10q10k10q10k.net
Starbucks

StarbucksSBUXEarnings & Financial Report

Nasdaq · Consumer Discretionary · Restaurants

Starbucks Corporation is an American multinational chain of coffeehouses and roastery reserves headquartered in Seattle, Washington. It was founded in 1971 by Jerry Baldwin, Zev Siegl, and Gordon Bowker at Seattle's Pike Place Market initially as a coffee bean wholesaler.

What changed in Starbucks's 10-K — 2021 vs 2022

Top changes in Starbucks's 2022 10-K

260 paragraphs added · 273 removed · 189 edited across 5 sections

Item 1. Business

Business — how the company describes what it does

48 edited+17 added−32 removed54 unchanged
A large portion of our Channel Development business operates under a licensed model of the Global Coffee Alliance with Nestlé, while our global ready-to-drink businesses operate under collaborative relationships with PepsiCo, Inc., Tingyi-Ashi Beverages Holding Co., Ltd., Arla Foods amba and others. 6 Table of Contents Revenue Components We generate the majority of our revenues through company-operated stores and licensed stores.
A large portion of our Channel Development business operates under a licensed model of the Global Coffee Alliance with Nestlé, while our global ready-to-drink businesses operate under collaborative relationships with PepsiCo, Inc., Tingyi-Ashi Beverages Holding Co., Ltd., Arla Foods amba, Nestlé and others. 5 Table of Contents Revenue Components We generate the majority of our revenues through company-operated stores and licensed stores.
We buy coffee using fixed-price and price-to-be-fixed purchase commitments, depending on market conditions, to secure an adequate supply of quality green coffee. We also utilize forward contracts, futures contracts and collars to hedge "C" price exposure under our price-to-be-fixed green coffee contracts and our long-term forecasted coffee demand where underlying fixed price and price-to-be-fixed contracts are not yet available.
We buy coffee using fixed-price and price-to-be-fixed purchase commitments, depending on market conditions, to secure an adequate supply of quality green coffee. We also utilize forward contracts, futures contracts and collars to hedge “C” price exposure under our price-to-be-fixed green coffee contracts and our long-term forecasted coffee demand where underlying fixed-price and price-to-be-fixed contracts are not yet available.
While we expect these shortages and delays may continue into fiscal 2022, we view them to be temporary and do not believe they will have a material impact to our long-term growth and profitability. Competition Our primary competitors for coffee beverage sales are specialty coffee retailers and shops.
While we expect these shortages and delays may continue into fiscal 2023, we view them to be temporary and do not believe they will have a material impact to our long-term growth and profitability. Competition Our primary competitors for coffee beverage sales are specialty coffee retailers and shops.
In addition to our flagship Starbucks Coffee brand, we sell goods and services under the following brands: Teavana, Seattle’s Best Coffee, Evolution Fresh, Ethos, Starbucks Reserve and Princi. Our primary objective is to maintain Starbucks standing as one of the most recognized and respected brands in the world.
In addition to our flagship Starbucks Coffee ® brand, we sell goods and services under the following brands: Teavana ® , Seattle’s Best Coffee ® , Ethos ® , Starbucks Reserve ® and Princi ® . Our primary objective is to maintain Starbucks standing as one of the most recognized and respected brands in the world.
Store growth in specific existing markets will vary due to many factors, including expected financial returns, the maturity of the market, economic conditions, consumer behavior and local business practices.
Store growth in specific existing markets will vary due to many factors, including expected financial returns, the maturity of the market, economic conditions, consumer behavior and local business environment.
To foster a stronger sense of ownership and 3 Table of Contents align the interests of partners with shareholders, restricted stock units are provided to eligible non-executive partners under our broad-based stock incentive programs. Furthermore, we offer comprehensive, locally relevant and innovative benefits to all eligible partners.
To foster a stronger sense of ownership and align the interests of partners with shareholders, restricted stock units are provided to eligible non-executive partners under our broad-based stock incentive programs. Furthermore, we offer comprehensive, locally relevant and innovative benefits to all eligible partners.
The results are shared with our partners and reviewed by senior leadership, who analyze areas of progress or deterioration and prioritize actions and activities in response to this feedback to drive meaningful improvements in partner engagement.
The results are shared with our partners and reviewed by 2 Table of Contents senior leadership, who analyze areas of progress or deterioration and prioritize actions and activities in response to this feedback to drive meaningful improvements in partner engagement.
We have three reportable operating segments: 1) North America, which is inclusive of the U.S. and Canada; 2) International, which is inclusive of China, Japan, Asia Pacific, Europe, Middle East, Africa, Latin America and Caribbean; and 3) Channel Development. Non-reportable operating segments such as Evolution Fresh and unallocated corporate expenses are reported within Corporate and Other.
We have three reportable operating segments: 1) North America, which is inclusive of the U.S. and Canada; 2) International, which is inclusive of China, Japan, Asia Pacific, Europe, Middle East, Africa, Latin America and Caribbean; and 3) Channel Development. Non-reportable operating segments and unallocated corporate expenses are reported within Corporate and Other.
We also hold patents on certain products, systems and designs which have an average remaining useful life of approximately two years.
We also hold patents on certain products, systems and designs which have an average remaining useful life of approximately seven years.
Trademarks, Copyrights, Patents and Domain Names Starbucks owns and has applied to register numerous trademarks and service marks in the U.S. and in other countries throughout the world. Some of our trademarks, including Starbucks, the Starbucks logo, Starbucks Reserve, Seattle’s Best Coffee, Teavana and Frappuccino are of material importance. The duration of trademark registrations varies from country to country.
Trademarks, Copyrights, Patents and Domain Names Starbucks owns and has applied to register numerous trademarks and service marks in the U.S. and in other countries throughout the world. Some of our trademarks, including Starbucks, the Starbucks logo, Starbucks Reserve and Frappuccino are of material importance. The duration of trademark registrations varies from country to country.
Our goal is for at least 30% of all corporate roles and at least 40% of all retail and manufacturing roles to be held by BIPOC partners by 2025. • Holding ourselves accountable at the highest levels of the organization. ◦ Incorporating metrics focused on building inclusive and diverse teams into our executive compensation programs beginning in fiscal 2021. ◦ Joining the Board Diversity Action Alliance to act alongside other companies similarly committed to increasing racially and ethnically diverse representation on corporate boards of directors. ◦ Publicizing self-identified race/ethnicity of each member of our board of directors.
Our goal is for at least 30% of all corporate roles and at least 40% of all retail and manufacturing roles to be held by BIPOC partners in the U.S. by 2025. • Holding ourselves accountable at the highest levels of the organization. ◦ Incorporating metrics focused on building inclusive and diverse teams into our executive compensation programs. ◦ Joining the Board Diversity Action Alliance to act alongside other companies similarly committed to increasing racially and ethnically diverse representation on corporate boards. ◦ Publicizing self-identified race/ethnicity/gender of each member of our Board.
Refer to Note 1 , Summary of Significant Accounting Policies and Estimates, included in Item 8 of Part II of this 10-K, for further discussion of our stored value cards and loyalty program. Licensed Stores Revenues from our licensed stores accounted for 9% of total net revenues in fiscal 2021.
Refer to Note 1 , Summary of Significant Accounting Policies and Estimates, included in Item 8 of Part II of this 10-K, for further discussion of our stored value cards and loyalty program. Licensed Stores Revenues from our licensed stores accounted for 11% of total net revenues in fiscal 2022.
Working under these principles, our Partner 2 Table of Contents Resources Organization is tasked with managing employment-related matters, including recruiting and hiring, onboarding and training, compensation planning, performance management and professional development. Our Board of Directors and Board committees provide oversight on certain human capital matters, including our Inclusion and Diversity programs and initiatives.
Working under these principles, our Partner Resources Organization is tasked with managing employment-related matters, including recruiting and hiring, onboarding and training, compensation planning, performance management and professional development. Our Board of Directors (the “Board”) and Board committees provide oversight on certain human capital matters, including our Inclusion and Diversity programs and initiatives.
In addition, by leveraging experiences gained through our stores and elsewhere, we continue to drive beverage, equipment, process and technology innovation. We strive to regularly offer consumers new, innovative coffee and other products in a variety of forms, across new categories, diverse channels and alternative store formats.
In addition, by leveraging experiences gained through our stores and elsewhere, we continue to drive beverage, equipment, process and technology innovation, including in our industry-leading digital platform. We strive to regularly offer consumers new, innovative coffee and other products in a variety of forms, across new categories, diverse channels and alternative store formats.
In addition, Starbucks has registered and maintains numerous Internet domain names, including “Starbucks.com,” “Starbucks.net,” “Starbucksreserve.com,” “Seattlesbest.com” and “Teavana.com.” Seasonality and Quarterly Results Our business is subject to moderate seasonal fluctuations, of which our fiscal second quarter typically experiences lower revenues and operating income.
In addition, Starbucks has registered and maintains numerous Internet domain names, including “Starbucks.com,” “Starbucks.net” and “Starbucksreserve.com.” Seasonality and Quarterly Results Our business is subject to moderate seasonal fluctuations, of which our second fiscal quarter typically experiences lower revenues and operating income.
We believe, based on relationships established with these suppliers and manufacturers, that the risk of non-delivery of sufficient amounts of these items generally is remote. During fiscal 2021, we began to experience certain supply shortages and transportation delays largely attributable to impacts of the COVID-19 pandemic as well as changes in customer demand and behaviors.
We believe, based on relationships established with these suppliers and manufacturers, that the risk of non-delivery of sufficient amounts of these items generally is remote. During fiscal 2021 and continuing into fiscal 2022, we experienced certain supply shortages and transportation delays largely attributable to impacts of the COVID-19 pandemic as well as changes in customer demand and behaviors.
We also purchase a broad range of paper and plastic products, such as cups and cutlery, from several companies to support the needs of our retail stores as well as our manufacturing and distribution operations. Consistent with our planet-positive vision, we are also expanding our use of reusable packaging to reduce landfill waste.
We also purchase a broad range of paper and plastic products, such as cups and cutlery, from several companies to support the needs of our retail stores as well as our manufacturing and distribution operations. We are also expanding our use of reusable packaging to reduce landfill waste.
Retail sales mix by product type for company-operated stores: Fiscal Year Ended Oct 3, 2021 Sep 27, 2020 Sep 29, 2019 Beverages 74 % 75 % 74 % Food 21 % 20 % 20 % Other (1) 5 % 5 % 6 % Total 100 % 100 % 100 % (1) “Other” primarily consists of sales of packaged and single-serve coffees and teas, serveware and ready-to-drink beverages, among other items.
Retail sales mix by product type for company-operated stores: Fiscal Year Ended Oct 2, 2022 Oct 3, 2021 Sep 27, 2020 Beverages 74 % 74 % 75 % Food 22 % 21 % 20 % Other (1) 4 % 5 % 5 % Total 100 % 100 % 100 % (1) “Other” primarily consists of sales of packaged and single-serve coffees and teas, serveware and ready-to-drink beverages, among other items.
Revenues from our reportable operating segments as a percentage of total net revenues for fiscal 2021 were as follows: North America (70%), International (24%) and Channel Development (6%). Our North America and International segments include both company-operated and licensed stores. Our North America segment is our most mature business and has achieved significant scale.
Revenues from our reportable operating segments as a percentage of total net revenues for fiscal 2022 were as follows: North America (72%), International (22%) and Channel Development (6%). Our North America and International segments include both company-operated and licensed stores. Our North America segment is our most mature business and has achieved significant scale.
Item 1. Business General In this Annual Report on Form 10-K (“10-K” or “Report”) for the fiscal year ended October 3, 2021 (“fiscal 2021”), Starbucks Corporation (together with its subsidiaries) is referred to as “Starbucks,” the “Company,” “we,” “us” or “our.” Starbucks is the premier roaster, marketer and retailer of specialty coffee in the world, operating in 84 markets.
Item 1. Business General In this Annual Report on Form 10-K (“10-K” or “Report”) for the fiscal year ended October 2, 2022 (“fiscal 2022”), Starbucks Corporation (together with its subsidiaries) is referred to as “Starbucks,” the “Company,” “we,” “us” or “our.” Starbucks is the premier roaster, marketer and retailer of specialty coffee in the world, operating in 83 markets.
Michael Conway joined Starbucks in March 2013 and was named group president, International and Channel Development in June 2021, where he is responsible for leading Starbucks retail growth and operations in over 80 markets across Asia Pacific, Europe, Middle East and Africa, Latin America and the Caribbean and growth for the Global Channel Development business, which consists of consumer packaged goods, ready-to-drink businesses and strategic partnerships, including those with Nestlé, PepsiCo and other key business partners.
Narasimhan is a trustee of the Brookings Institution and a member of the Council on Foreign Relations. 4 Table of Contents Michael Conway joined Starbucks in March 2013 and was named group president, International and Channel Development in June 2021, where he is responsible for leading Starbucks retail growth and operations in over 80 markets across Asia Pacific, Europe, Middle East and Africa, Latin America and the Caribbean and growth for the Global Channel Development business, which consists of consumer packaged goods, ready-to-drink businesses and strategic partnerships, including those with Nestlé, PepsiCo and other key business partners.
Company-operated Stores Revenue from company-operated stores accounted for 85% of total net revenues during fiscal 2021.
Company-operated Stores Revenue from company-operated stores accounted for 82% of total net revenues during fiscal 2022.
He also served as executive vice president and president, Starbucks Canada, executive vice president and president for Starbucks Licensed Stores business for the United States and Latin America and executive vice president and president of Starbucks Global Channel Development from December 2014 to March 2020. He currently serves on the Board of Directors of McCormick & Company, Incorporated. Rachel A.
He also served as executive vice president and president, Starbucks Canada, executive vice president and president for Starbucks Licensed Stores business for the United States and Latin America and executive vice president and president of Starbucks Global Channel Development from December 2014 to March 2020.
As of October 3, 2021, Starbucks employed approximately 383,000 people worldwide. In the U.S., Starbucks employed approximately 245,000 people, with approximately 235,000 in company-operated stores and the remainder in corporate support, store development, roasting, manufacturing, warehousing and distribution operations.
As of October 2, 2022, Starbucks employed approximately 402,000 people worldwide. In the U.S., Starbucks employed approximately 258,000 people, with approximately 248,000 in company-operated stores and the remainder in corporate support, store development, roasting, manufacturing, warehousing and distribution operations.
In addition to using their Starbucks Cards, Starbucks ® Rewards members can earn Stars by paying with cash, credit or debit cards, or selected mobile wallets at company-operated stores in the U.S. and Canada.
In addition to using their Starbucks Cards, Starbucks Rewards members can earn Stars by paying with cash, credit or debit cards, or selected mobile wallets at all company-operated stores and a majority of licensed stores in North America.
Outside of the U.S., we have provided other innovative benefits to help address market-specific needs, such as providing interest-free loans to our U.K. partners to help cover rental deposits, mental health services in Canada, and in China, a monthly housing subsidy for full-time Starbucks baristas and shift supervisors, as well as comprehensive health insurance coverage for parents of partners.
These include a free subscription to Headspace, an online application that enables guided mediation, and 20 free mental health therapy or coaching sessions annually with Lyra. 3 Table of Contents Outside of the U.S., we have provided other innovative benefits to help address market-specific needs, such as providing interest-free loans to our U.K. partners to help cover rental deposits, mental health services in Canada, and in China, a monthly housing subsidy for full-time Starbucks baristas and shift supervisors, as well as comprehensive health insurance coverage for parents of partners.
