Starbucks 2011 Annual Report Download - page 31

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Operating Expenses
Fiscal Year Ended
Oct 2,
2011
Oct 3,
2010
Oct 2,
2011
Oct 3,
2010
%ofTotalNet
Revenues
Costofsalesincludingoccupancycosts .......................... $ 4,949.3 $4,458.6 42.3% 41.6%
Storeoperatingexpenses ..................................... 3,665.1 3,551.4 31.3% 33.2%
Otheroperatingexpenses ..................................... 402.0 293.2 3.4% 2.7%
Depreciationandamortizationexpenses.......................... 523.3 510.4 4.5% 4.8%
Generalandadministrativeexpenses ............................ 636.1 569.5 5.4% 5.3%
Restructuringcharges ........................................ 0.0 53.0 0.0% 0.5%
Totaloperatingexpenses ..................................... 10,175.8 9,436.1 87.0% 88.1%
Gain on sale of properties ..................................... 30.2 0.0 0.3% 0.0%
Incomefromequityinvestees .................................. 173.7 148.1 1.5% 1.4%
Operating income .......................................... $ 1,728.5 $1,419.4 14.8% 13.3%
Supplemental ratios as a % of related revenues:
Storeoperatingexpenses ..................................... 38.0% 39.6%
Cost of sales including occupancy costs as a percentage of total net revenues increased 70 basis points. The increase
was primarily due to higher commodity costs (approximately 220 basis points), mainly driven by increased coffee
costs. Partially offsetting this increase was lower occupancy costs as a percentage of total net revenues
(approximately 70 basis points), driven by increased sales leverage.
Store operating expenses as a percentage of total net revenues decreased 190 basis points primarily due to increased
sales leverage.
Other operating expenses as a percentage of total net revenues increased 70 basis points primarily due to higher
expenses to support the direct distribution model for packaged coffee and tea (approximately 40 basis points) and
the impairment of certain assets in our Seattle’s Best Coffee business associated with the Borders bankruptcy in
April 2011 (approximately 20 basis points).
The above changes contributed to an overall increase in operating margin of 150 basis points for fiscal 2011.
Considering the impact from all line items, the primary drivers for the increase in operating margin for fiscal 2011
were increased sales leverage (approximately 300 basis points), the absence of restructuring charges in the current
year (approximately 50 basis points) and the gain on the sale of properties (approximately 30 basis points). These
increases were partially offset by higher commodity costs (approximately 220 basis points).
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