Starbucks Corporation (NASDAQ:SBUX) Morgan Stanley Global Consumer & Retail Conference December 5, 2023 12:45 PM ET Company Participants Laxman Narasimhan - CEO Conference Call Participants Brian Harbour - Morgan Stanley Brian Harbour Okay. Thank you. Thank you, everyone. I'm Brian Harbour. I'm the Restaurant and Foodservice Distribution Analyst at Morgan Stanley. First of all, this is a joint forum here. So I just wanted to thank everyone for being here. It means a lot and just a couple of stats. Sorry if ...

[Part I - Business and Risk Factors](index=7&type=section&id=Part%20I) [Business Overview](index=7&type=section&id=Item%201.%20Business) Starbucks operates as a premier global coffee roaster and retailer across 86 markets, primarily generating revenue from company-operated and licensed stores within its North America, International, and Channel Development segments - Starbucks is the premier roaster, marketer, and retailer of specialty coffee, operating in 86 markets, with main brands including Starbucks Coffee, Teavana, Ethos, Starbucks Reserve, and Princi[9](index=9&type=chunk) - As of October 1, 2023, approximately **3.6% of Starbucks partners** in U.S. company-operated stores are represented by unions[15](index=15&type=chunk) Worldwide Employee Distribution (as of Oct 1, 2023) | Region | Number of Employees | | :--- | :--- | | **Total Worldwide** | **~381,000** | | U.S. | ~228,000 | | Outside of the U.S. | ~153,000 | FY2023 Revenue Contribution by Segment | Segment | % of Total Net Revenues | | :--- | :--- | | North America | 74% | | International | 21% | | Channel Development | 5% | Global Store Count by Type (as of Oct 1, 2023) | Store Type | North America | International | Total | % of Total | | :--- | :--- | :--- | :--- | :--- | | Company-operated | 10,628 | 8,964 | 19,592 | 52% | | Licensed | 7,182 | 11,264 | 18,446 | 48% | | **Total** | **17,810** | **20,228** | **38,038** | **100%** | Retail Sales Mix by Product (Company-Operated Stores) | Product Type | FY 2023 | FY 2022 | FY 2021 | | :--- | :--- | :--- | :--- | | Beverages | 74% | 74% | 74% | | Food | 22% | 22% | 21% | | Other | 4% | 4% | 5% | [Risk Factors](index=15&type=section&id=Item%201A.%20Risk%20Factors) Starbucks faces significant risks including brand reputation damage, supply chain vulnerabilities, macroeconomic pressures, labor cost increases, intense competition, and cybersecurity threats, particularly impacting its North America and China operations - The company's success is substantially dependent on its brand value, which could be diminished by unethical or illegal actions, negative publicity regarding responses to unionization efforts, or failure to meet social and environmental goals[42](index=42&type=chunk) - Starbucks is highly dependent on the financial performance of its North America operating segment, which accounted for approximately **74% of consolidated total net revenues in fiscal year 2023**[49](index=49&type=chunk) - The business is exposed to significant risks in China, its second-largest market, including U.S.-China trade tensions, new competitors, and regulatory uncertainty[50](index=50&type=chunk)[51](index=51&type=chunk) - Increases in the cost or decreases in the availability of high-quality arabica coffee beans and dairy products could have an adverse impact on business and financial results, with climate change potentially exacerbating these factors[55](index=55&type=chunk) - The business could be adversely impacted by rising labor costs, union organizing efforts, and difficulties in attracting and retaining qualified personnel, with unionization presenting potential operational disruptions and increased costs[62](index=62&type=chunk) - The company faces risks from failure to comply with complex and evolving data privacy laws such as GDPR in Europe and CCPA in California, which could result in significant fines and reputational harm[70](index=70&type=chunk)[71](index=71&type=chunk) - Heavy reliance on information technology for point-of-sale, mobile platforms, and supply chain management exposes the company to risks of system failures or cybersecurity breaches, which could disrupt operations and harm financial results[73](index=73&type=chunk) [Properties](index=27&type=section&id=Item%202.