This includes expansion of our global store base, adding stores in both existing, developed markets such as the U.S. and in newer, higher growth markets such as China, as well as optimizing the mix of company-operated and licensed stores around the world.
We believe the continuous investments in our brand and operations will deliver long-term targeted revenue and income growth. This includes expansion of our global store base, adding stores in both existing, developed markets such as the U.S. and in higher growth markets such as China, as well as optimizing the mix of company-operated and licensed stores around the world.
As a result of moderate seasonal fluctuations, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year. 10 Table of Contents Government Regulation As a company with global operations, we are subject to the laws and regulations of the United States and the multiple foreign jurisdictions in which we operate as well as the rules, reporting obligations and interpretations of all such requirements and obligations by various governing bodies, which may differ among jurisdictions.
Government Regulation As a company with global operations, we are subject to the laws and regulations of the United States and the multiple foreign jurisdictions in which we operate as well as the rules, reporting obligations and interpretations of all such requirements and obligations by various governing bodies, which may differ among jurisdictions.
We are continuing the expansion of our stores, particularly drive-thru formats that provide a higher degree of access and convenience, and alternative store formats, which are designed to provide a more streamlined customer experience in dense metropolitan areas. Prior to the global COVID-19 pandemic, approximately 80% of Starbucks transactions in U.S. company-operated stores were “on-the-go” occasions.
We are continuing the expansion of our stores, particularly drive-thru formats that provide a higher degree of access and convenience, and alternative store formats, which are designed to provide a more streamlined customer experience in dense metropolitan areas.
Total purchase commitments, together with existing inventory, are expected to provide an adequate supply of green coffee through fiscal 2022. 9 Table of Contents We depend upon our relationships with coffee producers, outside trading companies and exporters for our supply of green coffee.
Total purchase commitments, together with existing inventory, are expected to provide an adequate supply of green coffee through fiscal 2023. We depend upon our relationships with coffee producers, outside trading companies and exporters for our supply of green coffee. We believe, based on relationships established with our suppliers, the risk of non-delivery on such purchase commitments is remote.
The information on our website (or any webpages referenced in this Annual Report on Form 10-K) is not part of this or any other report Starbucks files with, or furnishes to, the SEC.
Our corporate governance policies, code of ethics and Board committee charters and policies are also posted on the Investor Relations section of Starbucks website. The information on our website (or any webpages referenced in this Annual Report on Form 10-K) is not part of this or any other report Starbucks files with, or furnishes to, the SEC.
We believe our efforts in managing our workforce have been effective, evidenced by a strong Starbucks culture and a good relationship between the company and our partners. 4 Table of Contents Information about our Executive Officers Name Age Position Kevin R.
We believe our efforts in managing our workforce have been effective, evidenced by a strong Starbucks culture and a good relationship between the company and our partners.
In China, the introduction of Starbucks Now TM stores is intended to enable a seamless integration of physical and digital customer touchpoints. Orders may be placed in advance through the Starbucks Mobile App or Starbucks Delivers TM and can be conveniently picked up by customers and delivery providers in these express retail format locations.
Orders may be placed in advance through the Starbucks Mobile App or Starbucks Delivers TM and can be conveniently picked up by customers and delivery providers in these express retail format locations.
These strategies align closely with rapidly evolving customer preferences, including higher levels of mobile ordering, more contactless pick-up experiences and reduced in-store congestion, all of which naturally allow for greater physical distancing. We believe our continued efforts to transform our store portfolio and elevate technology will enhance the customer experience and position Starbucks for long-term growth.
These strategies align closely with rapidly evolving customer preferences, including higher levels of mobile ordering, more contactless pick-up experiences and reduced in-store congestion, all of which naturally allow for greater physical distancing.
We believe, based on relationships established with our suppliers, the risk of non-delivery on such purchase commitments is remote. To help ensure the future supply of high-quality green coffee and to reinforce our leadership role in the coffee industry, Starbucks operates ten farmer support centers, including our China Farmer Support Center located in the Yunnan Province of this high-growth market.
To help ensure the future supply of high-quality green coffee and to reinforce our leadership role in the coffee industry, Starbucks operates ten farmer support centers, including our China Farmer Support Center located in the Yunnan Province of 8 Table of Contents this high-growth market.
Company-operated and Licensed Store Summary as of October 3, 2021 North America As a% of Total North America Stores International As a% of Total International Stores Total As a% of Total Stores Company-operated stores 9,861 59 % 7,272 43 % 17,133 51 % Licensed stores 6,965 41 % 9,735 57 % 16,700 49 % Total 16,826 100 % 17,007 100 % 33,833 100 % The mix of company-operated versus licensed stores in a given market generally varies based on several factors, including our ability to access desirable local retail space, the complexity, profitability and expected ultimate size of the market for Starbucks and our ability to leverage the support infrastructure within a geographic region.
Company-operated and Licensed Store Summary as of October 2, 2022: North America As a % of Total North America Stores International As a % of Total International Stores Total As a % of Total Stores Company-operated stores 10,216 59 % 8,037 44 % 18,253 51 % Licensed stores 7,079 41 % 10,379 56 % 17,458 49 % Total 17,295 100 % 18,416 100 % 35,711 100 % The mix of company-operated versus licensed stores in a given market generally varies based on several factors, including our ability to access desirable local retail space, the complexity, profitability and expected ultimate size of the market for Starbucks and our ability to leverage the support infrastructure within a geographic region.
Starbucks has made specific racial equity commitments based on our principles of being intentional, transparent and accountable at all levels: • Being intentional in cultivating a culture of inclusion, with a focus on partner retention and development. ◦ Launching a mentorship program connecting black, indigenous and people of color (“BIPOC”) partners to senior leaders, beginning with a cohort of leaders, senior vice president and above, as well as BIPOC directors in corporate and retail roles. ◦ Investing in strategic partnerships with professional organizations that focus on the development of BIPOC talent, providing additional development opportunities for our BIPOC partners. • Being transparent in our approach to Inclusion and Diversity goal setting and progress. ◦ Publicly sharing workforce diversity data. ◦ Setting annual Inclusion and Diversity goals based on retention rates and progress towards achieving BIPOC representation.
Starbucks has made specific racial equity commitments based on our principles of being intentional, transparent and accountable at all levels: • Being intentional in cultivating a culture of inclusion, with a focus on partner retention and development. ◦ Expanding our mentorship program designed to foster and deepen understanding of inclusion, diversity, equity and accessibility and provide partners in corporate and retail roles, including Black, Indigenous and people of color (“BIPOC”) and lesbian, gay, bisexual, transgender, queer and/or questioning (“LGBTQ+”) partners, development opportunities and connections with senior leaders. • Being transparent in our approach to Inclusion and Diversity goal setting and progress. ◦ Publicly sharing workforce diversity data. ◦ Setting annual Inclusion and Diversity goals based on retention rates and progress towards achieving BIPOC representation.
Approximately 138,000 employees were employed outside of the U.S., with approximately 135,000 in company-operated stores and the remainder in regional support operations. The number of Starbucks partners represented by unions is not significant.
Approximately 144,000 employees were employed outside of the U.S., with approximately 140,000 in company-operated stores and the remainder in regional support operations. Some Starbucks partners in company-operated stores are represented by unions, though it is an immaterial portion of our total workforce.
Available Information Starbucks Annual Report on Form 10-K reports, along with all other reports and amendments filed with or furnished to the SEC, are publicly available free of charge on the Investor Relations section of our website at investor.starbucks.com or at www.sec.gov as soon as reasonably practicable after these materials are filed with or furnished to the SEC.
In addition, changes to such laws, regulations, rules, reporting obligations and related compliance obligations could result in significant costs but are not expected to have a material effect on our capital expenditures, results of operations and competitive position as compared to prior periods. 9 Table of Contents Available Information Starbucks Annual Report on Form 10-K reports, along with all other reports and amendments filed with or furnished to the Securities and Exchange Commission (the “SEC”), are publicly available free of charge on the Investor Relations section of our website at investor.starbucks.com as soon as reasonably practicable after these materials are filed with or furnished to the SEC.
From July 2018 to January 2021, she served as senior vice president, Reputation Marketing for Public Affairs, and she previously served as vice president, Entertainment & Executive Communications from September 2013 to July 2018. Segment Financial Information Segment information is prepared on the same basis that our management reviews financial information for operational decision-making purposes.
She also served as vice president of Finance from December 2010 to September 2016 supporting Corporate Financial Planning & Analysis and the U.S. Retail business. Segment Financial Information Segment information is prepared on the same basis that our management reviews financial information for operational decision-making purposes.
We believe it is our responsibility to advance racial and social equity, and we are committed to furthering that work with intention, transparency and accountability. In 2021, we published our third Civil Rights Assessment that evaluated our ongoing efforts related to diversity, equity and inclusion and how they support our mission and values.
We believe it is our responsibility to advance racial and social equity, and we are committed to furthering that work with intention, transparency and accountability. We continue to welcome our partners, customers, civil rights and community leaders, along with our chief inclusion and diversity officer, to advise us along this journey.
Company-operated store data for the fiscal year-ended October 3, 2021: Stores Open as of Stores Open as of Sep 27, 2020 Opened Closed Transfers Net Oct 3, 2021 North America: U.S. 8,941 449 (424) (19) 6 8,947 Canada 1,159 30 (277) (4) (251) 908 Siren Retail 9 1 (4) — (3) 6 Total North America 10,109 480 (705) (23) (248) 9,861 International: China 4,704 697 (43) — 654 5,358 Japan 1,464 95 (13) — 82 1,546 U.K. 288 15 (5) — 10 298 All Other 67 — — (2) (2) 65 Siren Retail 5 — — — — 5 Total International 6,528 807 (61) (2) 744 7,272 Total company-operated 16,637 1,287 (766) (25) 496 17,133 Starbucks ® company-operated stores are typically located in high-traffic, high-visibility locations.
Company-operated store data for the fiscal year-ended October 2, 2022: Stores Open as of Stores Open as of Oct 3, 2021 Opened Closed Transfers Net Oct 2, 2022 North America: U.S. 8,947 437 (116) (3) 318 9,265 Canada 908 44 (6) — 38 946 Siren Retail 6 — (1) — (1) 5 Total North America 9,861 481 (123) (3) 355 10,216 International: China 5,358 724 (63) — 661 6,019 Japan 1,546 102 (18) — 84 1,630 U.K. 298 29 (6) (3) 20 318 All Other 65 2 (2) — — 65 Siren Retail 5 — — — — 5 Total International 7,272 857 (89) (3) 765 8,037 Total company-operated 17,133 1,338 (212) (6) 1,120 18,253 Starbucks company-operated stores are typically located in high-traffic, high-visibility locations.
Gonzalez currently serves on the Board of Directors of Dana Incorporated. 5 Table of Contents Rachel Ruggeri joined Starbucks in 2001 as a member of the accounting team and was named executive vice president and chief financial officer in February 2021.
She serves as an independent board director for Retail Opportunity Investments Corp., a Nasdaq-listed national manager of retail shopping centers, and is a member of the Board of Trustees for Central Washington University. Rachel Ruggeri joined Starbucks in 2001 as a member of the accounting team and was named executive vice president and chief financial officer in February 2021.
We believe the strength of our workforce is one of the significant contributors to our success as a global brand that leads with purpose as part of our people-positive vision. This is largely attributed to our partners who strive every day to create a welcoming and inclusive environment.
And we are hard at work uplifting our communities and building environments in our stores that are welcoming and safe. We believe the strength of our workforce is one of the significant contributors to our success as a global brand that leads with purpose.
New store formats are suitable for customers who prefer to order ahead and pay through the Starbucks ® Mobile App for pick-up. In our major international markets, we continue to invest in technology and establish partnerships with third parties with relevant expertise to increase digital adoption to provide convenience and elevate the customer experience.
In our major international markets, we also continue to invest in technology and establish partnerships with third parties with relevant expertise to increase digital adoption to provide convenience and elevate the customer experience. In China, we leverage platforms such as Starbucks Now TM stores to enable a seamless integration of physical and digital customer touchpoints.
In a limited number of international markets, we also use traditional franchising and include these stores in the results of operations from our other licensed stores. 8 Table of Contents Licensed store data for the fiscal year-ended October 3, 2021: Stores Open as of Stores Open as of Sep 27, 2020 Opened Closed Transfers Net Oct 3, 2021 North America: U.S. 6,387 191 (100) 19 110 6,497 Canada 444 48 (28) 4 24 468 Total North America (1) 6,831 239 (128) 23 134 6,965 International: Korea 1,468 166 (23) — 143 1,611 Mexico 752 7 (13) — (6) 746 U.K. 737 68 (14) — 54 791 Latin America 662 35 (6) — 29 691 Turkey 530 36 (7) — 29 559 Taiwan 501 28 (6) — 22 523 Indonesia 458 29 — — 29 487 Thailand 405 26 (6) — 20 425 Philippines 396 5 — — 5 401 All Other 3,283 313 (97) 2 218 3,501 Total International (1) 9,192 713 (172) 2 543 9,735 Total licensed 16,023 952 (300) 25 677 16,700 (1) North America and International licensed stores as of September 27, 2020, have been recast as a result of our fiscal 2021 operating segment reporting structure realignment.
In a limited number of international markets, we also use traditional franchising and include these stores in the results of operations from our other licensed stores. 7 Table of Contents Licensed store data for the fiscal year-ended October 2, 2022: Stores Open as of Stores Open as of Oct 3, 2021 Opened Closed Transfers Net Oct 2, 2022 North America: U.S. 6,497 217 (109) 3 111 6,608 Canada 468 27 (24) — 3 471 Total North America 6,965 244 (133) 3 114 7,079 International: Korea 1,611 168 (29) — 139 1,750 Latin America 1,437 115 (3) — 112 1,549 U.K. 791 74 (30) 3 47 838 Turkey 559 50 (5) — 45 604 Taiwan 523 30 (9) — 21 544 Indonesia 487 48 (12) — 36 523 Thailand 425 27 (6) — 21 446 Philippines 401 19 (2) — 17 418 All Other 3,501 394 (188) — 206 3,707 Total International 9,735 925 (284) 3 644 10,379 Total licensed 16,700 1,169 (417) 6 758 17,458 Other Revenues Other revenues primarily are recorded in our Channel Development segment and include sales of packaged coffee, tea and ready-to-drink beverages to customers outside of our company-operated and licensed stores, as well as royalties received from Nestlé under the Global Coffee Alliance and other collaborative partnerships.
We also use our website as a tool to disclose important information about the company and comply with our disclosure obligations under Regulation Fair Disclosure. Our corporate governance policies, code of ethics and Board committee charters and policies are also posted on the Investor Relations section of Starbucks website.
In addition, the SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at www.sec.gov. We also use our website as a tool to disclose important information about the company and comply with our disclosure obligations under Regulation Fair Disclosure.
Mr. Johnson served as president and chief operating officer from March 2015 to April 2017. Mr. Johnson served as Chief Executive Officer of Juniper Networks, Inc., a leading provider of high-performance networking products and services, from September 2008 to December 2013. He also served on the Board of Directors of Juniper Networks from September 2008 to February 2014.
He also previously served as chief executive officer from January 2008 to April 2017 and from November 1985 to June 2000, and as president from January 2008 until March 2015 and from November 1985 to June 1994. From June 2000 to February 2005, Mr. Schultz also held the title of chief global strategist. Mr.
Removed
We believe our work to create a company that is profit-, people- and planet-positive, along with our ability to successfully execute strategies that support this work, contribute to our primary objective. Profit-Positive Our profit-positive efforts are aligned with our global long-term “Growth at Scale” agenda to deliver consistent revenue and income growth, through focus and discipline.
