Starbucks 2012 Annual Report Download - page 3

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Dear Shareholders,
It is an honor to write you this
year, not only because we have
achieved record financial
performance but because we
have once again done so by living
up to the heritage of our company,
balancing profits with a social conscience. Our
commitment to creating shareholder value through
the lens of humanity is truly a cornerstone of Starbucks
global strength, especially as we pursue the most
ambitious agenda in our company’s history.
Two years ago, we embarked on a strategic plan, the
Blueprint for Profitable Growth, in which we would
leverage multiple channels of distribution. I am proud
to affirm that it is no longer theory but a true growth
engine. The measure of our success can be seen in the
past year’s performance:
Starbucks consolidated global revenues reached a
record $13.3 billion, a 14 percent increase, with revenue
growth driven by a 7 percent rise in global comparable
store sales and a 50 percent rise in revenue from
Channel Development. Our operating income was
$2 billion, a 16 percent increase, with our consolidated
operating margin rising to 15 percent, up 20 basis
points from last year.
Starbucks record earnings-per-share growth continued,
up 10 percent in 2012 to $1.79 from last year’s $1.62.
Through share repurchases and dividends, we returned
approximately $1.1 billion to shareholders.
While we are proud of our achievements, we have
learned never to take our success for granted, which is
why three primary attributes will continue to drive our
every decision and action. First, we will remain
committed to our coffee core. Second, we will exercise
relevant, timely, and courageous innovation. And third,
we will ceaselessly honor our values. I firmly believe that
the ability to adhere to these attributes is what defines
the most enduring organizations of our time, and as I
share them with you in the context of highlights from
Starbucks past year, I think you will agree that they
are key to our ongoing success.
Staying True to Our Core Purpose
and Capabilities as We Grow
We will always be a coffee company
whose core business is to ethically
source and roast the highest-quality
arabica coffee in the world, as we
simultaneously create authentic
connections with our customers and the
communities we serve. I assure you we
are not deviating from this purpose but
rather enhancing it with extreme diligence.
Scaling the Starbucks Experience. Today, 42 years after
opening our first store in Seattle, Starbucks operates in
61 countries, and we recently had our most successful
launch ever, in India. I was in Mumbai when our doors
opened, and I personally witnessed, with our fantastic
business partner in India, Tata Global Beverages, the
unabashed affection and demand for Starbucks, a
definitive signal that our brand is resonating around
the world.
In the China and Asia Pacific region in 2012, we once
again posted strong annual returns, including 11
consecutive quarters of double-digit comparable store
sales growth. This success showcases how—with nearly
3,300 stores, plus hundreds more planned throughout
Asia Pacific—we are mastering the transferable ability
to scale our brand’s core attributes and expertise, while
respecting and reflecting regional customs and cultures
so we may be locally relevant. When we strike this
delicate balance, we establish trust, which ensures the
company has opportunities for continued growth
everywhere we do business. That includes the 36
countries in EMEA, where revenues grew 9 percent last
year and where we continue to apply lessons of the
past to reconnect with our customers in this
economically challenged but important region.
As the equity of our brand thrives around the world, we
anticipate having 20,000 stores on six continents by
2014. Additionally, over the next five years, we plan to
open 3,000 new stores in the Americas region alone.
Unlike a period in our past, I assure you that our growth
today is highly disciplined.
Strengthening Connections. As always, our 200,000
partners (employees) are working hard, crafting perfect
beverages, and fostering the personal relationships
with customers that distinguish our brand. As consumer
behavior continues to shift, we are further translating
our connective spirit beyond the walls of our stores by
leveraging a combination of social and digital media,
1971,
Our first store opens in Seattle's
Pike Place Market