%20Properties) Starbucks primarily leases its 19,592 company-operated stores and most warehousing, distribution, and corporate sites, while owning key roasting facilities in locations like York, PA, and Minden, NV Major Corporate, Roasting, and Distribution Properties | Location | Approx. Size (Sq. Feet) | Purpose | | :--- | :--- | :--- | | York, PA | 1,957,000 | Roasting, warehousing and distribution | | Seattle, WA | 1,294,000 | Corporate administrative | | Minden, NV | 1,080,000 | Roasting, warehousing and distribution | | Kunshan, China | 630,000 | Roasting, warehousing and distribution | - As of October 1, 2023, Starbucks had **19,592 company-operated stores**, and almost all of these locations are leased[79](index=79&type=chunk) [Part II - Financial Information](index=29&type=section&id=Part%20II) [Shareholder and Market Information](index=29&type=section&id=Item%205.%20Market%20for%20the%20Registrant%27s%20Common%20Equity%2C%20Related%20Shareholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section details Starbucks' common stock, dividend policy, and share repurchase activities, noting over 3.1 million shares repurchased in Q4 FY2023 and a comparative stock performance analysis Share Repurchases (Q4 FY2023) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | Jul 3 - Jul 30, 2023 | — | $ — | | Jul 31 - Aug 27, 2023 | 1,072,090 | $ 98.16 | | Aug 28 - Oct 1, 2023 | 2,059,067 | $ 95.39 | | **Total** | **3,131,157** | **$ 96.34** | - As of the end of Q4 FY2023, the maximum number of shares that may yet be purchased under the company's repurchase plans is **42,589,661**[86](index=86&type=chunk) [Management's Discussion and Analysis (MD&A)](index=32&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Starbucks achieved strong FY2023 financial results with 12% revenue growth to $36.0 billion and a 200 basis point operating margin expansion, driven by pricing and operational efficiencies, while anticipating continued global store growth FY2023 Financial Highlights vs. FY2022 | Metric | FY 2023 | FY 2022 | Change | | :--- | :--- | :--- | :--- | | Total Net Revenues | $36.0 billion | $32.3 billion | +12% | | Operating Income | $5.9 billion | $4.6 billion | +28% | | Operating Margin | 16.3% | 14.3% | +200 bps | | Diluted EPS | $3.58 | $2.83 | +26.5% | | Capital Expenditures | $2.3 billion | $1.8 billion | +28% | | Cash Returned to Shareholders | $3.4 billion | $6.3 billion | -46% | Consolidated Revenue Breakdown (FY2023 vs FY2022) | Revenue Source | FY 2023 (in millions) | FY 2022 (in millions) | % Change | | :--- | :--- | :--- | :--- | | Company-operated stores | $29,462.3 | $26,576.1 | +10.9% | | Licensed stores | $4,512.7 | $3,655.5 | +23.4% | | Other | $2,000.6 | $2,018.7 | -0.9% | | **Total net revenues** | **$35,975.6** | **$32,250.3** | **+11.6%** | - The **200 basis point expansion in consolidated operating margin** was primarily driven by pricing (+250 bps), sales leverage (+240 bps), and in-store operational efficiencies (+160 bps), partially offset by investments in partner wages (-250 bps) and higher G&A expenses (-130 bps)[97](index=97&type=chunk) - Cash provided by operating activities increased to **$6.0 billion in FY2023** from $4.4 billion in FY2022, primarily due to higher net earnings and lower inventory purchases driven by reduced coffee commodity prices[129](index=129&type=chunk) - The company identifies Income Taxes, Property, Plant & Equipment impairment, and Goodwill & Intangible Asset impairment as its critical accounting estimates, requiring significant management judgment[139](index=139&type=chunk) [Financial Statements and Supplementary Data](index=46&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements for fiscal years 2023, 2022, and 2021, including statements of earnings, balance sheets, and cash flows, with detailed notes on accounting policies and segment performance Consolidated Statements of Earnings (in millions) | Fiscal Year Ended | Oct 1, 2023 | Oct 2, 2022 | Oct 3, 2021 | | :--- | :--- | :--- | :--- | | Total net revenues | $35,975.6 | $32,250.3 | $29,060.6 | | Operating income | $5,870.8 | $4,617.8 | $4,872.1 | | Net earnings attributable to Starbucks | $4,124.5 | $3,281.6 | $4,199.3 | | Diluted EPS | $3.58 | $2.83 | $3.54 | Consolidated Balance Sheets (in millions) | As of | Oct 1, 2023 | Oct 2, 2022 | | :--- | :--- | :--- | | Total current assets | $7,303.4 | $7,018.7 | | Total assets | $29,445.5 | $27,978.4 | | Total current liabilities | $9,345.3 | $9,151.8 | | Long-term debt | $13,547.6 | $13,119.9 | | Total liabilities | $37,433.3 | $36,677.1 | | Total shareholders' deficit | ($7,994.8) | ($8,706.6) | - In FY2023, the