Starbucks 2014 Annual Report Download - page 27

Starbucks Corporation 2014 Form 10-K 23
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other channels in the Japan market, such as CPG, licensing and foodservice. We also expect that China will continue to grow
toward being one of our largest markets outside of the US.
Channel Development segment revenues grew 11% to $1.5 billion, in fiscal 2014, primarily due to increased sales of premium
single-serve products. Lower coffee costs was the primary contributor to the 630 basis point increase in operating margin for
fiscal 2014. As we continue to expand customer occasions outside of our retail stores, including growing our presence in the
premium single-serve category, we expect this segment to become a more significant contributor to future growth.
Fiscal 2015 — The View Ahead
For fiscal 2015, we expect revenue growth of 16% to 18%, including 6% to 7% of incremental growth from the acquisition of
Starbucks Japan. The remaining growth will primarily come from mid-single-digit global comparable store sales growth and
the addition of approximately 1,650 net new stores. Approximately one-half of net new store openings will be in our China/
Asia Pacific segment, with the remaining half coming primarily from the Americas.
We expect consolidated operating margin to decline slightly in fiscal 2015 when compared to our fiscal 2014 results, primarily
due to the mildly dilutive margin impact of the acquisition of Starbucks Japan, largely driven by the change in business model
from a joint venture to a company-operated market. We expect strong EPS growth in fiscal 2015, due in part to an anticipated
acquisition-related gain of approximately $325 million to $375 million after-tax, or $0.43 to $0.49 per share, resulting from a
fair value adjustment of our current 39.5% ownership interest in Starbucks Japan. We expect sales leverage to also contribute to
the EPS growth.
The effective tax rate for fiscal 2015 is expected to be approximately 31%, including a net tax benefit of approximately 4%
from the acquisition of Starbucks Japan.
Capital expenditures in fiscal 2015 are expected to be approximately $1.4 billion, primarily for new stores and store
renovations, as well as for other investments to support our ongoing growth initiatives.
Acquisitions and Divestitures
See Note 2, Acquisitions and Divestitures, to the consolidated financial statements included in Item 8 of Part II of this 10-K for
information regarding acquisitions and divestitures.
RESULTS OF OPERATIONS — FISCAL 2014 COMPARED TO FISCAL 2013
Consolidated results of operations (in millions):
Revenues
Fiscal Year Ended Sep 28, 2014 Sep 29, 2013 % Change
Net revenues:
Company-operated stores $ 12,977.9 $ 11,793.2 10.0%
Licensed stores 1,588.6 1,360.5 16.8
CPG, foodservice and other 1,881.3 1,713.1 9.8
Total net revenues $ 16,447.8 $ 14,866.8 10.6%
Total net revenues were $16.4 billion for fiscal 2014, an increase of $1.6 billion, or 11%, over fiscal 2013, primarily due to
increased revenues from company-operated stores (contributing $1.2 billion). The growth in company-operated store revenues
was driven by a 6% increase in comparable store sales (approximately $641 million) and incremental revenues from 555 net
new Starbucks® company-operated store openings over the past 12 months (approximately $529 million).
Licensed store revenue growth contributed $228 million to the increase in total net revenues, primarily due to increased product
sales to and royalty revenues from our licensees, as a result of improved comparable store sales and the opening of 1,029 net
new licensed stores over the past 12 months.
CPG, foodservice and other revenues increased $168 million, primarily due to increased sales of premium single-serve
products (approximately $111 million) and increased foodservice sales (approximately $17 million).