Starbucks Coffee Company

Oppenheimer Consumer, Gaming, Lodging and

Leisure Conference
June 30, 2010

© 2010 Starbucks Coffee Company. All rights reserved.

Starbucks Coffee Company
Building for the Future

 Elevate the customer experience

 Drive efficiencies and operational leverage

 Deliver relevant innovation and profitable

growth platforms through multiple channels
Q2 Fiscal 2010 Highlights
Strong momentum continues
 Revenue of $2.5B; 9% growth
 Comparable store sales growth of 7%
 5th sequential quarter of improvement
 Highest comp since Q206
 Operating margin:
 GAAP = 13.4% compared to 1.8% prior year
 Non-GAAP = 13.7% compared to 8.3% prior year
 Earnings per share:
 GAAP = $0.28 vs. $0.03 in prior year
 Non-GAAP = $0.29 vs. $0.16 in prior year
 Initiated first-ever cash dividend
Note: Non-GAAP reconciliations available on Starbucks.com
Comparable Store Sales
Return to growth
U.S. Segment Ticket Transactions

10%
7%

4%
5%
(1%)
(4%)
(5%) (8%) (10%) (8%) (6%) (1%)
0%

-5%

-10%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

FY 2008 FY 2009 FY 2010

International Segment
10%
7%
5%
4%
5%
3%
2%
0% 0%
(3%) (3%) (2%)
0%

-5%

-10%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2

FY 2008 FY 2009 FY 2010

Margin Improvement
Driven by cost discipline and powerful sales leverage
Consolidated Operating Margin

13.7%
12.3%
11.5% 11.2% 13.2%
9.2%
8.1% 7.8%

4.9% 5.7%

3.2%

Notes: 1) Line on FY05 bar indicates operating margin including FAS 123 expensing of stock option compensation, 2) Non -GAAP
reconciliations available on Starbucks.com
Earnings per Share
Profitable growth in a challenging environment

$0.80
$0.71
$0.62

$0.32

Notes: 1) FY05 EPS was before the adoption of FAS 123R, 2) FY06 includes $0.02 expense related to the cumulative effect of an
accounting change, 3) Non-GAAP reconciliations available on Starbucks.com
Profitable Growth
Record second quarter earnings
Non-GAAP Net Earnings & Operating Margin
$121.1 Million $223.1 Million
5.2% 8.8%

$0.28

$0.03

Note: Non-GAAP reconciliation available on Starbucks.com

United States
Healthy business provides foundation for Starbucks growth
Revenue (in millions) Operating Margin

Fiscal Year Fiscal 1H

Fiscal Year Fiscal 1H

17.7%*

High teens
11.0%*
9.7%*
9.5%*

Operating Income (in millions)

Fiscal Year Fiscal 1H

$778*
$730* $666*

$345*
GAAP

Non-GAAP

*Note: Non-GAAP reconciliation available on Starbucks.com

International
On the path to an enormous opportunity
Revenue (in millions) Operating Margin

Fiscal Year Fiscal 1Hr

Fiscal Year Fiscal 1H

Mid-to-high teens
9.0%*
6.5%*
6.2%*
Operating Income (in millions) 3.9%*

Fiscal Year Fiscal 1H

$137*
$120*
$102*

$36*
GAAP

Non-GAAP

*Note: Non-GAAP reconciliation available on Starbucks.com

Consumer Products Group
High margin, high return business with growth ahead
Revenue (in millions) Operating Margin

Fiscal Year Fiscal 1H

Fiscal Year Fiscal 1H

35%

Operating Income (in millions)

Fiscal Year Fiscal 1H

Diversifying Our Business
As we expand our reach
CHANNEL OWNERSHIP GEOGRAPHY

16%
59%
FY 2005 76%
8%
37 markets
41%

25%
53%
10%
FY 2009
65% 50 markets
47%

U.S. Op Income*
International Op Income* Company-operated Stores
CPG Op Income* Licensed Stores
*Non-GAAP
Building for the Future
Investing for disciplined, profitable growth

ACROSS GEOGRAPHY,
CHANNEL & BRAND U.S. AND INTERNATIONAL STARBUCKS VIA® READY BREW

SEATTLE’S BEST COFFEE® PACKAGED GOODS

Innovation at the Store
Elevating the third place experience
Relevant, Sustainable & Fresh Designs
Seattle – 1st & Pike
Relevant, Sustainable & Fresh Designs
Seattle – University Village
Relevant, Sustainable & Fresh Designs
New York (Soho) – Spring Street
Relevant, Sustainable & Fresh Designs
Paris - Disney Village
Relevant, Sustainable & Fresh Designs
London – Conduit Street
Innovation Beyond the Store
Driving occasions in other channels
Innovation: Starbucks VIA Ready Brew
®

Single serve coffee on-the-go and at-home

 Innovation: Starbucks VIA Ready Brew ®

Single serve coffee on-the-go and at-home

US: International:

 Compete in single serve market  Take share from the $23B global
instant and single serve category
 Grow Starbucks 4% share in the
65B cup Brewed Coffee category  Instant coffee represents a higher mix
of retail coffee sales Internationally:
 Create new usage occasions
On the go
At home
 U.K. = 80%
37 billion cups Away from home
25 billion cups
(e.g., office, travel) 3.7 billion cups
(restaurant, specialty
coffee houses)
 Japan = 53%

 Russia = 85%

3% 13% 4% Starbucks
Starbucks share Starbucks share share
Innovation Across Brands
Ability to leverage with multiple concepts
Seattle’s Best Coffee
Creating a billion dollar global business
Starbucks and Seattle’s Best Coffee
Little overlap in brand equity
Seattle’s Best Coffee
Meaningful multi-channel growth opportunity

RETAIL PACKAGED SERVING THROUGH

GOODS OTHERS

Today

Franchising Innovation Pipeline New Partnerships

Growth
Opportunity
Operating Cash Flow Remains Strong
Significant free cash flow potential

millions

Capex % of net
10% 10% 11% 9% 5%
revenues
Improving Shareholder Return
Through the distribution of excess cash

DIVIDEND SHARE REPURCHASE

Initiated First distribution
Q2 2010 April 23, 2010
15 million shares 21 million shares
newly authorized available for
Q2 2010 repurchase Q2 2010
$0.10 per share Targeted 35% - 40%
paid quarterly payout ratio
 Investment Highlights

ABUNDANT
MULTI-CHANNEL GLOBAL
GROWTH OPPORTUNITIES
GROWTH
OPPORTUNITIES
RELEVANT ESTABLISHED
PRODUCT BLUE-CHIP
INNOVATION PARTNERSHIPS

LEVERAGABLE UNPARALLELED
ATTRACTIVE & LOYAL
CSR
LEADERSHIP
ROBUST
FREE CASH FLOW
PLATFORM CUSTOMER DEMOGRAPHIC GENERATION

SOLID ICONIC
BRAND WITH
UNDISPUTED
COFFEE AUTHORITY
GLOBALLY
DIVERSIFIED EARNINGS
EXPERIENCED
MANAGEMENT
FOUNDATION GLOBAL FOOTPRINT & MARKET LEADER