company sold the Seattle's Best Coffee brand to Nestlé for **$110.0 million**, recognizing a pre-tax gain of **$91.3 million**[214](index=214&type=chunk) - As of October 1, 2023, the company had committed to purchasing green coffee totaling **$989 million** ($412 million under fixed-price contracts and an estimated $577 million under price-to-be-fixed contracts)[239](index=239&type=chunk) - In FY2023, the company repurchased **10.0 million shares of common stock for $1.0 billion**; as of October 1, 2023, **42.6 million shares** remained available for repurchase under current authorizations[265](index=265&type=chunk) - Revenues from the United States represented **73% of total net revenues in FY2023**, at **$26.4 billion**[286](index=286&type=chunk) [Controls and Procedures](index=89&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and internal control over financial reporting were effective as of October 1, 2023, as affirmed by an unqualified audit opinion - Based on an evaluation, the chief executive officer and chief financial officer concluded that the company's disclosure controls and procedures were effective as of October 1, 2023[298](index=298&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of October 1, 2023, based on the COSO framework, and this assessment was audited by Deloitte & Touche LLP, which issued an unqualified opinion[299](index=299&type=chunk)[302](index=302&type=chunk) [Part III - Corporate Governance and Executive Compensation](index=92&type=section&id=Part%20III) [Corporate Governance, Compensation, and Related Matters](index=92&type=section&id=Items%2010-14) This section incorporates information on corporate governance, executive compensation, and related matters by reference from the company's definitive Proxy Statement for the Annual Meeting of Shareholders - Information required for Items 10 through 14 is incorporated by reference from the company's definitive Proxy Statement for the Annual Meeting of Shareholders scheduled for March 13, 2024[310](index=310&type=chunk)[311](index=311&type=chunk)[312](index=312&type=chunk)[313](index=313&type=chunk)[314](index=314&type=chunk) [Part IV - Exhibits and Schedules](index=93&type=section&id=Part%20IV) [Exhibits and Financial Statement Schedules](index=93&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section provides a comprehensive list of exhibits and financial statement schedules filed with the Form 10-K, including consolidated financial statements, audit reports, and various corporate and contractual documents - This section lists the financial statements, notes, and the Report of Independent Registered Public Accounting Firm included in Item 8[316](index=316&type=chunk) - A comprehensive list of exhibits filed with the 10-K is provided, including Restated Articles of Incorporation, various debt indentures, credit agreements, and executive compensation plans[319](index=319&type=chunk)[320](index=320&type=chunk)[322](index=322&type=chunk)

Financial Data and Key Metrics Changes - Total company revenue reached a record $9.4 billion in Q4 2023, representing an 11% increase year-over-year, while full-year revenue reached $36 billion, reflecting a 12% growth year-over-year [8][22] - Earnings per share (EPS) grew by 31% to $1.06 for the quarter and by 20% to $3.54 for the fiscal year [8][24] - Operating margin expanded by 310 basis points in Q4 and 100 basis points for the full year, reaching 18.2% in Q4 and 16.1% for the fiscal year [24][25] Business Line Data and Key Metrics Changes - North America delivered Q4 revenue of $6.9 billion, up 12% from the prior year, driven by an 8% increase in comparable store sales [26] - International segment revenue was $2 billion in Q4, up 11% year-over-year, with a 5% increase in comparable store sales [31][32] - Channel Development segment revenue was $486 million in Q4, essentially flat year-over-year, maintaining a leading market position in ready-to-drink coffee [35] Market Data and Key Metrics Changes - U.S. comparable store sales increased by 8% in Q4, driven by strong ticket performance and customer loyalty [27][29] - In China, revenue grew by 8% in Q4, with a comparable store sales growth of 5%, reflecting strong brand affinity and local innovation [14][33] - The Starbucks Rewards program saw a record number of active members, contributing significantly to sales growth [9][29] Company Strategy and Development Direction - The company is focused on five strategic