Starbucks 2006 Annual Report Download - page 29

United States total net revenues increased 21% to $6.2 billion for the fiscal year ended 2006, compared to $5.1 billion for
fiscal 2005.
United States Company-operated retail revenues increased 21% to $5.5 billion for the fiscal year ended 2006, compared
to $4.5 billion for fiscal 2005. United States Company-operated retail revenues increased primarily due to the opening of
810 new Company-operated retail stores in the last 12 months and comparable store sales growth of 7% for fiscal 2006.
The increase in comparable store sales was due to a 5% increase in the average value per transaction and a 2% increase in
the number of customer transactions. Management believes increased customer traffic continues to be driven by new
product innovation, continued popularity of core products and a high level of customer satisfaction.
Total United States specialty revenues increased 22% to $683 million for the fiscal year ended 2006, compared to
$558 million in fiscal 2005. United States licensing revenues increased 33% to $369 million, compared to $278 million
for fiscal 2005. United States licensing revenues increased due to increased product sales and royalty revenues as a result of
opening 733 new licensed retail stores in the last 12 months. Foodservice and other revenues increased 12% to
$314 million from $280 million for fiscal 2005. United States foodservice and other revenues increased primarily due to
growth in new and existing foodservice accounts.
United States operating income increased 17% to $955 million for the fiscal year ended 2006, from $819 million for the
fiscal year ended 2005. Operating margin decreased to 15.5% of related revenues from 16.1% in fiscal 2005. The
decrease was due to the recognition of stock-based compensation expense.
International
The Company’s International operations (“International”) represent the remaining 17% of Company-operated retail
revenues and 18% of total specialty revenues as well as 17% of total net revenues. International operations sell coffee and
other beverages, whole bean coffees, complementary food, coffee brewing equipment and merchandise through
Company-operated retail stores in the United Kingdom, Canada, Thailand, Australia, Germany, China, Singapore,
Puerto Rico, Chile and Ireland. Specialty Operations in International primarily include retail store licensing operations in
more than 25 countries and foodservice accounts in Canada and the United Kingdom. The Company’s International
store base continues to increase rapidly and Starbucks is achieving a growing contribution from established areas of the
business while at the same time investing in emerging markets and channels, such as China. The Company’s International
operations are in various early stages of development that require a more extensive support organization, relative to the
current levels of revenue and operating income, than in the United States. This continuing investment is part of the
Company’s long-term, balanced plan for profitable growth.
International total net revenues increased 27% to $1.3 billion for the fiscal year ended 2006, compared to $1.0 billion for
fiscal 2005. International Company-operated retail revenues increased 28% to $1.1 billion for the fiscal year ended 2006,
compared to $852 million for fiscal 2005. International Company-operated revenues increased due to the opening of 230
new Company-operated retail stores in the last 12 months, comparable store sales growth of 8% for fiscal 2006, and the
weakening of the U.S. dollar against the Canadian dollar. The increase in comparable store sales resulted from a 5%
increase in the number of customer transactions and a 3% increase in the average value per transaction.
Total International specialty revenues increased 26% to $215 million for the fiscal year ended 2006, compared to
$170 million for fiscal 2005. International licensing revenues increased 28% to $186 million for the fiscal year ended
2006, compared to $146 million in fiscal 2005. International licensing revenues increased due to higher product sales and
royalty revenues from opening 426 new licensed retail stores in the last 12 months. International foodservice and other
revenues increased 19% to $29 million for the fiscal year ended 2006, compared to $24 million in fiscal 2005.
International foodservice and other revenues increased primarily due to growth in the total number of foodservice
accounts.
International operating income increased to $108 million for the fiscal year ended 2006, compared to $82 million in
fiscal 2005. Operating margin increased to 8.3% of related revenues from 8.0% in fiscal 2005, primarily due to lower cost
of sales including occupancy costs due to leverage gained from fixed costs distributed over an expanded revenue base, as
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