Added
Starbucks has always been a different kind of company – one deep with purpose, where we work together to create a positive impact in the world.
Removed
We believe incremental investments in our brand, principally to support our people- and planet-positive work, will deliver long-term targeted revenue and income growth.
Added
With coffee at our core, we pursue ambitious goals for our partners (employees), our communities and our planet because we believe it is our role and responsibility to create a thriving business powered by thriving people for a thriving planet and communities.
Removed
We are committed to further investments in our partners (employees) and our industry-leading digital platform as well as environmental, social and governance issues underscoring our mission and values. Our disciplined capital allocation methodology, which prioritizes high-return investments as well as share repurchases and competitive dividends, rounds out our “Growth at Scale” agenda and our profit-positive vision.
Added
Starbucks work to uplift one another extends well beyond our partners to the communities where we do business around the world.
Removed
People-Positive Our people-positive vision is to cultivate an inclusive environment where everyone belongs. This includes empowering our partners with opportunities to pursue their aspirations while living our mission and values, acting with empathy and compassion and sharing in our success. This enables our partners to deliver an elevated Starbucks Experience to our customers every day.
Added
We are committed to responsible and ethical sourcing led by Coffee and Farmer Equity (C.A.F.E.) Practices, the company’s third-party verification program and the cornerstone of our approach to ethical sourcing coffee, as well as a more sustainable, resilient future for our planet and for our communities.
Removed
We also strive to develop long-lasting trust and make tangible differences in the communities where we serve by investing in humanity and the well-being of everyone we connect with, advancing initiatives that support diversity, equity and inclusion through education, pay equity, hiring commitments and meaningful community involvement, including donations.
Added
Human Capital Management We invest in the well-being – the mental, physical and financial health – of every partner through our practices, policies and benefits. This work is grounded in the belief that we are at our best when we create inclusive and welcoming environments, where we uplift one another with dignity, respect and kindness.
Removed
Planet-Positive Our planet-positive vision is to give back more than we take from the planet. This includes reducing our environmental impacts, such as expanding reusable packaging, conserving water, shifting to renewable energy and eliminating landfill waste, and committing to the sustainability of high-quality coffee and other raw materials.
Added
Information about our Executive Officers Name Age Position Howard Schultz 69 interim chief executive officer Laxman Narasimhan 55 chief executive officer-elect Michael Conway 56 group president, International and Channel Development Zabrina Jenkins 52 acting executive vice president and general counsel Rachel Ruggeri 53 executive vice president, chief financial officer Howard Schultz is the founder of Starbucks Corporation and has served as interim chief executive officer and a member of the Starbucks Board since April 2022.
Removed
Sustainability of our raw materials, especially coffee, is paramount to our business operations. We are committed to ethically sourcing coffee, tea and cocoa, donating disease-resistant coffee trees to farmers, providing farmers access to low-interest loans and sharing the expertise of our agronomists with all coffee farmers, among other things.
Added
Mr. Schultz previously served as chairman of the Board of Starbucks since its inception in 1985 and until June 2018, and since 2018 has held the role of founder and chairman emeritus of Starbucks.
Removed
Human Capital Management As a company, Starbucks mission is not only to deliver outstanding financial results by offering exceptional and unique products and services, but to also create a strong connection with the communities where we operate.
Added
Schultz also held leadership and director roles with Il Giornale Coffee Company and Starbucks Coffee Company, which were predecessors to Starbucks. Laxman Narasimhan joined Starbucks as its chief executive officer-elect on October 1, 2022. Prior to joining Starbucks, Mr.
Removed
The report addressed our progress over time and provides recommendations for how we can better advance diversity, equity and inclusion on behalf of our partners, customers and communities. We continue to welcome our partners, customers, civil rights and community leaders, along with our chief inclusion and diversity officer, to advise us along this journey.
Added
Narasimhan served as Chief Executive Officer of Reckitt Benckiser Group Plc (“Reckitt”), a FTSE 12 listed British multinational consumer health, hygiene and nutrition company, since September 2019. Prior to joining Reckitt, Mr. Narasimhan held various roles at PepsiCo from 2012 to 2019.
Removed
These include a free subscription to Headspace, an online application that enables guided mediation, and 20 free mental health therapy or coaching sessions annually with Lyra.
Added
He served as PepsiCo’s Group Chief Commercial Officer until July 2019, and prior to that beginning in 2012 served as Chief Executive Officer - Latin America, Europe and Sub-Saharan Africa, Chief Executive Officer - Latin America and Chief Financial Officer of PepsiCo Americas Foods. Prior to joining PepsiCo, Mr.
Removed
Johnson 61 president and chief executive officer John Culver 61 group president, North America, and chief operating officer Michael Conway 55 group president, International and Channel Development Rachel A.
Added
Narasimhan spent 19 years at McKinsey & Company, where he focused on its consumer, retail and technology practices in the U.S., Asia and India. Mr. Narasimhan currently serves on the Board of Directors of Verizon Communications, Inc., a NYSE-listed telecommunications company. Mr.
Removed
Gonzalez 52 executive vice president and general counsel Rachel Ruggeri 52 executive vice president, chief financial officer Angela Lis 54 executive vice president, chief partner officer Gina Woods 48 executive vice president, Public Affairs and Social Impact Kevin R. Johnson has served as president and chief executive officer since April 2017 and has been a Starbucks director since March 2009.
Added
He currently serves on the Board of Directors of McCormick & Company, Incorporated, a NYSE-listed spice and extract manufacturing company. Zabrina Jenkins joined the Starbucks legal department in 2005 and was named acting executive vice president and general counsel in April 2022, where she leads legal and regulatory affairs, global security and ethics and compliance for the company.
Removed
Prior to joining Juniper Networks, Mr. Johnson served as President, Platforms and Services Division for Microsoft Corporation, a worldwide provider of software, services and solutions. Mr. Johnson was a member of Microsoft’s Senior Leadership Team and held several senior executive positions over the course of his 16 years at Microsoft. Prior to joining Microsoft in 1992, Mr.
Added
Prior to being named acting executive vice president, she served as senior vice president, deputy general counsel from February 2020 to April 2022. She previously held roles as senior vice president, deputy general counsel, interim chief ethics and compliance officer, lead legal advisor for Teavana and was a member of the Starbucks 2018 Philadelphia incident crisis management response team.
Removed
Johnson worked in International Business Machine Corp.’s systems integration and consulting business. John Culver joined Starbucks in August 2002 and has served as group president, North America and chief operating officer since July 2021. From July 2018 to July 2021, Mr. Culver served as group president, International, Channel Development and Global Coffee & Tea.
Added
In fiscal 2022, we announced our plan in the U.S. market to increase efficiency while elevating the partner and customer experience (the “Reinvention Plan”).
Removed
From October 2017 to July 2018, Mr. Culver served as group president, International and Channels. From September 2016 to October 2017, he served as group president, Starbucks Global Retail. From May 2013 to September 2016, he served as group president, China, Asia Pacific, Channel Development and Emerging Brands. Mr.
Added
We believe the investments in partner wages and trainings will increase retention and 6 Table of Contents productivity while the acceleration of purpose-built store concepts and innovations in technologies will provide additional convenience and connection with our customers.
Removed
Culver served as president, Starbucks Coffee China and Asia Pacific from October 2011 to May 2013. From December 2009 to October 2011, he served as president, Starbucks Coffee International. Mr.
Added
We announced plans to invest in a digital third place that will offer members access to new benefits, a digital community and immersive coffee experiences, giving our customers new ways to experience and connect with Starbucks. We believe our continued efforts to transform our store portfolio and elevate technology will enhance the customer experience and position Starbucks for long-term growth.

… 17 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

55 edited+21 added−4 removed108 unchanged
Our international operations are also subject to additional inherent risks of conducting business abroad, such as: • foreign currency exchange rate fluctuations, or requirements to transact in specific currencies; • changes or uncertainties in economic, legal, regulatory, social and political conditions in our markets, as well as negative effects on U.S. businesses due to increasing anti-American sentiment in certain markets; • interpretation and application of laws and regulations, including tax, tariffs, labor, merchandise, anti-bribery and privacy laws and regulations; • restrictive actions of foreign or U.S. governmental authorities affecting trade and foreign investment, especially during periods of heightened tension between the U.S. and such foreign governmental authorities, including protective measures such as export and customs duties and tariffs, government intervention favoring local competitors and restrictions on the level of foreign ownership; • import or other business licensing requirements; • the enforceability of intellectual property and contract rights; • limitations on the repatriation of funds and foreign currency exchange restrictions due to current or new U.S. and international regulations; • in developing economies, the growth rate in the portion of the population achieving sufficient levels of disposable income may not be as fast as we forecast; • difficulty in staffing, developing and managing foreign operations and supply chain logistics, including ensuring the consistency of product quality and service, due to governmental actions affecting supply chain logistics, distance, language and cultural differences, as well as challenges in recruiting and retaining high quality employees in local markets; • local laws that make it more expensive and complex to negotiate with, retain or terminate employees; • local regulations, health guidelines and safety protocols related to the COVID-19 pandemic affecting our operations; and • delays in store openings for reasons beyond our control, competition with locally relevant competitors or a lack of desirable real estate locations available for lease at reasonable rates, any of which could keep us from meeting annual store opening targets and, in turn, negatively impact net revenues, operating income and earnings per share.
Our international operations are also subject to additional inherent risks of conducting business abroad, such as: • foreign currency exchange rate fluctuations, or requirements to transact in specific currencies; • changes or uncertainties in economic, legal, regulatory, social and political conditions in our markets, as well as negative effects on U.S. businesses due to increasing anti-American sentiment in certain markets; • interpretation and application of laws and regulations, including tax, tariffs, labor, merchandise, anti-bribery and privacy laws and regulations; • restrictive actions of foreign or U.S. governmental authorities affecting trade and foreign investment, especially during periods of heightened tension between the U.S. and such foreign governmental authorities, including protective measures such as export and customs duties and tariffs, government intervention favoring local competitors and restrictions on the level of foreign ownership; • import or other business licensing requirements; • the enforceability of intellectual property and contract rights; • limitations on the repatriation of funds and foreign currency exchange restrictions due to current or new U.S. and international regulations; 20 Table of Contents • in developing economies, the growth rate in the portion of the population achieving sufficient levels of disposable income may not be as fast as we forecast; • difficulty in staffing, developing and managing foreign operations and supply chain logistics, including ensuring the consistency of product quality and service, due to governmental actions affecting supply chain logistics, distance, language and cultural differences, as well as challenges in recruiting and retaining high-quality employees in local markets; • local laws that make it more expensive and complex to negotiate with, retain or terminate employees; • local regulations, health guidelines and safety protocols related to the COVID-19 pandemic affecting our operations; and • delays in store openings for reasons beyond our control, competition with locally relevant competitors or a lack of desirable real estate locations available for lease at reasonable rates, any of which could keep us from meeting annual store opening targets and, in turn, negatively impact net revenues, operating income and earnings per share.
Unauthorized access, theft, use, destruction or other compromises may occur through a variety of methods, including attacks using malicious code, those taking advantage of vulnerabilities in software, hardware or other infrastructure (including systems used by our supply chain), those using techniques aimed at convincing those with access to such data or information to share passwords or otherwise allow access through deceit or otherwise and those taking advance of inadequate account security practices.
Unauthorized access, theft, use, destruction or other compromises may occur through a variety of methods, including attacks using malicious code, those taking advantage of vulnerabilities in software, hardware or other infrastructure (including systems used by our supply chain), those using techniques aimed at convincing those with access to such data or information to share passwords or otherwise allow access through deceit or otherwise and those taking advantage of inadequate account security practices.
Any one or more of the factors listed below or described elsewhere in this risk factors section could have a material adverse impact on our business, financial condition and/or results of operations: • increases in real estate costs in certain domestic and international markets; 11 Table of Contents • inflationary pressures; • disruptions to our supply chain; • changes in governmental rules and approaches to taxation; • fluctuations in foreign currency exchange rates; • adverse outcomes of litigation; • severe weather or other natural or man-made disasters affecting a large market or several closely located markets that may temporarily but significantly affect our retail business in such markets; • changes in climate, including changes to the frequency of severe weather events, that impact the price and availability or cost of goods and services, energy and other materials throughout our supply chain; and • especially in our largest markets, including the U.S. and China, labor discord or disruption, geopolitical events, war, terrorism (including incidents targeting us), political instability, acts of public violence, boycotts, increasing anti-American sentiment in certain markets, hostilities and social unrest and other health pandemics that lead to avoidance of public places or restrictions on public gatherings such as in our stores. • Economic conditions in the U.S. and international markets could adversely affect our business and financial results.
Any one or more of the factors listed below or described elsewhere in this risk factors section could have a material adverse impact on our business, financial condition and/or results of operations: • increases in real estate costs in certain domestic and international markets; • inflationary pressures; • disruptions to our supply chain; • changes in governmental rules and approaches to taxation; • fluctuations in foreign currency exchange rates; • adverse outcomes of litigation; • severe weather or other natural or man-made disasters affecting a large market or several closely located markets that may temporarily but significantly affect our retail business in such markets; • changes in climate, including changes to the frequency of severe weather events, that impact the price and availability or cost of goods and services, energy and other materials throughout our supply chain; and • especially in our largest markets, including the U.S. and China, labor discord or disruption, geopolitical events, war, terrorism (including incidents targeting us), political instability, acts of public violence, boycotts, increasing anti-American sentiment in certain markets, hostilities and social unrest and other health pandemics that lead to avoidance of public places or restrictions on public gatherings such as in our stores. • Economic conditions in the U.S. and international markets could adversely affect our business and financial results.
Additionally, while the number of partners represented by unions is not significant, if a significant portion of our employees were to become unionized, our labor costs could increase and our business could be negatively affected by other requirements and expectations that could increase our costs, change our employee culture, decrease our flexibility and disrupt our business.
While the number of partners represented by unions is not significant, if a significant portion of our employees were to become unionized, our labor costs could increase and our business could be negatively affected by other requirements and expectations that could increase our costs, change our employee culture, decrease our flexibility and disrupt our business.
Our financial results could be adversely affected by a shift in consumer spending away from outside-the-home food and beverages (such as the disruption caused by online commerce that results in reduced foot traffic to “brick & mortar” retail stores); lack of customer acceptance of new products (including due to price increases necessary to cover the costs of new products or higher input costs), brands (such as the global expansion of the Starbucks brand) and platforms (such as features of our mobile technology, changes in our loyalty rewards programs and our delivery services initiatives); or customers reducing their demand for our current offerings as new products are introduced.
Our financial results could be adversely affected by a shift in consumer spending away from outside-the-home food and beverages (such as the disruption caused by online commerce that results in reduced foot traffic to “brick & mortar” retail stores); lack of customer acceptance of new products (including due to price increases necessary to cover the costs of new products or higher input costs), brands (such as the global expansion of the Starbucks brand) and platforms (such as features of our mobile technology, changes in our loyalty rewards programs, the Starbucks Odyssey experience and our delivery services initiatives); or customers reducing their demand for our current offerings as new products are introduced.
In addition, we cannot ensure that licensees will not take actions that hurt the value of our intellectual property. Risks Related to Labor and Supply Chain • Our reliance on key business partners may adversely affect our business and operations.
In addition, we cannot ensure that licensees will not take actions that hurt the value of our intellectual property. Risks Related to Supply Chain • Our reliance on key business partners may adversely affect our business and operations.