areas: elevating the brand through stores, strengthening digital capabilities, becoming truly global, unlocking efficiencies, and reinvigorating partner culture [7] - The reinvention plan is seen as a key driver for sustainable growth, with investments in partners, technology, and supply chain [6][12] - The company aims to reach nearly 41,000 stores globally by the end of fiscal year 2024, with a significant portion of growth coming from international markets [39] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's long-term growth potential despite macroeconomic uncertainties, highlighting strong customer loyalty and brand strength [20][54] - The company anticipates global comparable sales growth of 5% to 7% for fiscal year 2024, with continued margin expansion and double-digit EPS growth [36][44] - Management emphasized the importance of innovation and digital engagement in driving future growth [38][41] Other Important Information - The company invested over 20% of its profits back into partners and stores through wages, training, and equipment [12] - The opening of the China Coffee Innovation Park signifies the company's commitment to sustainable growth in the Chinese market [17] Q&A Session All Questions and Answers Question: Competitive environment in China and its impact on margins - Management acknowledged the competitive intensity in China but expressed confidence in the brand's strength and the cash returns from new store openings [48][50] Question: Changes in consumer behavior in the U.S. - Management noted that customer demand remains strong, with no significant changes in sentiment, reflecting the brand's loyalty and diversified channels [54][55] Question: Contributors to North America's operating margin expansion - Management highlighted operational efficiencies from the reinvention plan as the primary driver of margin expansion, alongside sales leverage and strategic pricing [59][61] Question: Sources of growth in U.S. traffic - Management indicated that growth is coming from both rewards and non-rewards customers, with an increase in overall transactions and spending [66][68] Question: Improvements in store throughput and operational efficiency - Management reported significant progress in operational practices and equipment upgrades, leading to improved throughput and customer service [72][75]

Starbucks Corporation (NASDAQ:SBUX) Q3 2023 Earnings Conference Call August 1, 2023 5:00 PM ET Company Participants Tiffany Willis - VP, IR Laxman Narasimhan - CEO Rachel Ruggeri - EVP & CFO Belinda Wong - Chairwoman & CEO, Starbucks China Conference Call Participants Jeffrey Bernstein - Barclays Sharon Zackfia - William Blair Andrew Charles - TD Cowen Brian Harbour - Morgan Stanley David Palmer - Evercore ISI John Ivankoe - JPMorgan Peter Saleh - BTIG Sara Senatore - Bank of America Joshua Long - Stephens ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended July 2, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number: 000-20322 Starbucks Corporation (Exact Name of Registrant as Specified in its Charter) Washington 91-1325671 (State or Other Jurisdiction of (IR ...

Starbucks Corporation (NASDAQ:SBUX) 7th Annual Future of the Consumer Conference Call June 6, 2023 10:00 AM ET Company Participants Rachel Ruggeri - Chief Financial Officer Tiffany Willis - Vice President and Head, Investor Relations Conference Call Participants Andrew Charles - TD Cowen Andrew Charles Great. Well, thank you everyone for joining us today. I am Andrew Charles. I’m TD Cowen’s Restaurant Analyst. I think today’s session really needs no introduction. Starbucks is the largest roaster, retailer o ...

Starbucks Corporation (NASDAQ:SBUX) Q2 2023 Earnings Conference Call May 2, 2023 5:00 PM ET Company Participants Tiffany Willis - Vice President of Investor Relations Laxman Narasimhan - Chief Executive Officer Rachel Ruggeri - Executive Vice President and Chief Financial Officer Frank Britt - Executive Vice President, Chief Reinvention Officer Sara Trilling - Executive Vice President and President of Starbucks North America Belinda Wong - Chairwoman and Chief Executive Officer of Starbucks China Brady Bre ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended April 2, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to . Commission File Number: 000-20322 Starbucks Corporation (Exact Name of Registrant as Specified in its Charter) Washington 91-1325671 (State or Other Jurisdiction of (I ...

