Starbucks 2012 Annual Report Download - page 41

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35
total net revenues was favorable foreign currency translation (approximately $126 million) resulting from a
weakening of the US dollar relative to foreign currencies and an increase in licensed store revenues
(approximately $106 million). This increase was partially offset by the impact of the extra week in fiscal 2010
(approximately $207 million).
Operating Expenses
Fiscal Year Ended
Oct 2,
2011
Oct 3,
2010
Oct 2,
2011
Oct 3,
2010
% of Total
Net Revenues
Cost of sales including occupancy costs $ 4,915.5 $ 4,416.5 42.0% 41.2%
Store operating expenses 3,594.9 3,471.9 30.7% 32.4%
Other operating expenses 392.8 279.7 3.4% 2.6%
Depreciation and amortization expenses 523.3 510.4 4.5% 4.8%
General and administrative expenses 749.3 704.6 6.4% 6.6%
Restructuring charges
—
53.0 — 0.5%
Total operating expenses 10,175.8 9,436.1 87.0% 88.1%
Gain on sale of properties 30.2
—
0.3% —
Income from equity investees 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:
Store operating expenses 37.3% 38.7%
Cost of sales including occupancy costs as a percentage of total net revenues increased 80 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 170 basis points primarily due to
increased sales leverage.
Other operating expenses as a percentage of total net revenues increased 80 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 corporate real estate in fiscal 2011 (approximately
30 basis points). These increases were partially offset by higher commodity costs (approximately 220 basis
points).
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