The supply and price of coffee we purchase can also be affected by multiple factors in the producing countries, such as weather, climate change, water supply quality and availability throughout the coffee production chain, natural disasters, crop disease and pests, general increase in farm inputs and costs of production, inventory levels, political and economic conditions and the actions of certain organizations and associations that have historically attempted to influence prices of green coffee through agreements establishing export quotas or by restricting coffee supplies.
The supply and price of coffee we purchase can also be affected by multiple factors in the producing countries, such as weather, water supply quality and availability throughout the coffee production chain, natural disasters, crop disease and pests, general increase in farm inputs and costs of production, inventory levels, political and economic conditions and the actions of certain organizations and associations that have historically attempted to influence prices of green coffee through agreements establishing export quotas or by restricting coffee supplies.
We continue to make significant investments in technology, third-party services and personnel to develop and implement systems and processes that are designed to anticipate cyber-attacks and to prevent or minimize breaches of our information technology systems or data loss, but these security measures cannot provide assurance that we will be successful in preventing such breaches or data loss. 16 Table of Contents • We rely heavily on information technology in our operations and growth initiatives, and any material failure, inadequacy, interruption or security failure of that technology could harm our ability to effectively operate and grow our business and could adversely affect our financial results.
We continue to make significant investments in technology, third-party services and personnel to develop and implement systems and processes that are designed to anticipate cyber-attacks and to prevent or minimize breaches of our information technology systems or data loss, but these security measures cannot provide assurance that we will be successful in preventing such breaches or data loss. • We rely heavily on information technology in our operations and growth initiatives, and any material failure, inadequacy, interruption or security failure of that technology could harm our ability to effectively operate and grow our business and could adversely affect our financial results.
Because many of our international operations are in an early phase of development, operating expenses as a percentage of related revenues are often higher compared to more developed operations. • We face risks as a global business that could adversely affect our financial performance. We operate in 84 markets globally.
Because many of our international operations are in an early phase of development, operating expenses as a percentage of related revenues are often higher compared to more developed operations. • We face risks as a global business that could adversely affect our financial performance. We operate in 83 markets globally.
It remains difficult to predict the full impact of the COVID-19 pandemic on the broader economy and how consumer behavior may change, and whether such change is temporary or permanent. Social distancing, telecommunicating and reductions in travel may become the new normal.
It remains difficult to predict the full impact of the COVID-19 pandemic on the broader economy and how consumer behavior may change, and whether such change is temporary or permanent. Social distancing, telecommuting and reductions in travel may become the new normal.
Such incidents include actual or perceived breaches of privacy or violations of domestic or international privacy laws, contaminated food, product recalls, store employees or other food handlers infected with communicable diseases, such as COVID-19, or other potential incidents discussed in this risk factors section.
Such incidents include actual or perceived breaches of privacy or violations of domestic or international privacy laws, contaminated food, product recalls, store employees or other food handlers infected with communicable diseases, such as COVID-19, safety-related incidents or other potential incidents discussed in this risk factors section.
And because the North America segment is relatively mature and produces the large majority of our operating cash flows, such a slowdown or decline could result in reduced cash flows for funding the expansion of our international businesses and other initiatives and for returning cash to shareholders. • We are increasingly dependent on the success of certain international markets in order to achieve our growth targets.
And because the North America segment is relatively mature and produces the 19 Table of Contents large majority of our operating cash flows, such a slowdown or decline could result in reduced cash flows for funding the expansion of our international businesses and other initiatives and for returning cash to shareholders. • We are increasingly dependent on the success of certain international markets in order to achieve our growth targets.
Changes in applicable environmental laws and regulations, including 21 Table of Contents increased or additional regulations and associated costs to limit carbon dioxide and other greenhouse gas emissions, to discourage the use of plastic or to limit or impose additional costs on commercial water use, may result in increased compliance costs, capital expenditures, incremental investments and other financial obligations for us and our business partners, which could affect our profitability.
Changes in applicable environmental laws and regulations, including increased or additional regulations and associated costs to limit carbon dioxide and other greenhouse gas emissions, to discourage the use of plastic or to limit or impose additional costs on commercial water use, may result in increased compliance costs, capital expenditures, incremental investments and other financial obligations for us and our business partners, which could affect our profitability.
Due to the significance of our China market for our profit and growth, we are exposed to risks in China, including the risks mentioned elsewhere and the following: • the effects of current U.S.-China relations, including rounds of tariff increases and retaliations and increasing restrictive regulations, potential boycotts and increasing anti-Americanism; • escalating U.S.-China tension and increasing political sensitivities in China; • the effects of the COVID-19 pandemic and related governmental regulations and restrictions on our operations in China; • entry of new competitors to the specialty coffee market in China; • changes in economic conditions in China and potential negative effects to the growth of its middle class, wages, labor, inflation, discretionary spending and real estate and supply chain costs; 20 Table of Contents • ongoing government regulatory reform, including relating to public health, food safety, tariffs and tax, sustainability and responses to climate change, which result in regulatory uncertainty as well as potential significant increases in compliance costs; and • food-safety related matters, including compliance with food-safety regulations and ability to ensure product quality and safety.
Due to the significance of our China market for our profit and growth, we are exposed to risks in China, including the risks mentioned elsewhere and the following: • the effects of current U.S.-China relations, including rounds of tariff increases and retaliations and increasing restrictive regulations, potential boycotts and increasing anti-Americanism; • escalating U.S.-China tension and increasing political sensitivities in China; • the effects of the COVID-19 pandemic and related governmental regulations and restrictions on our operations in China, including China's “zero COVID” policy; • entry of new competitors to the specialty coffee market in China; • changes in economic conditions in China and potential negative effects to the growth of its middle class, wages, labor, inflation, discretionary spending and real estate and supply chain costs; • ongoing government regulatory reform, including relating to public health, food safety, tariffs and tax, sustainability and responses to climate change, which result in regulatory uncertainty as well as potential significant increases in compliance costs; and • food-safety related matters, including compliance with food-safety regulations and ability to ensure product quality and safety.
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 to provide high quality products and to comply with applicable laws.
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 17 Table of Contents suppliers to provide high-quality products and to comply with applicable laws.
These costs, which could be material, could adversely impact our results of operations in the period in which they are incurred, including by interfering with the pursuit of other important business strategies and initiatives, and may not meaningfully limit the success of future attempts to breach our information technology systems.
These costs, which could be material, could adversely impact our results of operations in the period in which they are incurred, 15 Table of Contents including by interfering with the pursuit of other important business strategies and initiatives, and may not meaningfully limit the success of future attempts to breach our information technology systems.
The growth of our business relies on the ability of our licensee partners to implement our growth platforms and product innovations as well as on the degree to which we are able to enter into, maintain, develop and negotiate appropriate terms and conditions of, and enforce, commercial and other agreements and the performance of our business partners under such agreements.
The growth of our business relies on the ability of our licensee partners to implement our growth platforms and product innovations as well as on the degree to which we are able to enter into, maintain, develop and negotiate appropriate terms and 16 Table of Contents conditions of, and enforce, commercial and other agreements and the performance of our business partners under such agreements.
Our business could be adversely impacted by increases in labor costs, including wages and benefits, which, in a retail business such as ours, are two of our most significant costs, both domestically and internationally, including those increases triggered by regulatory actions regarding wages, scheduling and benefits; increased health care and workers’ compensation insurance costs; increased wages and costs of other benefits necessary to attract and retain high quality employees with the right skill sets and increased wages, benefits and costs related to the COVID-19 pandemic.
Our business could be adversely impacted by increases in labor costs, including wages and benefits, which, in a retail business such as ours, are two of our most significant costs, both domestically and internationally, including those increases triggered by state and federal legislation and regulatory actions regarding wages, scheduling and benefits; increased healthcare and workers’ compensation insurance costs; increased wages and costs of other benefits necessary to attract and retain high-quality employees with the right skill sets and increased wages, benefits and costs related to the COVID-19 pandemic.
In addition, our legal and regulatory obligations in jurisdictions outside the U.S. are subject to unexpected changes, including the potential for regulatory or other governmental entities to enact new or additional laws or regulations, to issue rulings that invalidate prior laws or regulations or to increase penalties significantly.
In addition, our legal and regulatory obligations in jurisdictions outside the U.S. are subject to unexpected changes, including the potential for regulatory or other governmental entities to enact new or additional laws or regulations, to issue rulings that invalidate prior laws or regulations or to increase penalties 14 Table of Contents significantly.
The impact of 12 Table of Contents such incidents may be exacerbated if they receive considerable publicity, including rapidly through social or digital media (including for malicious reasons) or result in litigation.
The impact of such incidents may be exacerbated if they receive considerable publicity, including rapidly through social or digital media (including for malicious reasons) or result in litigation.
Failure to meet market expectations going forward, particularly with respect to our operational and financial results and related guidance, environmental performance and shareholder returns, will likely result in a decline and/or increased volatility in the market price of our stock.
Failure to meet market expectations going forward, particularly with respect to our operational and financial results, and expectations regarding the success of our Reinvention Plan and related guidance, environmental performance and shareholder returns, will likely result in a decline and/or increased volatility in the market price of our stock.
If they are not able to access sufficient funds or financing, or are otherwise unable or unwilling to successfully operate and grow their businesses it could 17 Table of Contents have a material adverse effect on our results in the markets.
If they are not able to access sufficient funds or financing, or are otherwise unable or unwilling to successfully operate and grow their businesses it could have a material adverse effect on our results in the markets.
These strategic initiatives, which include our profit-, people- and planet-positive visions, are designed to create growth, improve our results of operations and drive long-term shareholder value, and include: • being an employer of choice and investing in employees to deliver a superior customer experience; • building our leadership position around coffee; • driving convenience, brand engagement and digital relationships through our mobile, loyalty, delivery and digital capabilities both domestically and internationally; • simplifying store administrative tasks to allow store partners to better engage with customers; • increasing the scale of the Starbucks store footprint with disciplined global expansion and introducing flexible and unique store formats, including the accelerated development of alternative store formats (such as Starbucks ® Pickup stores, Starbucks Now stores and curbside pickup) especially in light of the COVID-19 pandemic; • adjusting rapidly to changing customer preferences and behaviors in light of the COVID-19 pandemic; • moving to a more licensed store model in some markets and a more company-owned model in other markets; • creating new occasions in stores across all dayparts with new product offerings, including our growing lunch food and beverage product lineup; • continuing the global growth of our Channel Development business through our supply, distribution and licensing agreements with Nestlé and other Channel Development business partners; • delivering continued growth in our cold beverage business; • working to address the potential effects of climate change and the sustainability of our business; and • reducing our operating costs, particularly general and administrative expenses.
These strategic initiatives, which includes our Reinvention Plan, are designed to create growth, improve our results of operations and drive long-term shareholder value, and include: • being an employer of choice and investing in employees to deliver a superior customer experience; • building our leadership position around coffee; • driving convenience, brand engagement and digital relationships through our mobile, loyalty, delivery and digital capabilities both domestically and internationally; • simplifying store administrative tasks to allow store partners to better engage with customers; • increasing the scale of the Starbucks store footprint with disciplined global expansion and introducing flexible and unique store formats, including the accelerated development of alternative store formats (such as Starbucks Pickup stores, Starbucks Now stores and curbside pickup) especially in light of the COVID-19 pandemic; • adjusting rapidly to changing customer preferences and behaviors in light of the COVID-19 pandemic, inflation and changing economic conditions; • moving to a more licensed store model in some markets and a more company-operated model in certain markets; 12 Table of Contents • creating new occasions in stores across all dayparts with new product offerings, including our growing lunch food and beverage product lineup; • continuing the global growth of our Channel Development business through our supply, distribution and licensing agreements with Nestlé and other Channel Development business partners; • delivering continued growth in our cold beverage business; • working to address the potential effects of climate change and the sustainability of our business; and • reducing our operating costs, particularly general and administrative expenses.
There is also a risk that if negative economic conditions or uncertainty, as a result of the COVID-19 pandemic or otherwise, persist for a long period of time or worsen, consumers may make long-lasting changes to their discretionary purchasing behavior, including less frequent discretionary purchases on a more permanent basis or there may be a general downturn in the restaurant industry.
There is also a risk that if negative economic conditions or uncertainty, as a result of the COVID-19 pandemic or any other public health emergency, persist for a long period of time or worsen, consumers may make long-lasting changes to their discretionary purchasing behavior, including less frequent discretionary purchases on a more permanent basis or there may be a general downturn in the restaurant industry.
Risks Related to Operating a Global Business • We are highly dependent on the financial performance of our North America operating segment. Our financial performance is highly dependent on our North America operating segment, which comprised approximately 70% of consolidated total net revenues in fiscal 2021.
Risks Related to Operating a Global Business We are highly dependent on the financial performance of our North America operating segment. Our financial performance is highly dependent on our North America operating segment, which comprised approximately 72% of consolidated total net revenues in fiscal 2022.
In addition to other factors listed in this risk factors section, factors that may adversely affect the successful implementation of these initiatives, which could have a material adverse impact on our business and financial results, include the following: • imposition of additional taxes by jurisdictions, such as on certain types of beverages or based on number of employees; • construction cost increases associated with new store openings and remodeling of existing stores; delays in store openings for reasons beyond our control, such as potential shortages of materials and labor and delays in permits, or a lack of desirable real estate locations available for lease at reasonable rates, either of which could keep us from meeting annual store opening targets in the U.S. and internationally; • governmental regulations or other health guidelines concerning operations of stores, including due to the COVID-19 pandemic or other public health emergencies; • not successfully scaling our supply chain infrastructure as our product offerings increase and as we continue to expand, including our emphasis on a broad range of high-quality food offerings; • not successfully adapting to customer or market factors affecting our supply chain as we work to address sustainability and climate change; and • the deterioration in our credit ratings, which could limit the availability of additional financing and increase the cost of obtaining financing to fund our initiatives. 14 Table of Contents Effectively managing growth can be challenging, particularly as we expand in international markets where we must balance the need for flexibility and a degree of autonomy for local management against the need for consistency with our goals, policies and standards.
In addition to other factors listed in this risk factors section, factors that may adversely affect the successful implementation of these initiatives, which could have a material adverse impact on our business and financial results, include the following: • imposition of additional taxes by jurisdictions, such as on certain types of beverages or based on number of employees; • construction cost increases associated with new store openings and remodeling of existing stores; delays in store openings for reasons beyond our control, such as potential shortages of materials and labor and delays in permits, or a lack of desirable real estate locations available for lease at reasonable rates, either of which could keep us from meeting annual store opening targets in the U.S. and internationally; • governmental regulations or other health guidelines concerning operations of stores, including due to the COVID-19 pandemic or other public health emergencies; • not successfully scaling our supply chain infrastructure as our product offerings increase and as we continue to expand, including our emphasis on a broad range of high-quality food offerings; • not successfully adapting to customer or market factors affecting our supply chain as we work to address sustainability and climate change; and • the deterioration in our credit ratings, which could limit the availability of additional financing and increase the cost of obtaining financing to fund our initiatives.
In addition to the COVID-19 pandemic, our operating results have been in the past and will continue to be subject to a number of other 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 macroeconomic and other factors, many of which are largely outside our control.
If the North America operating segment revenue trends slow or decline, or does not successfully recover in the post COVID-19 environment, especially in our U.S. market, our other segments may be unable to make up any significant shortfall and our business and financial results could be adversely affected.
If the North America operating segment revenue trends slow or decline, especially in our U.S. market, our other segments may be unable to make up any significant shortfall and our business and financial results could be adversely affected.