Starbucks Corporation (NASDAQ:SBUX) Q1 2023 Earnings Conference Call February 2, 2023 5:00 PM ET Company Participants Tiffany Willis - Vice President of Investor Relations Howard Schultz - Interim Chief Executive Officer Brady Brewer - Executive Vice President and Chief Marketing Officer Rachel Ruggeri - Executive Vice President and Chief Financial Officer Belinda Wong - Chairwoman and Chief Executive Officer, Starbucks China Frank Britt - Executive Vice President, Chief Reinvention Officer Michael Conway - ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements) For the quarter ended January 1, 2023, Starbucks reported total net revenues of **$8.71 billion**, an **8.2% increase** year-over-year, with net earnings attributable to Starbucks at **$855.2 million** and diluted EPS of **$0.74** [Consolidated Statements of Earnings](index=3&type=section&id=Consolidated%20Statements%20of%20Earnings) For the quarter ended January 1, 2023, total net revenues increased by **8.2%** to **$8.71 billion**, operating income rose to **$1.25 billion**, and net earnings attributable to Starbucks grew to **$855.2 million**, with diluted EPS increasing to **$0.74** | Financial Metric | Q1 FY2023 (ended Jan 1, 2023) (in millions) | Q1 FY2022 (ended Jan 2, 2022) (in millions) | Change | | :--- | :--- | :--- | :--- | | **Total Net Revenues** | $8,713.9 | $8,050.4 | +8.2% | | **Operating Income** | $1,253.1 | $1,177.8 | +6.4% | | **Net Earnings Attributable to Starbucks** | $855.2 | $815.9 | +4.8% | | **Diluted Earnings Per Share (EPS)** | $0.74 | $0.69 | +7.2% | [Consolidated Balance Sheets](index=5&type=section&id=Consolidated%20Balance%20Sheets) As of January 1, 2023, total assets were **$28.26 billion**, total liabilities stood at **$36.92 billion**, and total shareholders' deficit was **$8.67 billion** | Balance Sheet Item | Jan 1, 2023 (in millions) | Oct 2, 2022 (in millions) | | :--- | :--- | :--- | | **Total Current Assets** | $6,934.9 | $7,018.7 | | **Total Assets** | $28,256.1 | $27,978.4 | | **Total Current Liabilities** | $9,246.2 | $9,151.8 | | **Long-term Debt** | $13,176.7 | $13,119.9 | | **Total Liabilities** | $36,922.0 | $36,677.1 | | **Total Shareholders' Deficit** | $(8,673.8) | $(8,706.6) | [Consolidated Statements of Cash Flows](index=6&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For Q1 FY2023, net cash provided by operating activities was **$1.59 billion**, while investing activities used **$279.3 million** and financing activities used **$1.01 billion**, resulting in a net increase in cash and cash equivalents of **$368.1 million** | Cash Flow Activity (Q1 FY2023) | Amount (in millions) | | :--- | :--- | | Net cash provided by operating activities | $1,593.2 | | Net cash used in investing activities | $(279.3) | | Net cash used in financing activities | $(1,007.8) | | **Net increase in cash and cash equivalents** | **$368.1** | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail key accounting policies, the impact of COVID-19 on the China market, derivative instruments used for hedging, segment performance, and a subsequent event regarding the sale of Seattle's Best Coffee brand - During Q1 2023, the China market continued to experience significant business interruptions due to escalating COVID outbreaks, which suppressed customer mobility[21](index=21&type=chunk) - The company uses derivative instruments, including swaps and forward contracts, to hedge risks related to interest rates, foreign currency fluctuations, and commodity prices like coffee and dairy[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) - As of January 1, 2023, the company had repurchased **1.9 million shares** of common stock for **$191.4 million** in the quarter. A quarterly cash dividend of **$0.53 per share** was declared[67](index=67&type=chunk) | Segment (Q1 2023) | Total Net Revenues (in millions) | Operating Income/(Loss) (in millions) | | :--- | :--- | :--- | | North America | $6,551.3 | $1,212.4 | | International | $1,680.1 | $240.4 | | Channel Development | $478.2 | $226.3 | | Corporate and Other | $4.3 | $(426.0) | - On January 13, 2023, Starbucks finalized the sale of the Seattle's Best Coffee brand to Nestlé, expecting to recognize a pre-tax gain of approximately **$90 million** in the second quarter of fiscal 2023[77](index=77&type=chunk) [Management's Discussion and Analysis (MD&A)](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management reported an **8% increase** in consolidated net revenues to **$8.7 billion**, driven by **5% global comparable store sales growth**, though operating margin decreased slightly by **20 basis points** to **14.4%** due to labor investments, inflation, and China's sales deleverage [Overall Performance Overview](index=25&type=section&id=Overall%20Performance%20Overview) In Q1 2023, Starbucks achieved **5% global comparable store sales growth**, led by a **10% increase** in the U.S., but offset by a **29% decrease** in China, with consolidated net revenues growing **8%** to **$8.7 billion** and operating margin contracting to **14.4%** - Global comparable store sales grew **5%**, driven by a **10% increase** in the U.S. but partially offset by a **29% decrease** in China due to COVID-19 related business conditions[82](index=82&type=chunk) - Consolidated operating margin decreased by **20 basis points** to **14.4%**, primarily due to investments in labor, inflationary