Starbucks 2012 Annual Report Download - page 20

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•Our success depends substantially on the value of our brands and failure to preserve their value could have
a negative impact on our financial results.
We believe we have built an excellent reputation globally for the quality of our products, for delivery of a
consistently positive consumer experience and for our corporate social responsibility programs. The Starbucks
brand has been highly rated in several global brand value studies. To be successful in the future, particularly
outside of US, where the Starbucks brand and our other brands are less well-known, we believe we must
preserve, grow and leverage the value of our brands across all sales channels. Brand value is based in part on
consumer perceptions on a variety of subjective qualities. Even isolated business incidents that erode consumer
trust, such as contaminated food, recalls or privacy breaches, particularly if the incidents receive considerable
publicity or result in litigation, can significantly reduce brand value and have a negative impact on our financial
results. Consumer demand for our products and our brand equity could diminish significantly if we or our
licensees fail to preserve the quality of our products, are perceived to act in an unethical or socially irresponsible
manner or fail to deliver a consistently positive consumer experience in each of our markets. Additionally,
inconsistent uses of our brand and other of our intellectual property assets, as well as failure to protect our
intellectual property, including from unauthorized uses of our brand or other of our intellectual property assets,
can erode consumer trust and our brand value and have a negative impact on our financial results.
•Our business depends in large part on the success of our business partners and suppliers, and our brand
and reputation may be harmed by actions taken by third parties that are outside of our control.
Our business strategy, including our plans for new stores, foodservice, branded products and other initiatives,
relies significantly on a variety of business partners, and licensee and partnership relationships, particularly in
our international markets. Licensees are often authorized to use our logos and provide branded beverages, food
and other products directly to customers. We provide training and support to, and monitor the operations of,
certain of these business partners, but the product quality and service they deliver may be diminished by any
number of factors beyond our control, including financial pressures. We believe customers expect the same
quality of products and service from our licensees as they do from us and we strive to ensure customers have the
same experience whether they visit a company-operated or licensed store. Any shortcoming of a Starbucks
business partner, particularly an issue affecting the quality of the service experience, the safety of beverages or
food or compliance with laws and regulations, may be attributed by customers to us, thus damaging our
reputation and brand value and potentially affecting our results of operations.
Our food and beverage products are sourced from a wide variety of domestic and international business partners
in our supply chain operations, and in certain cases are produced or sourced by our licensees directly. We rely
on these suppliers and vendors to provide high quality products and to comply with applicable laws. Our ability
to find qualified suppliers and vendors who meet our standards and supply products in a timely and efficient
manner is a significant challenge, especially with respect to goods sourced from outside the US. A vendor's or
supplier's failure to meet our standards, provide products in a timely and efficient manner, and comply with
applicable laws is beyond our control. These issues could negatively impact our business and profitability.
•Failure to meet market expectations for our financial performance will likely adversely affect the market
price and volatility of our stock.
Failure to meet market expectations going forward, particularly with respect to operating margins, earnings per
share, comparable store sales, operating cash flows, and net revenues, will likely result in a decline and/or
increased volatility in the market price of our stock. In addition, price and volume fluctuations in the stock
market as a whole may affect the market price of our stock in ways that may be unrelated to our financial
performance.