These modifications will require us to incur additional costs and expenses in our effort to comply. Virginia and Colorado recently 15 Table of Contents enacted similar data privacy legislation that will take effect in 2023, and several other states and countries are considering expanding or passing privacy laws in the near term.
Colorado, Connecticut, Utah and Virginia recently enacted similar data privacy legislation that will also take effect in 2023, and several other states and countries are considering expanding or passing privacy laws in the near term. These modifications and new laws will require us to incur additional costs and expenses in our efforts to comply.
Our success depends in part on whether the allocation of our advertising, promotional and marketing resources across different channels, including digital marketing, allows us to reach our customers effectively and efficiently, and in ways that are meaningful to them.
Our marketing, promotional and advertising programs may not be successful in reaching our customers in the way we intend. Our success depends in part on whether the allocation of our advertising, promotional and marketing resources across different channels, including digital marketing, allows us to reach our customers effectively and efficiently, and in ways that are meaningful to them.
For certain products, we may rely on one or very few suppliers. A supplier's failure to meet our standards, provide products in a timely and efficient manner, or comply with applicable laws is beyond our control.
For certain products, we may rely on one or very few suppliers. A 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 could have a material negative impact on our business and profitability.
All of these conditions could fundamentally impact the way we work and the services we provide, and could have continuing adverse effects on our results of operations, cash flows and financial condition.
All of these conditions could fundamentally impact the way we work and the services we provide, and could have continuing adverse effects on our financial performance.
In June 2021, the European Commission finalized recommendations in relation to cross border data transfers and published new versions of the Standard Contractual Clauses. The new requirements will require us to incur costs and expenses in order to comply and may impact the transfer of personal data throughout our organization and to third parties.
In June 2021, the European Commission published new versions of the Standard Contractual Clauses and in March 2022, the U.K. finalized the U.K. International Data Transfer Agreement. The new requirements will require us to incur costs and expenses in order to comply and may impact the transfer of personal data throughout our organization and to third parties.
Speculative trading in coffee commodities can also influence coffee prices. For example, drought conditions in Brazil have and, given continued drought conditions, are predicted to continue to impact coffee prices.
Climate change may further exacerbate many of these factors. Speculative trading in coffee commodities can also influence coffee prices. For example, drought conditions in Brazil have and, given continued drought conditions, are predicted to continue to impact coffee prices.
At the peak of the COVID-19 outbreak, many of our company-operated and licensed stores were closed. For stores that remained open, same-store sales declined due to modified operating hours and reduced customer traffic.
The COVID-19 pandemic has had, and is continuing to have, a significant impact on our business and results of operations. At the peak of the COVID-19 outbreak, many of our company-operated and licensed stores were closed. For stores that remained open, same-store sales declined due to modified operating hours and reduced customer traffic.
However, the product quality and service they deliver may still be diminished by any number of factors beyond our control, including financial constraints caused by the COVID-19 pandemic and other factors.
However, the product quality and service they deliver may still be diminished by any number of factors beyond our control, including financial constraints, adherence to sanitation protocols and guidance (including those resulting from the COVID-19 pandemic), labor shortages and other factors.
Due to the COVID-19 pandemic or other global health events, we may experience a reduction and/or increased volatility in demand for our products, which may be caused by, among other things: store closures or modified operating hours and business model, reduced customer traffic due to illness, quarantine or government or self-imposed restrictions placed on our stores’ operations, impacts caused by precautionary measures such as those related to face coverings and vaccinations, and changes in consumer spending behaviors (e.g. continued practice of social distancing, decrease in consumer confidence in general macroeconomic conditions and a decrease in consumer discretionary spending).
Such reductions and volatility may be caused by, among other things: store closures or modified operating hours and business model, reduced customer traffic due to illness, quarantine or government or self-imposed 10 Table of Contents restrictions placed on our stores’ operations, impacts caused by precautionary measures such as those related to face coverings and vaccinations and changes in consumer spending behaviors, including those caused by social distancing, a decrease in consumer confidence in general macroeconomic conditions and a decrease in consumer discretionary spending.
Prolonged volatility or significant disruption of global financial markets due in part to the COVID-19 pandemic could have a negative impact on our ability to access capital markets and other funding sources, on acceptable terms or at all and impede our ability to comply with debt covenants. • Our financial condition and results of operations are subject to, and may be adversely affected by, a number of other factors, many of which are also largely outside our control.
Prolonged volatility or significant disruption of global financial markets due in part to the COVID-19 pandemic could have a negative impact on our ability to access capital markets and other funding sources, on acceptable terms or at all and impede our ability to comply with debt covenants.
We also source our food, beverage and other products from a wide variety of domestic and international business partners, and in certain cases such products are produced or sourced by our licensees directly.
We do not have direct control over our business partners and may not have visibility into their practices. 11 Table of Contents We also source our food, beverage and other products from a wide variety of domestic and international business partners, and in certain cases such products are produced or sourced by our licensees directly.
While nearly all of our company-operated and licensed stores have reopened, we expect that our operations will continue to be impacted by the continuing effects of COVID-19, including resurgences and variants of the virus.
While nearly all of our company-operated and licensed stores have reopened, we expect that certain parts of our operations will continue to be impacted by the continuing effects of COVID-19, including resurgences and variants of the virus. Our China market experienced unprecedented COVID-19 pandemic-related restrictions in multiple cities that severely impacted customer mobility.
Potential food safety incidents, whether at our stores or involving our business partners, could lead to wide public exposure, which could materially harm our business. 13 Table of Contents Additionally, we are evolving our product lineup to include more local or smaller suppliers for some of our products who may not have as rigorous quality and safety systems and protocols as larger or more national suppliers, especially in light of the heightened safety protocols as a result of the COVID-19 pandemic.
Additionally, we are evolving our product lineup to include more local or smaller suppliers for some of our products who may not have as rigorous quality and safety systems and protocols as larger or more national suppliers, especially in light of the heightened safety protocols as a result of the COVID-19 pandemic.
Furthermore, we have experienced, and could continue to experience, a shortage of labor for store positions, including due to concerns around COVID-19 and other factors, which could decrease the pool of available qualified talent for key functions. Such labor shortages could be further exacerbated by expanded COVID-19 vaccination requirements.
Furthermore, we have experienced, and could continue to experience, a shortage of labor for store positions, including due to market trends and conditions such as continued concerns around COVID-19, the availability of new telecommuting employment options and other factors, which could decrease the pool of available qualified talent for key functions.
Further, our responses to any union organizing efforts could negatively impact how our brand is perceived and have adverse effects on our business, including on our financial results. • The loss of key personnel or difficulties recruiting and retaining qualified personnel could adversely impact our business and financial results.
Additionally, our responses to any union organizing efforts could negatively impact how our brand is perceived and have adverse effects on our business, including on our financial results.
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.
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. Risks Related to COVID-19 • Our financial condition and results of operations have been and are expected to continue to be adversely affected by the COVID-19 pandemic.
Furthermore, if we are not effective in addressing our social and environmental program goals, including our people- and planet-positive work, or achieving relevant sustainability goals, consumer trust in our brand may suffer.
Furthermore, if we are not effective in addressing our social and environmental program goals, executing on our Reinvention Plan, or achieving relevant sustainability goals, consumer trust in our brand may suffer, and this perception could result in negative publicity or litigation.
As a retailer that is dependent upon consumer discretionary spending, our results of operations are sensitive to changes in or uncertainty about macro-economic conditions.
As a retailer that is dependent upon consumer discretionary spending, our results of operations are sensitive to changes in or uncertainty about macroeconomic conditions. A continued economic downturn or recession, or slowing or stalled recovery therefrom, may have a material adverse effect on our business, financial condition or results of operations.
The ongoing relevance of our brand may depend on the success of our people- and planet-positive initiatives, which require company-wide coordination and alignment. We are working to manage risks and costs to us, our licensees and our supply chain of any effects of climate change as well as diminishing energy and water resources.
We are working to manage risks and costs to us, our licensees and our supply chain of any effects of climate change as well as diminishing energy and water resources.
In addition, our wages and benefits programs may be insufficient to attract and retain the best talent.
Such labor shortages could be further exacerbated by expanded COVID-19 vaccination requirements. In addition, our wages and benefits programs may be insufficient to attract and retain the best talent.
Additionally, there is intense competition for qualified technology systems developers necessary to develop and implement new technologies for our growth initiatives, including increasing our digital relationships with customers.
Additionally, there is intense competition for qualified technology systems developers necessary to develop and implement new technologies for our growth initiatives, including increasing our digital relationships with customers. 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.
Furthermore, due to the COVID-19 pandemic, there are stricter health regulations and guidelines and increased public concern over food safety standards and controls.
Furthermore, due to the COVID-19 pandemic, there are stricter health regulations and guidelines and increased public concern over food safety standards and controls. Potential food safety incidents, whether at our stores or involving our business partners, could lead to wide public exposure, which could materially harm our business.
Furthermore, our financial results have been and could continue to be adversely affected by the impact of the COVID-19 pandemic, which has resulted in a disruption of customer routines, changes to employer “work-from-home” policies, reduced business and recreational travel and changes in consumer behavior and the ability or willingness to spend discretionary income on our products. • We may not be successful in our marketing, promotional and advertising plans and pricing strategies Our continued success depends in part on our ability to adjust our marketing, promotional and advertising plans and pricing strategy to respond quickly and effectively to shifting economic and competitive conditions as well as evolving customer preferences.
Furthermore, our financial results have been and could continue to be adversely affected by the impact of the COVID-19 pandemic, which has resulted in a disruption of customer routines, changes to employer “work-from-home” policies, reduced business and recreational travel and changes in consumer behavior and the ability or willingness to spend discretionary income on our products. 13 Table of Contents Risks Related to Brand Relevance and Brand Execution • Our success depends substantially on the value of our brands and failure to preserve their value could have a negative impact on our financial results.
These risks may also include any increased pressure to make commitments, set targets or establish additional goals and take actions to meet them, which could expose us to market, operational and execution costs or risks. • If our business partners and third-party providers do not satisfactorily fulfill their responsibilities and commitments, it could damage our brand and our financial results could suffer.
These risks may also include any increased pressure to make commitments, set targets or establish additional goals and take actions to meet them, which could expose us to market, operational and execution costs or risks. • We may not be successful in our marketing, promotional and advertising plans and pricing strategies.
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. 19 Table of Contents Risks Related to Competition • We face intense competition in each of our channels and markets, which could lead to reduced profitability.
Risks Related to Competition • We face intense competition in each of our channels and markets, which could lead to reduced profitability.
These issues could have a material negative impact on our business and profitability. 18 Table of Contents • Changes in the availability of and the cost of labor could adversely affect our business.
Risks Related to Human Capital • Changes in the availability of and the cost of labor could adversely affect our business.
Risks Related to Macroeconomic Conditions • Our financial condition and results of operations have been and are expected to continue to be adversely affected by the COVID-19 pandemic. The COVID-19 pandemic has had, and is continuing to have, a significant impact on our business and results of operations.
Risks Related to Macroeconomic Conditions • Our financial condition and results of operations are subject to, and may be adversely affected by, a number of macroeconomic and other factors, many of which are also largely outside our control.
Removed
Risks Related to Brand Relevance and Brand Execution • Our success depends substantially on the value of our brands and failure to preserve their value could have a negative impact on our financial results.
Added
Due to the COVID-19 pandemic or other global health events, we may experience a reduction and increased volatility in demand for our products.
Removed
We do not have direct control over our business partners, including in their adherence to additional sanitation protocols and guidelines as a result of the COVID-19 pandemic, and may not have visibility into their practices.
Added
Risks Related to Our Business If our business partners and third-party providers do not satisfactorily fulfill their responsibilities and commitments, it could damage our brand and our financial results could suffer.
Removed
We operate in a complex and costly marketing, promotional and advertising environment. Our marketing, promotional and advertising programs may not be successful in reaching our customers in the way we intend.
Added
Effectively managing growth can be challenging, particularly as we expand in international markets where we must balance the need for flexibility and a degree of autonomy for local management against the need for consistency with our goals, policies and standards.
Removed
Our business partners may be materially adversely impacted by the COVID-19 pandemic and may not have sufficient financial support and capital to remain financially solvent and may not have the ability to meet their development goals and targets.
Added
The ongoing relevance of our brand may depend on the success of our social and environmental program goals as well as the success of the Reinvention Plan, which requires company-wide coordination and alignment.
Added
Our continued success depends in part on our ability to adjust our marketing, promotional and advertising plans and pricing strategy to respond quickly and effectively to shifting economic and competitive conditions as well as evolving customer preferences. We operate in a complex and costly marketing, promotional and advertising environment.
Added
Starting in December 2021, Starbucks partners at company-operated stores in multiple jurisdictions across the U.S. began filing for unionization elections and a number of these stores have now successfully unionized, with potentially more to follow.
Added
These responses could also expose us to legal risk, causing us to incur costs to defend legal and regulatory actions, potential penalties and restrictions or reputational harm. • The loss of key personnel or difficulties recruiting and retaining qualified personnel could adversely impact our business and financial results.
Added
Environmental, Social and Governance Risk Factors • Our business is subject to evolving corporate governance and public disclosure regulations and expectations, including with respect to environmental, social and governance matters, that could expose us to numerous risks.
Added
We are subject to changing rules and regulations promulgated by a number of governmental and self-regulatory organizations, including the SEC, the Nasdaq Stock Market and the Financial Accounting Standards Board.
Added
These rules and regulations continue to evolve in scope and complexity and many new requirements have been created in response to laws enacted by Congress, making compliance more difficult and uncertain. In addition, increasingly regulators, customers, investors, employees and other stakeholders are focusing on environmental, social and governance (“ESG”) matters and related disclosures.
Added
These changing rules, regulations and stakeholder expectations have resulted in, and are likely to continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such regulations and expectations.
Added
For example, developing and acting on initiatives within the scope of ESG, and 18 Table of Contents collecting, measuring and reporting ESG related information and metrics can be costly, difficult and time consuming and is subject to evolving reporting standards, including the SEC’s recently proposed climate-related reporting requirements, and similar proposals by other international regulatory bodies.
Added
We may also communicate certain initiatives and goals, regarding environmental matters, diversity, responsible sourcing and social investments and other ESG related matters, in our SEC filings or in other public disclosures.
Added
These initiatives and goals within the scope of ESG could be difficult and expensive to implement, the technologies needed to implement them may not be cost effective and may not advance at a sufficient pace, and we could be criticized for the accuracy, adequacy or completeness of the disclosure.
Added
Further, statements about our ESG related initiatives and goals, and progress against those goals, may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.
Added
In addition, we could be criticized for the scope or nature of such initiatives or goals, or for any revisions to these goals.
Added
If our ESG-related data, processes and reporting are incomplete or inaccurate, or if we fail to achieve progress with respect to our goals within the scope of ESG on a timely basis, or at all, our reputation, business, financial performance and growth could be adversely affected. • Climate change may have an adverse impact on our business.
Added
While we seek to mitigate our business risks associated with climate change by establishing environmental goals and standards and seeking business partners, including within our supply chain, that are committed to operating in ways that protect the environment or mitigate environmental impacts, we recognize that there are inherent climate-related risks wherever business is conducted.
Added
For example, as we noted above, the supply and price of coffee we purchase can also be affected by multiple factors in the producing countries, such as weather and water supply quality and availability, which factors may be caused by or exacerbated by climate change. We operate in 83 markets globally.
