SEATTLE, March 24, 2010 - At its 19th annual meeting of shareholders today, Starbucks Corporation (NASDAQ:SBUX) credited the success of its transformation agenda and the hard work of its partners (employees) for delivering strong financial results and positioning the company for long-term, profitable growth. The company also outlined plans to leverage its brand and global retail footprint to increase distribution for its growing portfolio of brands, including Seattle's Best Coffee and its recently launched Starbucks VIAÂ® Ready Brew.
"We have fundamentally transformed Starbucks over the last two years," Howard Schultz, Starbucks chairman, president and ceo told the audience of more than 3,000 gathered at Seattle's McCaw Hall. "As we approach our 40th anniversary, we've reframed the way we work and think to create a new kind of company – one that will achieve disciplined, profitable growth by embracing the global marketplace and leveraging our brand strength through new and existing channels. We will invest in our partners to ensure world-class customer service and bring relevant innovation to market, all while demonstrating a social conscience and remaining true to our core values."
Schultz, who has led the transformation effort since returning to the roles of president and ceo in January 2008, credited partners (employees) for the speed and success of the transformation. "We made very tough decisions in the most challenging economic climate any of us had ever seen," Schultz added, "but together we were able to take nearly $600 million of costs out of the company while building new muscle in our operations and delivering double-digit improvements in key customer satisfaction metrics. By staying true to our core purpose and exceeding the expectations of our partners, we've also been able to exceed the expectations of our customers and deliver increased value to our shareholders."
Healthy Financial Results
Despite challenging economic and consumer environments in the U.S. and abroad, Starbucks has seen sales and earnings rise, with key metrics pointing to broad-based improvements in its financial and operating performance and overall fiscal health. The company has reported that comparable store sales trends began to improve in the second half of fiscal 2009, and returned to positive territory in the first quarter of fiscal 2010, an improvement that contributed to the company recently reporting the highest quarterly earnings in its 39-year history.
Starbucks also saw record free cash flow in fiscal 2009, and has projected that free cash flow will further increase to one billion dollars in fiscal 2010. Together, these improvements are enabling the company to continue to make key long-term investments in the U.S. and abroad, increase by 15 million the number of shares authorized for repurchase and, for the first time in its history, initiate a cash dividend to shareholders.
Positioned for Disciplined, Strategic Growth
Starbucks also outlined plans to expand its presence and accelerate profitable growth in both the U.S. retail business and in key international markets. Noting that Starbucks currently has less than four percent of the U.S. coffee market and less than one percent of the global coffee market, Schultz detailed the company's plans to capture significant market share gains.
"The reframed Starbucks business proposition will deliver great coffee to every customer, in every format, and in every place they want it," said Schultz. "We've already proven we can innovate and build multi-billion dollar businesses and brands through our stores – success stories like our Frappuccino and Tazo brands demonstrate this. We will now leverage this experience and expertise to build new businesses and brands beyond our stores."
The company discussed plans to extend Starbucks VIAÂ® Ready Brew to more than 30,000 points of distribution in the coming months. Additionally, Starbucks highlighted a multi-channel strategy to create a billion-dollar business with Seattle's Best Coffee through partnerships with other retailers, franchising and brand extensions through consumer packaged goods channels. Starbucks also discussed plans to expand its retail presence in both the U.S. and internationally, applying lessons learned from its improved U.S. business to each of its other markets in locally relevant ways.
Since 1971, Starbucks Coffee Company has been committed to ethically sourcing and roasting the highest quality arabica coffee in the world. Today, with stores around the globe, the company is the premier roaster and retailer of specialty coffee in the world. Through our unwavering commitment to excellence and our guiding principles, we bring the unique Starbucks Experience to life for every customer through every cup. To share in the experience, please visit us in our stores or online at www.starbucks.com.
This release contains forward-looking statements relating to certain company initiatives and plans, as well as trends in or expectations regarding, growth, expansion, free cash flow and market share. These forward-looking statements are based on currently available operating, financial and competitive information and are subject to a number of significant risks and uncertainties. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive, and/or regulatory factors, and other risks detailed in the company's filings with the Securities and Exchange Commission. The company assumes no obligation to update any of these forward-looking statements.