Starbucks(US:SBUX)2025-11-14 21:08Employment and Workforce - In fiscal 2025, Starbucks employed approximately 381,000 people worldwide, with about 223,000 in the U.S. and 158,000 outside the U.S.[32] - In fiscal 2025, more than 230,000 partners received a Bean Stock grant, giving them an ownership stake in Starbucks[28] - Starbucks aims to fill 90% of retail leadership roles internally, promoting career growth for hourly partners[28] - Starbucks covers 100% of tuition for a first-time online bachelor's degree from Arizona State University for partners working an average of 20 hours or more each week[28] - The company has committed to fair pay principles to ensure equitable compensation for all partners, regardless of race or gender[31] Revenue and Financial Performance - Revenues from reportable operating segments for fiscal 2025 were as follows: North America (74%), International (21%), and Channel Development (5%)[40] - Revenue from company-operated stores accounted for 83% of total net revenues during fiscal 2025[46] - Licensed stores generated 12% of total net revenues in fiscal 2025[51] - Consolidated net revenues increased 3% to $37.2 billion in fiscal 2025 compared to $36.2 billion in fiscal 2024, driven by new store openings and incremental revenue from the Global Coffee Alliance[171] - North America segment revenue increased 1% in fiscal 2025, primarily due to a net new company-operated store growth of 4%, or 441 stores, despite a 2% decline in comparable store sales[172] - International segment revenue increased 7% in fiscal 2025, driven by new store openings and the conversion of 113 licensed stores to company-operated stores following the acquisition of 23.5 Degrees Topco Limited[173] - Channel Development segment revenue increased 6% in fiscal 2025, primarily due to an increase in revenue in the Global Coffee Alliance[174] Store Operations and Expansion - Total company-operated stores reached 21,514 as of September 28, 2025, with a net increase of 496 stores during the fiscal year[48] - Total licensed stores reached 19,476 as of September 28, 2025, with a net increase of 295 stores during the fiscal year[53] - The North America segment includes 11,018 company-operated stores and 7,293 licensed stores, making up 52% and 48% of total stores, respectively[44] - The International segment includes 10,496 company-operated stores and 12,183 licensed stores, making up 46% and 54% of total stores, respectively[44] - The company plans to close underperforming stores in North America, with closures expected to be completed in the first half of fiscal 2026, which may reduce baseline revenues but improve operating margins[176] Strategic Initiatives - The "Back to Starbucks" strategy was announced in Q4 of fiscal 2024 to enhance customer experience and return to growth[18] - Strategic initiatives under the "Back to Starbucks" plan aim to improve service models, enhance customer experience, and expand digital engagement, but may incur significant additional costs and face execution challenges[74] - Starbucks is focused on empowering coffeehouse leaders and enhancing customer experience through the Green Apron Service model, which was implemented across the U.S. company-operated store portfolio[177] - A new strategic joint venture with Boyu Capital aims to accelerate long-term growth in China, emphasizing investments in store partners and enhancing the coffeehouse experience[177] Financial Challenges and Risks - Consolidated operating income decreased to $2.9 billion in fiscal 2025, with an operating margin of 7.9%, down from 15.0% in fiscal 2024, reflecting a contraction of 710 basis points[185] - Diluted earnings per share (EPS) declined to $1.63 in fiscal 2025 from $3.31 in fiscal 2024, primarily due to the contraction in operating margin[185] - The company anticipates macroeconomic challenges, including new tariffs and dynamic coffee prices, will continue but remains encouraged by the results from its "Back to Starbucks" initiatives[177] - The company faces risks in new store openings, including rising development costs and potential cannibalization of sales from existing locations, which could adversely affect operating results[85] - Health concerns regarding product ingredients and changing consumer preferences may lead to reduced demand and impact financial performance[80] - The company is subject to various risks related to brand value, including potential negative impacts from public perception, operational challenges, and macroeconomic volatility[69] Market and Competitive Environment - The specialty coffee market is highly competitive, with significant pressure from large quick-service competitors in the U.S. and established brands globally, potentially reducing profitability[114] - The international segment is critical for growth, with performance in key markets affecting overall consolidated results; economic downturns in these regions could materially impact financial outcomes[89] - The company operates in 89 global markets, facing diverse cultural, regulatory, geopolitical, and economic environments that could adversely affect financial performance[91] Supply Chain and Operational Risks - Starbucks operates ten farmer support centers to promote best practices in coffee production and ensure high-quality supply[59] - The company utilizes various purchasing strategies, including fixed-price and price-to-be-fixed commitments, to secure an adequate supply of quality green coffee[57] - The volatility in the availability and pricing of high-quality arabica coffee beans could significantly affect profitability, as coffee typically trades at a premium above the "C" commodity price[95][96] - Supply chain disruptions, including those caused by natural disasters or geopolitical conflicts, could materially impact the company's ability to deliver products and maintain profitability[101] - Labor costs are a significant concern, with potential increases due to new legislation and competitive pressures in the labor market, impacting overall operational costs[109] Compliance and Legal Risks - The evolving regulatory environment, including new corporate governance and public disclosure regulations, may increase compliance costs and expose the company to legal risks[118] - The company faces potential litigation related to various claims, including employment practices and data privacy, which could adversely affect financial performance and reputation[127] - Cybersecurity threats, including unauthorized access and data breaches, could result in significant financial costs and reputational harm[129] - Compliance with privacy and data protection laws is complex and evolving, with potential penalties for noncompliance that could impact operations and financial performance[130] Financial Position and Capital Management - Cash and investments totaled $3.7 billion as of September 28, 2025, down from $3.8 billion in the previous year, with approximately $1.6 billion held in foreign subsidiaries[208] - The company replaced its $3.0 billion unsecured five-year revolving credit facility with a new facility of the same amount, maturing on June 13, 2030[209][210] - Total available contractual borrowing capacity for general corporate purposes was $3.0 billion as of the end of fiscal 2025[213] - No borrowings were outstanding under the commercial paper program as of September 28, 2025, with a maximum aggregate amount of $3.0 billion available[214] - The company maintained compliance with all applicable covenants related to its credit facilities as of September 28, 2025[212]