Added
While we believe this geographic diversity is likely to lessen the impact of individual climate change related events on our financial results, our properties and operations may nonetheless be vulnerable to the adverse effects of climate change, which are predicted to increase the frequency and severity of weather events and other natural cycles such as wildfires and droughts.
Added
Such events have the potential to disrupt our operations, cause store closures, disrupt the business of our third-party suppliers and impact our customers, all of which may cause us to suffer losses and additional costs to maintain or resume operations.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed1 unchanged
Properties The material properties used by Starbucks in connection with its roasting, manufacturing, warehousing, distribution and corporate administrative operations, serving all segments, are as follows: Location Approximate Size in Square Feet Purpose York, PA 1,957,000 Roasting, warehousing and distribution Seattle, WA 1,288,000 Corporate administrative Minden, NV (Carson Valley) 1,080,000 Roasting, warehousing and distribution Lebanon, TN 680,000 Warehousing and distribution Kent, WA 510,000 Roasting and distribution Auburn, WA 491,000 Warehousing and distribution Shanghai, China 175,000 Corporate administrative We own most of our roasting facilities and lease the majority of our warehousing and distribution locations.
Properties The material properties used by Starbucks in connection with its roasting, manufacturing, warehousing, distribution and corporate administrative operations, serving all segments, are as follows: Location Approximate Size in Square Feet Purpose York, PA 1,957,000 Roasting, warehousing and distribution Seattle, WA 1,145,000 Corporate administrative Minden, NV (Carson Valley) 1,080,000 Roasting, warehousing and distribution Lebanon, TN 680,000 Warehousing and distribution Kent, WA 510,000 Roasting and distribution Auburn, WA 491,000 Warehousing and distribution Shanghai, China 225,000 Corporate administrative We own most of our roasting facilities and lease the majority of our warehousing and distribution locations.
As of October 3, 2021, Starbucks h ad 17,133 company-operated stores, almost all of which are leased. We also lease space in various locations worldwide for regional, district and other administrative offices, training facilities and storag e. In addition to the locations listed above, we hold inventory at various locations managed by third-party warehouses.
As of October 2, 2022, Starbucks h ad 18,253 company-operated stores, almost all of which are leased. We also lease space in various locations worldwide for regional, district and other administrative offices, training facilities and storag e. In addition to the locations listed above, we hold inventory at various locations managed by third-party warehouses.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+1 added−0 removed0 unchanged
ISSUER PURCHASES OF EQUITY SECURITIES Shares under our ongoing share repurchase program may be repurchased in open market transactions, including pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934 (the “Exchange Act”), as amended, or through privately negotiated transactions.
ISSUER PURCHASES OF EQUITY SECURITIES Shares under our ongoing share repurchase program may be repurchased in open market transactions, including pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or through privately negotiated transactions.
This does not include persons whose stock is in nominee or “street name” accounts through brokers. Future decisions to pay comparable cash dividends continue to be at the discretion of the Board of Directors and will be dependent on our operating performance, financial condition, capital expenditure requirements and other factors that the Board of Directors considers relevant.
This does not include persons whose stock is in nominee or “street name” accounts through brokers. Future decisions to pay comparable cash dividends continue to be at the discretion of the Board and will be dependent on our operating performance, financial condition, capital expenditure requirements and other factors that the Board considers relevant.
Item 5. Market for the Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities SHAREHOLDER INFORMATION MARKET INFORMATION AND DIVIDEND POLICY Starbucks common stock is traded on Nasdaq, under the symbol “SBUX.” As of November 12, 2021, we had approximately 18,000 shareholders of record.
Item 5. Market for the Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities SHAREHOLDER INFORMATION MARKET INFORMATION AND DIVIDEND POLICY Starbucks common stock is traded on Nasdaq, under the symbol “SBUX.” As of November 11, 2022, we had approximately 18,000 shareholders of record.
All indices shown in the graph have been reset to a base of 100 as of October 2, 2016, and assume an investment of $100 on that date and the reinvestment of dividends paid since that date. The stock price performance shown in the graph is not necessarily indicative of future price performance.
All indices shown in the graph have been reset to a base of 100 as of October 1, 2017, and assume an investment of $100 on that date and the reinvestment of dividends paid since that date. The stock price performance shown in the graph is not necessarily indicative of future price performance.
Due to our business recovery and restoration of certain leverage metrics, we have resumed our share repurchase program in the first quarter of fiscal 2022. 23 Table of Contents Performance Comparison Graph The following graph depicts the total return to shareholders from October 2, 2016, through October 3, 2021, relative to the performance of the Standard & Poor’s 500 Index, the NASDAQ Composite Index and the Standard & Poor’s 500 Consumer Discretionary Sector, a peer group that includes Starbucks.
We have resumed our share repurchase program in the first quarter of fiscal 2023. 23 Table of Contents Performance Comparison Graph The following graph depicts the total return to shareholders from October 1, 2017, through October 2, 2022, relative to the performance of the Standard & Poor’s 500 Index, the Nasdaq Composite Index and the Standard & Poor’s 500 Consumer Discretionary Sector, a peer group that includes Starbucks.
The timing, manner, price and amount of repurchases will be determined at our discretion, and the share repurchase program may be suspended, terminated or modified at any time for any reason. During the fiscal year ended October 3, 2021, there was no share repurchase activity. As of October 3, 2021, 48.9 million shares remained available for repurchase under current authorizations.
The timing, manner, price and amount of repurchases will be determined at our discretion, and the share repurchase program may be suspended, terminated or modified at any time for any reason. On April, 4, 2022, we announced a temporary suspension of our share repurchase program to allow us to augment investments in our stores and partners.
Oct 2, 2016 Oct 1, 2017 Sep 30, 2018 Sep 29, 2019 Sep 27, 2020 Oct 3, 2021 Starbucks Corporation $ 100.00 $ 100.98 $ 109.35 $ 173.26 $ 168.68 $ 229.83 S&P 500 100.00 118.61 139.85 145.80 167.89 218.27 NASDAQ Composite 100.00 123.68 154.82 155.63 219.37 285.75 S&P Consumer Discretionary 100.00 114.52 151.78 155.36 200.25 238.59 24 Table of Contents
Oct 1, 2017 Sep 30, 2018 Sep 29, 2019 Sep 27, 2020 Oct 3, 2021 Oct 2, 2022 Starbucks Corporation $ 100.00 $ 108.29 $ 171.58 $ 167.04 $ 227.59 $ 173.61 S&P 500 100.00 117.91 122.93 141.55 184.02 155.55 Nasdaq Composite 100.00 125.17 125.82 177.36 231.03 170.38 S&P Consumer Discretionary 100.00 132.54 135.66 174.86 208.34 164.81 24 Table of Contents
Added
During the fourth fiscal quarter ended October 2, 2022, there was no share repurchase activity. As of October 2, 2022, 52.6 million shares remained available for repurchase under current authorizations.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

77 edited+32 added−48 removed57 unchanged
As discussed in Note 14 , Income Taxes, to the consolidated financial statements included in Item 8 of Part II of this 10-K, we do not expect a significant amount of the Company’s gross unrecognized tax benefits to be recognized by the end of fiscal 2022 for reasons such as a lapse of the statute of limitations or resolution of examinations with tax authorities .
As discussed in Note 14 , Income Taxes, to the consolidated financial statements included in Item 8 of Part II of this 10-K, we do not expect a significant amount of the Company’s gross unrecognized tax benefits to be recognized by the end of fiscal 2023 for reasons such as a lapse of the statute of limitations or resolution of examinations with tax authorities .
(2) Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on Starbucks and that specify all significant terms. Green coffee purchase commitments comprise 96% of total purchase obligations. (3) Other obligations include other long-term liabilities primarily consisting of long-term income taxes payable, asset retirement obligations and equity investment capital commitments.
(2) Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on Starbucks and that specify all significant terms. Green coffee purchase commitments comprise 99% of total purchase obligations. (3) Other obligations include other long-term liabilities primarily consisting of long-term income taxes payable, asset retirement obligations and equity investment capital commitments.
RECENT ACCOUNTING PRONOUNCEMENTS See Note 1 , Summary of Significant Accounting Policies, to the consolidated financial statements included in Item 8 of Part II of this 10-K for a detailed description of recent accounting pronouncements.
RECENT ACCOUNTING PRONOUNCEMENTS See Note 1 , Summary of Significant Accounting Policies and Estimates, to the consolidated financial statements included in Item 8 of Part II of this 10-K for a detailed description of recent accounting pronouncements.
See Note 3 , Derivative Financial Instruments and Note 9 , Debt, to the consolidated financial statements included in Item 8 of Part II of this 10-K for further discussion of our interest rate hedge agreements and details of the components of our long-term debt, respectively, as of October 3, 2021.
See Note 3 , Derivative Financial Instruments and Note 9 , Debt, to the consolidated financial statements included in Item 8 of Part II of this 10-K for further discussion of our interest rate hedge agreements and details of the components of our long-term debt, respectively, as of October 2, 2022.
Commercial Paper 33 Table of Contents Under our commercial paper program, we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time of $3.0 billion, with individual maturities that may vary but not exceed 397 days from the date of issue.
Commercial Paper Under our commercial paper program, we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time of $3.0 billion, with individual maturities that may vary but not exceed 397 days from the date of issue.
The information provided below relates only to the hedging instruments and does not represent the corresponding changes in the underlying hedged items ( in millions ): Increase/(Decrease) to Net Earnings Increase/(Decrease) to OCI 10% Increase in Underlying Rate 10% Decrease in Underlying Rate 10% Increase in Underlying Rate 10% Decrease in Underlying Rate Foreign currency hedges $ 43 $ (43) $ 139 $ (139) Equity Security Price Risk We have minimal exposure to price fluctuations on equity mutual funds and equity exchange-traded funds within our marketable equity securities portfolio.
The information provided below relates only to the hedging instruments and does not represent the corresponding changes in the underlying hedged items ( in millions ): Increase/(Decrease) to Net Earnings Increase/(Decrease) to OCI 10% Increase in Underlying Rate 10% Decrease in Underlying Rate 10% Increase in Underlying Rate 10% Decrease in Underlying Rate Foreign currency hedges $ 46 $ (46) $ 155 $ (155) Equity Security Price Risk We have minimal exposure to price fluctuations on equity mutual funds and equity exchange-traded funds within our marketable equity securities portfolio.
We use a combination of pricing features embedded within supply contracts, such as fixed-price and price-to-be-fixed contracts for coffee purchases, and financial derivatives to manage our commodity price risk exposure. The following table summarizes the potential impact as of October 3, 2021 to Starbucks future net earnings and other comprehensive income (“OCI”) from changes in commodity prices.
We use a combination of pricing features embedded within supply contracts, such as fixed-price and price-to-be-fixed contracts for coffee purchases, and financial derivatives to manage our commodity price risk exposure. The following table summarizes the potential impact as of October 2, 2022 to Starbucks future net earnings and other comprehensive income (“OCI”) from changes in commodity prices.
The information provided below relates only to the hedging instruments and does not represent the corresponding changes in the underlying hedged items (in millions) : Increase/(Decrease) to Net Earnings Increase/(Decrease) to OCI 10% Increase in Underlying Rate 10% Decrease in Underlying Rate 10% Increase in Underlying Rate 10% Decrease in Underlying Rate Commodity hedges $ — $ — $ 53 $ (53) Foreign Currency Exchange Risk The majority of our revenue, expense and capital purchasing activities are transacted in U.S. dollars.
The information provided below relates only to the hedging instruments and does not represent the corresponding changes in the underlying hedged items (in millions) : Increase/(Decrease) to Net Earnings Increase/(Decrease) to OCI 10% Increase in Underlying Rate 10% Decrease in Underlying Rate 10% Increase in Underlying Rate 10% Decrease in Underlying Rate Commodity hedges $ 3.0 $ (3.0) $ 74 $ (74) Foreign Currency Exchange Risk The majority of our revenue, expense and capital purchasing activities are transacted in U.S. dollars.
Estimates of revenue growth and operating expenses are based on internal projections considering the reporting unit’s past performance and forecasted growth, including assumptions regarding business recovery post COVID-19, strategic initiatives, local market economics and the local business environment impacting the reporting unit’s performance.
Estimates of revenue growth and operating expenses are based on internal projections considering the reporting unit’s past performance 38 Table of Contents and forecasted growth, including assumptions regarding business recovery post COVID-19, strategic initiatives, local market economics and the local business environment impacting the reporting unit’s performance.
Refer to Note 1 , Summary of Significant Accounting Policies, and Note 3 , Derivative Financial Instruments, to the consolidated financial statements included in Item 8 of Part II of this 10-K for further discussion of our hedging instruments. The sensitivity analyses disclosed below provide only a limited, point-in-time view of the market risk of the financial instruments discussed.
Refer to Note 1 , Summary of Significant Accounting Policies and Estimates, and Note 3 , Derivative Financial Instruments, to the consolidated financial statements included in Item 8 of Part II of this 10-K for further discussion of our hedging instruments. 35 Table of Contents The sensitivity analyses disclosed below provide only a limited, point-in-time view of the market risk of the financial instruments discussed.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations General Our fiscal year ends on the Sunday closest to September 30. All references to store counts, including data for new store openings, are reported net of related store closures, unless otherwise noted.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations General Our fiscal year ends on the Sunday closest to September 30. All references to store counts, including data for new store openings, are reported net of related store closures, unless otherwise noted. Fiscal year 2022 included 52 weeks.
Our ability to incur new liens and conduct sale and leaseback transactions on certain material properties is subject to compliance with terms of the indentures under which the long-term notes were issued. As of October 3, 2021, we were in compliance with all applicable covenants.
Our ability to incur new liens and conduct sale and leaseback transactions on certain material properties is subject to compliance with terms of the indentures under which the long-term notes were issued. As of October 2, 2022, we were in compliance with all applicable covenants.
Under this policy, market-based risks are quantified and evaluated for potential mitigation strategies, such as entering into hedging transactions. The market price risk management policy governs how hedging instruments may be used to mitigate risk. Risk limits are set annually and prohibit speculative trading activity.
Under this policy, market-based risks are quantified and evaluated for potential mitigation strategies, such as entering into hedging transactions. The market price risk management policy governs how hedging instruments may be used to mitigate risk. Risk limits are set annually and speculative trading activities are prohibited.
We performed a sensitivity analysis based on a 100 basis point change in the underlying interest rate of our available-for-sale securities as of October 3, 2021 and determined that such a change would not have a significant impact on the fair value of these instruments.
We performed a sensitivity analysis based on a 100 basis point change in the underlying interest rate of our available-for-sale securities as of October 2, 2022 and determined that such a change would not have a significant impact on the fair value of these instruments.
Borrowings under the credit facility are subject to terms defined within the facility and will bear interest at a variable rate based on TIBOR plus 0.350%. As of October 3, 2021, we had no borrowings outstanding under these credit facilities.
Borrowings under the credit facility are subject to terms defined within the facility and will bear interest at a variable rate based on TIBOR plus 0.350%. As of October 2, 2022, we had no borrowings outstanding under these credit facilities.
We have three reportable operating segments: 1) North America, which is inclusive of the U.S. and Canada; 2) International, which is inclusive of China, Japan, Asia Pacific, Europe, Middle East, Africa, Latin America and the Caribbean; and 3) Channel Development. Non-reportable operating segments such as Evolution Fresh and unallocated corporate expenses are reported within Corporate and Other.
