Starbucks 2015 Annual Report Download - page 19

We also purchase significant amounts of dairy products, particularly fluid milk, to support the needs of our company-operated
retail stores. Additionally, and although less significant to our operations than coffee or dairy, other commodities, including but
not limited to tea and those related to food inputs, such as cocoa, produce, baking ingredients, meats, eggs and energy, as well
as the processing of these inputs, are important to our operations. Increases in the cost of dairy products and other commodities,
or lack of availability, whether due to supply shortages, delays or interruptions in processing, or otherwise, especially in
international markets, could have an adverse impact on our profitability.
• Our financial condition and results of operations are sensitive to, and may be adversely affected by, a number of factors,
many of which are largely outside our control.
Our operating results have been in the past and will continue to be subject to a number of factors, many of which are largely
outside our control. Any one or more of the factors listed below or described elsewhere in this risk factors section could
adversely impact our business, financial condition and/or results of operations:
• increases in real estate costs in certain domestic and international markets;
• adverse outcomes of litigation; and
• especially in our larger or fast growing markets, labor discord, war, terrorism (including incidents targeting us),
political instability, boycotts, social unrest, and natural disasters, including health pandemics that lead to avoidance of
public places or restrictions on public gatherings such as in our stores.
• Interruption of our supply chain could affect our ability to produce or deliver our products and could negatively impact
our business and profitability.
Any material interruption in our supply chain, such as material interruption of roasted coffee supply due to the casualty loss of
any of our roasting plants, interruptions in service by our third party logistic service providers or common carriers that ship
goods within our distribution channels, trade restrictions, such as increased tariffs or quotas, embargoes or customs restrictions,
or natural disasters that cause a material disruption in our supply chain could negatively impact our business and our
profitability.
Additionally, our food, beverage and other 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 U.S. For certain products, we may rely on one or very few suppliers
or vendors. A vendor's or supplier's failure to meet our standards, provide products in a timely and efficient manner, or comply
with applicable laws is beyond our control. These issues, especially for those products for which we rely on one or few
suppliers or vendors, 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.
• The loss of key personnel or difficulties recruiting and retaining qualified personnel could adversely impact our business
and financial results.
Much of our future success depends on the continued availability and service of senior management personnel. The loss of any
of our executive officers or other key senior management personnel could harm our business. We must continue to recruit,
retain and motivate management and other employees sufficiently, both to maintain our current business and to execute our
strategic initiatives, some of which involve ongoing expansion in business channels outside of our traditional company-
operated store model. Our success also depends substantially on the contributions and abilities of our retail store employees
whom we rely on to give customers a superior in-store experience and elevate our brand. Accordingly, our performance
depends on our ability to recruit and retain high quality employees to work in and manage our stores, both domestically and
internationally. If we are unable to recruit, retain and motivate employees sufficiently to maintain our current business and
support our projected growth, our business and financial performance may be adversely affected.
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