pressures, and sales deleverage in China[82](index=82&type=chunk) - Management anticipates improved financial performance in the second half of fiscal 2023, driven by sales leverage, pricing, productivity gains, and an expected recovery in China[82](index=82&type=chunk) [Segment Performance Analysis](index=29&type=section&id=Segment%20Performance%20Analysis) Segment performance was mixed in Q1 2023, with North America delivering strong results with **14% revenue growth** to **$6.6 billion**, while the International segment's revenue fell **10%** to **$1.7 billion** due to China's decline and unfavorable foreign currency translation | Segment (Q1 2023) | Revenue (in millions) | Revenue Change (YoY) | Operating Income (in millions) | Operating Margin | | :--- | :--- | :--- | :--- | :--- | | **North America** | $6,551.3 | +14% | $1,212.4 | 18.5% | | **International** | $1,680.1 | -10% | $240.4 | 14.3% | | **Channel Development** | $478.2 | +15% | $226.3 | 47.3% | - North America's operating margin decreased **40 basis points** to **18.5%**, primarily due to investments in labor and inflationary pressures, partially offset by strategic pricing[93](index=93&type=chunk) - International's operating margin fell **170 basis points** to **14.3%**, mainly due to sales deleverage from COVID-19 impacts in China[97](index=97&type=chunk) - Channel Development's operating margin increased **340 basis points** to **47.3%**, driven by growth in the North American Coffee Partnership joint venture[100](index=100&type=chunk) [Store Portfolio Changes](index=33&type=section&id=Store%20Portfolio%20Changes) During Q1 FY2023, Starbucks opened **459 net new stores** globally, ending the period with a total of **36,170 stores**, representing a **5% increase** from the prior year, with International leading the expansion | Region | Net New Stores (Q1 2023) | Total Stores (as of Jan 1, 2023) | | :--- | :--- | :--- | | North America | 86 | 17,381 | | International | 373 | 18,789 | | **Total Company** | **459** | **36,170** | [Financial Condition, Liquidity and Capital Resources](index=33&type=section&id=Financial%20Condition%2C%20Liquidity%20and%20Capital%20Resources) As of January 1, 2023, Starbucks held **$3.6 billion** in cash and investments, maintained **$6.0 billion** in credit facilities with no outstanding balances, resumed share repurchases totaling **$191.4 million**, and projects **$2.5 billion** in capital expenditures for fiscal 2023 - Cash and investments totaled **$3.6 billion** as of January 1, 2023[105](index=105&type=chunk) - The company has a **$3.0 billion** unsecured revolving credit facility and a **$3.0 billion** commercial paper program, both with no amounts outstanding at the end of the quarter[106](index=106&type=chunk)[107](index=107&type=chunk) - Share repurchases resumed, with **1.9 million shares** bought back for **$191.4 million**. **50.6 million shares** remain available for repurchase under current authorizations[109](index=109&type=chunk) - Total capital expenditures for fiscal 2023 are expected to be approximately **$2.5 billion**[109](index=109&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company states that there have been no material changes in its market risk exposures for commodity prices, foreign currency exchange, equity security prices, or interest rates since the disclosures made in its Fiscal 2022 Annual Report on Form 10-K - There has been no material change in the commodity price risk, foreign currency exchange risk, equity security price risk, or interest rate risk from the last annual report (10-K)[115](index=115&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Based on management's evaluation, the company concluded that its disclosure controls and procedures were effective as of January 1, 2023, with no material changes in internal control over financial reporting during the quarter - Management, including the interim CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the quarter[117](index=117&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[117](index=117&type=chunk) [PART II. OTHER INFORMATION](index=37&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company provides an update on a long-running lawsuit related to California's Proposition 65 regarding acrylamide in coffee, with Starbucks believing the likelihood of a material loss is less than reasonably possible - The company is involved in a lawsuit concerning Proposition 65 and acrylamide in coffee. After favorable rulings in lower courts, the case is now pending a petition for review by the California Supreme Court[72](index=72&type=chunk) - Management believes that the likelihood of incurring a material loss from this litigation is less than reasonably possible, and no loss contingency has been recorded[72](index=72&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=37&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 FY2023, Starbucks repurchased approximately **1.9 million shares** of its common stock for **$191.4 million**, with **50.6 million shares** remaining available for repurchase under current authorizations | Period (Q1 FY2023) | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | **Total for Quarter** | **1,934,002** | **$98.97** | - As of the end of the quarter, **50,638,176 shares** remained available for repurchase under the company's publicly announced plans[122](index=122&type=chunk)