Overview We have three reportable operating segments: 1) North America, which is inclusive of the U.S. and Canada; 2) International, which is inclusive of China, Japan, Asia Pacific, Europe, Middle East, Africa, Latin America and the Caribbean; and 3) Channel Development. Non-reportable operating segments and unallocated corporate expenses are reported within Corporate and Other.
We believe that net future cash flows generated from operations and existing cash and investments both domestically and internationally combined with our ability to leverage our balance sheet through the issuance of debt will be sufficient to finance capital requirements for our core businesses as well as shareholder distributions for the foreseeable future.
We believe that net future cash flows generated from operations and existing cash and investments both domestically and internationally, combined with our ability to leverage our balance sheet through the issuance of debt, will be sufficient to finance capital requirements for our core businesses as well as shareholder distributions for at least the next 12 months.
The discount rate is selected based 38 Table of Contents on the estimated cost of capital for a market participant to operate the reporting unit in the region.
The discount rate is selected based on the estimated cost of capital for a market participant to operate the reporting unit in the region.
Throughout this MD&A, we commonly discuss the following key operating metrics: • New store openings and store count • Comparable store sales • Operating margin Starbucks results for fiscal 2021 demonstrate the overall strength and resilience of our brand.
Throughout this MD&A, we commonly discuss the following key operating metrics: • New store openings and store count • Comparable store sales • Operating margin Starbucks results for fiscal 2022 demonstrate the resiliency and strength of our brand.
Amounts outstanding under the commercial paper program are required to be backstopped by available commitments under the 2021 credit facility discussed above.
Amounts outstanding under the commercial paper program are required to be backstopped by available commitments under the 33 Table of Contents 2021 credit facility discussed above.
Borrowings under the credit facility are subject to terms defined within the facility and will bear interest at a variable rate based on TIBOR plus an applicable margin of 0.400%. • A ¥10 billion, or $89.9 million, facility is currently set to mature on March 26, 2022.
Borrowings under the credit facility are subject to terms defined within the facility and will bear interest at a variable rate based on TIBOR plus an applicable margin of 0.400%. • A ¥10 billion, or $69.2 million, facility is currently set to mature on March 27, 2023.
These totals included $53.1 million and $151.0 million, respectively, related to impairment and disposition of company-operated store assets and $89.5 million and $87.7 million, respectively, primarily associated with accelerated amortization of ROU lease assets and other lease costs due to store closures prior to the end of contractual lease terms.
These totals included $53.1 million related to disposal and impairment of company-operated store assets and $89.5 million primarily associated with accelerated amortization of ROU lease assets and other lease costs due to store closures prior to the end of contractual lease terms.
The proceeds from borrowings under our commercial paper program may be used for working capital needs, capital expenditures and other corporate purposes, including, but not limited to, business expansion, payment of cash dividends on our common stock and share repurchases. As of October 3, 2021, we had no amounts outstanding under our commercial paper program.
The proceeds from borrowings under our commercial paper program may be used for working capital needs, capital expenditures and other corporate purposes, including, but not limited to, business expansion, payment of cash dividends on our common stock and share repurchases. As of October 2, 2022, we had $175.0 million outstanding under our commercial paper program.
Credit Facilities in Japan Additionally, we hold Japanese yen-denominated credit facilities which are available for working capital needs and capital expenditures within our Japanese market. • A ¥5 billion, or $44.9 million, facility is currently set to mature on December 30, 2021.
Credit Facilities in Japan Additionally, we hold Japanese yen-denominated credit facilities which are available for working capital needs and capital expenditures within our Japanese market. • A ¥5 billion, or $34.6 million, facility is currently set to mature on December 31, 2022.
The following table summarizes the impact of a change in interest rates as of October 3, 2021 on the fair value of Starbucks debt (in millions) : Change in Fair Value Fair Value 100 Basis Point Increase in Underlying Rate 100 Basis Point Decrease in Underlying Rate Long-term debt (1) $ 16,014 $ 1,216 $ (1,216) (1) Amount disclosed is net of $13 million change in the fair value of our designated interest rate swap.
The following table summarizes the impact of a change in interest rates as of October 2, 2022 on the fair value of Starbucks debt (in millions) : Change in Fair Value Fair Value 100 Basis Point Increase in Underlying Rate 100 Basis Point Decrease in Underlying Rate Long-term debt (1) $ 13,052 $ 1,100 $ (1,100) (1) Amount disclosed is net of $28 million change in the fair value of our designated interest rate swap.
Total capital expenditures for fiscal 2022 are expected to be approximately $2 billion.
Total capital expenditures for fiscal 2023 are expected to be approximately $2.5 billion.
Our fiscal 2021 annual goodwill impairment testing, which was completed in the third fiscal quarter, resulted in an estimated fair value of our reporting units where a quantitative assessment was performed, was in excess of carrying value of approximately $74 billion.
Our fiscal 2022 annual goodwill impairment testing, which was completed in the third fiscal quarter, resulted in an estimated fair value of our reporting units where a quantitative assessment was performed, was in excess of carrying value of approximately $95 billion for the business units where a quantitative analysis on impairment was performed.
Borrowing capacity Credit Facilities and Commercial Paper Our total contractual borrowing capacity for general corporate purposes was $3.0 billion as of the end of fiscal 2021.
Borrowing capacity Credit Facilities and Commercial Paper Our total contractual borrowing capacity for general corporate purposes was $2.8 billion as of the end of fiscal 2022.
The “Base Rate” of interest is the highest of (i) the Federal Funds Rate plus 0.025%, (ii) Bank of America’s prime rate, and (iii) the Eurocurrency Rate (as defined in the credit facility) plus 1.025%. The 2021 credit facility is available for general corporate purposes. As of October 3, 2021, we had no borrowings under the 2021 credit facility.
The “Base Rate” of interest is the highest of (i) the Federal Funds Rate plus 0.500%, (ii) Bank of America’s prime rate, and (iii) the Eurocurrency Rate (as defined in the credit facility) plus 1.000%. As of October 2, 2022, we had no borrowings under the 2021 credit facility.
Due to our business recovery and restoration of certain leverage metrics, we have resumed our share repurchase program in the first quarter of fiscal 2022. Other than operating expenses, cash requirements for fiscal 2022 are expected to consist primarily of capital expenditures for investments in our new and existing stores, our supply chain and corporate facilities.
We have resumed our share repurchase program in the first quarter of fiscal 2023. 34 Table of Contents Other than operating expenses, cash requirements for fiscal 2023 are expected to consist primarily of capital expenditures for investments in our new and existing stores, our supply chain and corporate facilities.
Corporate and Other primarily consists of our unallocated corporate expenses and Evolution Fresh. Unallocated corporate expenses include corporate administrative functions that support the operating segments but are not specifically attributable to or managed by any segment and are not included in the reported financial results of the operating segments.
Unallocated corporate expenses include corporate administrative functions that support the operating segments but are not specifically attributable to or managed by any segment and are not included in the reported financial results of the operating segments. In the fourth quarter of fiscal 2022, we sold our Evolution Fresh brand and business.
The change was primarily due to lower net proceeds from borrowing activities and higher debt repayments, partially offset by the temporary suspension of our share repurchase program. 35 Table of Contents COMMODITY PRICES, AVAILABILITY AND GENERAL RISK CONDITIONS Commodity price risk represents Starbucks primary market risk, generated by our purchases of green coffee and dairy products, among other items.
The change was primarily due to resuming our share repurchase program, partially offset by net proceeds from issuance of long-term debt. COMMODITY PRICES, AVAILABILITY AND GENERAL RISK CONDITIONS Commodity price risk represents Starbucks primary market risk, generated by our purchases of green coffee and dairy products, among other items.
On September 30, 2020, and for each of the first three quarters of fiscal 2021, we declared a cash dividend of $0.45 per share. Dividends are generally paid in the quarter following the declaration date. Cash returned to shareholders through dividends in 34 Table of Contents fiscal 2021 and 2020 totaled $2.1 billion and $1.9 billion, respectively.
During the fourth quarter of fiscal 2021, and for each of the first three quarters of fiscal 2022, we declared a cash dividend of $0.49 per share. Dividends are generally paid in the quarter following the declaration date. Cash returned to shareholders through dividends in fiscal 2022 and 2021 totaled $2.3 billion and $2.1 billion, respectively.
While we do not expect to repatriate cash to the U.S. to satisfy domestic liquidity needs, if these amounts were distributed to the U.S., in the form of dividends or otherwise, we may be subject to additional foreign withholding taxes and U.S. state income taxes, which could be material. 39 Table of Contents Our income tax expense, deferred tax assets and liabilities and liabilities for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid.
While we do not expect to 39 Table of Contents repatriate cash to the U.S. to satisfy domestic liquidity needs, if these amounts were distributed to the U.S., in the form of dividends or otherwise, we may be subject to additional foreign withholding taxes and U.S. state income taxes, which could be material.
Our investment portfolio primarily includes highly liquid available-for-sale securities, including corporate debt securities, government treasury securities (domestic and foreign) and commercial paper. As of October 3, 2021, approximately $2.9 billion of cash was held in foreign subsidiaries.
Our investment portfolio primarily includes highly liquid available-for-sale securities, including corporate debt securities, government treasury securities (domestic and foreign) and commercial paper as well as principal-protected structured deposits. As of October 2, 2022, approximately $2.7 billion of cash and short-term investments were held in foreign subsidiaries.
These estimates are subjective and our ability to realize future cash flows and asset fair values is affected by factors such as ongoing maintenance and improvement of the assets, changes in economic conditions and changes in operating performance.
These estimates are subjective and our ability to realize future cash flows and asset fair values is affected by factors such as ongoing maintenance and improvement of the assets, changes in economic conditions and changes in operating performance. In fiscal 2022, we announced our Reinvention Plan in the U.S. market to increase efficiency while elevating the partner and customer experience.
The discussion of our financial condition and results of operations for the year ended September 29, 2019, included in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) can be found in the Annual Report on Form 10-K for the year ended September 27, 2020.
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) can be found in the Annual Report on Form 10-K for the fiscal year ended October 3, 2021.
The volatility in the foreign exchange market may lead to significant fluctuation in foreign currency exchange rates and adversely impact our financial results in the case of weakening foreign currencies relative to the U.S. dollar. 36 Table of Contents The following table summarizes the potential impact as of October 3, 2021 to Starbucks future net earnings and other comprehensive income from changes in the fair value of these derivative financial instruments due to a change in the value of the U.S. dollar as compared to foreign exchange rates.
The following table summarizes the potential impact as of October 2, 2022 to Starbucks future net earnings and other comprehensive income from changes in the fair value of these derivative financial instruments due to a change in the value of the U.S. dollar as compared to foreign exchange rates.
These were partially offset by growth in our ready-to-drink business ($52 million) and the impact of the extra week in fiscal 2021 ($21 million). Operating Margin Channel Development operating income for fiscal 2021 increased 15% to $789 million, compared to $687 million in fiscal 2020.
These increases were partially offset by the impact of the extra week in fiscal 2021 ($21 million). Operating Margin Channel Development operating income for fiscal 2022 increased 4% to $817 million, compared to $789 million in fiscal 2021.
Operating Margin International operating income for fiscal 2021 increased 236% to $1.2 billion, compared to $371 million in fiscal 2020.
Operating Margin International operating income for fiscal 2022 decreased 33% to $833.2 million, compared to $1.2 billion in fiscal 2021.
Other Income and Expenses Fiscal Year Ended Oct 3, 2021 Sep 27, 2020 Oct 3, 2021 Sep 27, 2020 As a % of Total Net Revenues Operating income $ 4,872.1 $ 1,561.7 16.8 % 6.6 % Net gain resulting from divestiture of certain operations 864.5 — 3.0 — Interest income and other, net 90.1 39.7 0.3 0.2 Interest expense (469.8) (437.0) (1.6) (1.9) Earnings before income taxes 5,356.9 1,164.4 18.4 5.0 Income tax expense 1,156.6 239.7 4.0 1.0 Net earnings including noncontrolling interests 4,200.3 924.7 14.5 3.9 Net earnings/(loss) attributable to noncontrolling interests 1.0 (3.6) — — Net earnings attributable to Starbucks $ 4,199.3 $ 928.3 14.5 % 3.9 % Effective tax rate including noncontrolling interests 21.6 % 20.6 % Net gain resulting from divestiture of certain operations increased $865 million due to the sale of our ownership interest in our South Korea joint venture.
The combination of these changes resulted in an overall decrease in operating margin of 250 basis points in fiscal 2022 when compared to fiscal 2021. 28 Table of Contents Other Income and Expenses Fiscal Year Ended Oct 2, 2022 Oct 3, 2021 Oct 2, 2022 Oct 3, 2021 As a % of Total Net Revenues Operating income $ 4,617.8 $ 4,872.1 14.3 % 16.8 % Net gain resulting from divestiture of certain operations — 864.5 — 3.0 Interest income and other, net 97.0 90.1 0.3 0.3 Interest expense (482.9) (469.8) (1.5) (1.6) Earnings before income taxes 4,231.9 5,356.9 13.1 18.4 Income tax expense 948.5 1,156.6 2.9 4.0 Net earnings including noncontrolling interests 3,283.4 4,200.3 10.2 14.5 Net earnings/(loss) attributable to noncontrolling interests 1.8 1.0 0.0 0.0 Net earnings attributable to Starbucks $ 3,281.6 $ 4,199.3 10.2 % 14.5 % Effective tax rate including noncontrolling interests 22.4 % 21.6 % Net gain resulting from divestiture of certain operations decreased $865 million due to lapping the sale of our ownership interest in our South Korea joint venture in the prior year.
Further, we may use our available cash resources to make proportionate capital contributions to our investees. We may also seek strategic acquisitions to leverage existing capabilities and further build our business in support of our “Growth at Scale” agenda. Acquisitions may include increasing our ownership interests in our investees.
Further, we may use our available cash resources to make proportionate capital contributions to our investees. We may also seek strategic acquisitions to leverage existing capabilities and further build our business. Acquisitions may include increasing our ownership interests in our investees. Any decisions to increase such ownership interests will be driven by valuation and fit with our ownership strategy.
Cash used in investing activities totaled $0.3 billion for fiscal 2021, compared to $1.7 billion for fiscal 2020. The change was primarily driven by net proceeds from the divestiture of our ownership interest in our South Korea joint venture and higher maturities and calls of investments.
The change was primarily driven by lapping the net proceeds from the divestiture of our ownership interest in our South Korea joint venture and an increase in spend on capital expenditures. Cash used in financing activities for fiscal 2022 totaled $5.6 billion, compared to cash provided by financing activities of $3.7 billion for fiscal 2021.
For the North America segment, comparable store sales increased 22% for fiscal 2021 compared to a decline of 12% in fiscal 2020. Comparable store sales for our U.S. market increased 21% for fiscal 2021 compared to a decline of 12% in fiscal 2020. The U.S. market also had a 7% increase in two-year comparable store sales (1) .
For both the North America segment and U.S. market, comparable store sales increased 12% for fiscal 2022 compared to an increase of 22% and 21% for the North America segment and the U.S. market, respectively, in fiscal 2021.
We expect total future restructuring costs under this plan, which are attributable to our North America segment, to be immaterial. Asset impairment charges are discussed in Note 1 , Summary of Significant Accounting Policies, to the consolidated financial statements included in Item 8 of Part II of this 10-K.
Asset impairment charges are discussed in Note 1 , Summary of Significant Accounting Policies and Estimates, to the consolidated financial statements included in Item 8 of Part II of this 10-K.
