-LATTE (1-800-235-2883) or email your request to [email protected].
Item 1A. Risk Factors
This Annual Report on Form 10-K includes forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements generally are identified by words such as “believe”,
“expect”, “anticipate”, “estimate”, “intend”, “strategy”, “may”, “will likely” and similar words or phrases. A forward-
looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or
circumstances may not occur. Investors should not place undue reliance on the forward-looking statements, which speak
only as of the date of this Report. Starbucks is under no obligation to update or alter any forward-looking statements,
whether as a result of new information, future events or otherwise. These forward-looking statements are all based on
currently available operating, financial and competitive information and are subject to various risks and uncertainties.
The Company’s actual future results and trends may differ materially depending on a variety of factors including, but not
limited to, the risks and uncertainties discussed below. The risks below are not the only ones the Company faces.
Additional risks and risks that management currently considers immaterial may also have an adverse effect on the
Company.
• A regional or global health pandemic could severely affect Starbucks business.
A health pandemic is a disease that spreads rapidly and widely by infection and affects many individuals in an area or
population at the same time. If a regional or global health pandemic were to occur, depending upon its duration and
severity, the Company’s business could be severely affected. Starbucks has positioned itself as a “third place” between
home and work where people can gather together for human connection. Customers might avoid public gathering places
in the event of a health pandemic, and local, regional or national governments might limit or ban public gatherings to halt
or delay the spread of disease. A regional or global health pandemic might also adversely impact the Company’s business
by disrupting or delaying production and delivery of materials and products in its supply chain and by causing staffing
shortages in its stores. The impact of a health pandemic on Starbucks might be disproportionately greater than on other
companies that depend less on the gathering of people together for the sale, use or license of their products and services.
• Market expectations for Starbucks financial performance are high.
Management believes the price of Starbucks stock reflects high market expectations for its future operating results. In
particular, any failure to meet the market’s high expectations for Starbucks comparable store sales growth rates, earnings
per share and new store openings could cause the market price of Starbucks stock to drop rapidly and sharply.
• Starbucks is subject to a number of significant risks that might cause the Company’s actual results to vary materially
from its forecasts, targets, or projections, including:
• declines in actual or estimated comparable store sales growth rates and expectations;
• failing to meet annual targets for store openings, as a result of delays in store openings or failing to identify and
secure sufficient real estate locations;
• negative trends in operating expenses or failing to continue to increase net revenues and operating income in any
or all of Starbucks United States, International and CPG operating segments;
• failing to penetrate and expand into emerging International markets, such as China;
• opening less productive stores and cannibalizing existing stores with new stores;
• higher costs associated with maintaining and refurbishing the Company’s existing base of Company-operated
retail stores;
10 STARBUCKS CORPORATION, FORM 10-K