Fiscal year 2021 included 53 weeks, with the 53rd week falling in the fourth fiscal quarter. Fiscal years 2020 and 2019 included 52 weeks. For fiscal 2021, comparable store sales percentages were calculated excluding the extra week in the fourth quarter of fiscal 2021.
Fiscal year 2021 included 53 weeks, with the 53rd week falling in the fourth fiscal quarter, and fiscal year 2020 included 52 weeks; comparable store sale percentages below are calculated excluding the 53rd week. The discussion of our financial condition and results of operations for the fiscal year ended September 27, 2020, included in Item 7.
Interest Rate Risk Long-term Debt We utilize short-term and long-term financing and may use interest rate hedges to manage our overall interest expense related to our existing fixed-rate debt, as well as to hedge the variability in cash flows due to changes in benchmark interest rates related to anticipated debt issuances.
We performed a sensitivity analysis based on a 10% change in the underlying equity prices of our investments as of October 2, 2022 and determined that such a change would not have a significant impact on the fair value of these instruments. 36 Table of Contents Interest Rate Risk Long-term Debt We utilize short-term and long-term financing and may use interest rate hedges to manage our overall interest expense related to our existing fixed-rate debt, as well as to hedge the variability in cash flows due to changes in benchmark interest rates related to anticipated debt issuances.
Operating Expenses Fiscal Year Ended Oct 3, 2021 Sep 27, 2020 Oct 3, 2021 Sep 27, 2020 As a % of Total Net Revenues Product and distribution costs $ 8,738.7 $ 7,694.9 30.1 % 32.7 % Store operating expenses 11,930.9 10,764.0 41.1 45.8 Other operating expenses 359.5 430.3 1.2 1.8 Depreciation and amortization expenses 1,441.7 1,431.3 5.0 6.1 General and administrative expenses 1,932.6 1,679.6 6.7 7.1 Restructuring and impairments 170.4 278.7 0.6 1.2 Total operating expenses 24,573.8 22,278.8 84.6 94.7 Income from equity investees 385.3 322.5 1.3 1.4 Operating income $ 4,872.1 $ 1,561.7 16.8 % 6.6 % Store operating expenses as a % of related revenues 48.5 % 56.2 % Product and distribution costs as a percentage of total net revenues decreased 260 basis points, primarily due to sales leverage driven by lapping the severe impact of the COVID-19 pandemic in the prior year and pricing in North America in the current year.
Partially offsetting these increases was the impact of the extra week in fiscal 2021 ($23 million). 27 Table of Contents Operating Expenses Fiscal Year Ended Oct 2, 2022 Oct 3, 2021 Oct 2, 2022 Oct 3, 2021 As a % of Total Net Revenues Product and distribution costs $ 10,317.4 $ 8,738.7 32.0 % 30.1 % Store operating expenses 13,561.8 11,930.9 42.1 41.1 Other operating expenses 461.5 359.5 1.4 1.2 Depreciation and amortization expenses 1,447.9 1,441.7 4.5 5.0 General and administrative expenses 2,032.0 1,932.6 6.3 6.7 Restructuring and impairments 46.0 170.4 0.1 0.6 Total operating expenses 27,866.6 24,573.8 86.4 84.6 Income from equity investees 234.1 385.3 0.7 1.3 Operating income $ 4,617.8 $ 4,872.1 14.3 % 16.8 % Store operating expenses as a % of related revenues 51.0 % 48.5 % Product and distribution costs as a percentage of total net revenues increased 190 basis points, primarily due to higher supply chain costs due to inflationary pressures.
We currently do not anticipate the need for repatriated funds to the U.S. to satisfy domestic liquidity needs. See Note 14 , Income Taxes, for further discussion. During the fourth quarter of fiscal 2021, we replaced our $2.0 billion 2018 credit facility and our $1.0 billion 364-day credit facility with a new $3.0 billion 2021 credit facility.
We currently do not anticipate the need for repatriated funds to the U.S. to satisfy domestic liquidity needs. See Note 14 , Income Taxes, for further discussion. During each of the first three quarters of fiscal 2021, we declared a cash dividend to shareholders of $0.45 per share.
The following table summarizes current and long-term material cash requirements as of October 3, 2021, which we expect to fund primarily with operating cash flows ( in millions ): Material Cash Requirements Total Less than 1 Year 1 - 3 Years 3 - 5 Years More than 5 Years Operating lease obligations (1) $ 10,129.9 $ 1,504.6 $ 2,751.5 $ 2,169.1 $ 3,704.7 Debt obligations Principal payments 14,713.8 1,000.0 2,513.8 1,750.0 9,450.0 Interest payments 6,639.0 457.1 840.7 730.1 4,611.1 Purchase obligations (2) 1,800.2 1,202.6 533.9 63.7 — Other obligations (3) 368.4 54.6 92.6 136.5 84.7 Total $ 33,651.3 $ 4,218.9 $ 6,732.5 $ 4,849.4 $ 17,850.5 (1) Amounts include direct lease obligations, excluding any taxes, insurance and other related expenses.
The following table summarizes current and long-term material cash requirements as of October 2, 2022, which we expect to fund primarily with operating cash flows ( in millions ): Material Cash Requirements Total Less than 1 Year 1 - 3 Years 3 - 5 Years More than 5 Years Operating lease obligations (1) $ 9,863.7 $ 1,473.5 $ 2,729.2 $ 2,121.4 $ 3,539.6 Debt obligations Principal payments 15,038.4 1,000.0 3,088.4 1,000.0 9,950.0 Interest payments 6,499.8 487.3 865.2 725.3 4,422.0 Purchase obligations (2) 1,354.5 1,030.1 324.4 — — Other obligations (3) 401.6 125.0 118.7 84.6 73.3 Total $ 33,158.0 $ 4,115.9 $ 7,125.9 $ 3,931.3 $ 17,984.9 (1) Amounts include direct lease obligations, excluding any taxes, insurance and other related expenses.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Cash and Investment Overview Our cash and investments were $6.9 billion and $4.8 billion as of October 3, 2021 and September 27, 2020, respectively.
These increases were partially offset by lower performance-based compensation ($62 million). FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Cash and Investment Overview Our cash and investments were $3.5 billion and $6.9 billion as of October 2, 2022 and October 3, 2021, respectively.
The growth in company-operated store revenue was driven by a 20% increase in comparable store sales ($3.8 billion), attributable to a 9% increase in comparable transactions and a 10% increase in average ticket, the incremental revenues from 524 net new Starbucks ® company-operated store openings, or a 3% increase, over the past 12 months ($782 million), the impact of the extra week in fiscal 2021 ($496 million) and the impact of favorable foreign currency translation ($359 million).
The growth in company-operated store revenue was driven by an 8% increase in comparable store sales ($1.8 billion) attributed to a 5% increase in average ticket and 2% increase in comparable transactions. Also contributing were the incremental revenues from 1,120 net new Starbucks company-operated store openings, or a 7% increase, over the past 12 months ($1.0 billion).
Our 2021 credit facility, of which $150 million may be used for issuances of letters of credit, is currently set to mature on September 16, 2026. We have the option, subject to negotiation and agreement with the related banks, to increase the maximum commitment amount by an additional $1.0 billion.
We have the option, subject to negotiation and agreement with the related banks, to increase the maximum commitment amount by an additional $1.0 billion.
Also contributing to the increase was a $0.56 gain net of estimated taxes on the divestiture of our South Korea joint venture and $0.10 related to the extra week in fiscal 2021. • Capital expenditures were $1.5 billion for both fiscal 2021 and fiscal 2020. • We returned $2.1 billion to our shareholders in fiscal 2021 through dividends.
The decrease was primarily driven by lapping the prior year $0.56 gain, net of estimated taxes, on the divestiture of our South Korea joint venture and $0.10 related to the extra week in fiscal 2021.
Cash Flows Cash provided by operating activities was $6.0 billion for fiscal 2021, compared to $1.6 billion for fiscal 2020. The change was primarily due to higher net earnings and lapping the U.S. federal tax payment related to the Nestlé transaction in fiscal 2020.
Cash Flows Cash provided by operating activities was $4.4 billion for fiscal 2022, compared to $6.0 billion for fiscal 2021. The change was primarily due to lower net earnings and an increase in inventory purchases and timing of income tax payments. Cash used in investing activities totaled $2.1 billion for fiscal 2022, compared to $0.3 billion for fiscal 2021.
Acquisitions and Divestitures See Note 2 , Acquisitions, Divestitures and Strategic Alliance, to the consolidated financial statements included in Item 8 of Part II of this 10-K for information regarding acquisitions and divestitures. 27 Table of Contents RESULTS OF OPERATIONS — FISCAL 2021 COMPARED TO FISCAL 2020 Consolidated results of operations (in millions) : Revenues Fiscal Year Ended Oct 3, 2021 Sep 27, 2020 % Change Net revenues: Company-operated stores $ 24,607.0 $ 19,164.6 28.4 % Licensed stores 2,683.6 2,327.1 15.3 Other 1,770.0 2,026.3 (12.6) Total net revenues $ 29,060.6 $ 23,518.0 23.6 % Total net revenues increased $5.5 billion, or 24%, over fiscal 2020, primarily due to higher revenues from company-operated stores ($5.4 billion).
RESULTS OF OPERATIONS — FISCAL 2022 COMPARED TO FISCAL 2021 Consolidated results of operations (in millions) : Revenues Fiscal Year Ended Oct 2, 2022 Oct 3, 2021 % Change Net revenues: Company-operated stores $ 26,576.1 $ 24,607.0 8.0 % Licensed stores 3,655.5 2,683.6 36.2 Other 2,018.7 1,770.0 14.1 Total net revenues $ 32,250.3 $ 29,060.6 11.0 % Total net revenues increased $3.2 billion, or 11%, over fiscal 2021, primarily due to higher revenues from company-operated stores ($2.0 billion).
See Note 14 , Income Taxes, for further discussion. 29 Table of Contents Segment Information Results of operations by segment (in millions) : North America (1) Fiscal Year Ended Oct 3, 2021 Sep 27, 2020 Oct 3, 2021 Sep 27, 2020 As a % of North America Total Net Revenues Net revenues: Company-operated stores $ 18,737.3 $ 14,778.8 91.6 % 90.7 % Licensed stores 1,702.2 1,509.9 8.3 9.3 Other 8.4 7.5 — — Total net revenues 20,447.9 16,296.2 100.0 100.0 Product and distribution costs 5,453.8 4,564.4 26.7 28.0 Store operating expenses 9,359.5 8,488.0 45.8 52.1 Other operating expenses 166.0 154.6 0.8 0.9 Depreciation and amortization expenses 753.9 762.0 3.7 4.7 General and administrative expenses 300.0 268.0 1.5 1.6 Restructuring and impairments 155.4 257.5 0.8 1.6 Total operating expenses 16,188.6 14,494.5 79.2 88.9 Operating income $ 4,259.3 $ 1,801.7 20.8 % 11.1 % (1) North America licensed store revenues, total net revenues, product and distribution costs, other operating expenses, total operating expenses and operating income for the fiscal year ended September 27, 2020, have been restated to conform with current period presentation.
While these tax law changes have no immediate effect and are not expected to have a material impact on our future financial results, we will continue to evaluate its impact as further information becomes available. 29 Table of Contents Segment Information Results of operations by segment (in millions) : North America Fiscal Year Ended Oct 2, 2022 Oct 3, 2021 Oct 2, 2022 Oct 3, 2021 As a % of North America Total Net Revenues Net revenues: Company-operated stores $ 21,214.2 $ 18,737.3 90.8 % 91.6 % Licensed stores 2,150.5 1,702.2 9.2 8.3 Other 6.1 8.4 0.0 0.0 Total net revenues 23,370.8 20,447.9 100.0 100.0 Product and distribution costs 6,677.2 5,453.8 28.6 26.7 Store operating expenses 10,860.0 9,359.5 46.5 45.8 Other operating expenses 202.1 166.0 0.9 0.8 Depreciation and amortization expenses 808.4 753.9 3.5 3.7 General and administrative expenses 303.3 300.0 1.3 1.5 Restructuring and impairments 33.3 155.4 0.1 0.8 Total operating expenses 18,884.3 16,188.6 80.8 79.2 Operating income $ 4,486.5 $ 4,259.3 19.2 % 20.8 % Revenues North America total net revenues for fiscal 2022 increased $2.9 billion, or 14%, primarily due to a 12% increase in comparable store sales ($2.2 billion) driven by a 7% increase in average ticket and a 5% increase in transaction.
These increases were partially offset by enhancements in retail store partner wages and benefits (approximately 150 basis points) and, to a lesser extent, increased supply chain costs due to accelerated inflationary pressures in the latter half of fiscal 2021. 30 Table of Contents International (1) Fiscal Year Ended Oct 3, 2021 Sep 27, 2020 Oct 3, 2021 Sep 27, 2020 As a % of International Total Net Revenues Net revenues: Company-operated stores $ 5,869.7 $ 4,385.8 84.8 % 83.8 % Licensed stores 981.4 817.2 14.2 15.6 Other 70.5 27.6 1.0 0.5 Total net revenues 6,921.6 5,230.6 100.0 100.0 Product and distribution costs 2,187.3 1,729.1 31.6 33.1 Store operating expenses 2,571.4 2,276.0 37.2 43.5 Other operating expenses 147.3 153.6 2.1 2.9 Depreciation and amortization expenses 544.7 518.4 7.9 9.9 General and administrative expenses 360.5 286.4 5.2 5.5 Restructuring and impairments — (1.2) — — Total operating expenses 5,811.2 4,962.3 84.0 94.9 Income from equity investees 135.3 102.3 2.0 2.0 Operating income $ 1,245.7 $ 370.6 18.0 % 7.1 % (1) International licensed store revenues, total net revenues, product and distribution costs, other operating expenses, general and administrative expenses, total operating expenses and operating income for the fiscal year ended September 27, 2020, have been restated to conform with current period presentation.
These were partially offset by strategic pricing (approximately 400 basis points) and sales leverage. 30 Table of Contents International Fiscal Year Ended Oct 2, 2022 Oct 3, 2021 Oct 2, 2022 Oct 3, 2021 As a % of International Total Net Revenues Net revenues: Company-operated stores $ 5,361.9 $ 5,869.7 77.3 % 84.8 % Licensed stores 1,505.0 981.4 21.7 14.2 Other 73.2 70.5 1.1 1.0 Total net revenues 6,940.1 6,921.6 100.0 100.0 Product and distribution costs 2,357.7 2,187.3 34.0 31.6 Store operating expenses 2,701.8 2,571.4 38.9 37.2 Other operating expenses 191.4 147.3 2.8 2.1 Depreciation and amortization expenses 513.0 544.7 7.4 7.9 General and administrative expenses 345.3 360.5 5.0 5.2 Total operating expenses 6,109.2 5,811.2 88.0 84.0 Income from equity investees 2.3 135.3 0.0 2.0 Operating income $ 833.2 $ 1,245.7 12.0 % 18.0 % Revenues International total net revenues for fiscal 2022 increased $19 million, or 0.3%, primarily due to higher product sales to and royalty revenues from our licensees ($435 million), mainly due to continuing business improvement from the COVID-19 pandemic.
Strong performance from our North American Coffee Partnership joint venture (approximately 120 basis points) also contributed. 32 Table of Contents Corporate and Other (1) Fiscal Year Ended Oct 3, 2021 Sep 27, 2020 % Change Net revenues: Other $ 97.5 $ 66.2 47.3 % Total net revenues 97.5 66.2 47.3 Product and distribution costs 86.4 63.3 36.5 Other operating expenses 14.9 13.9 7.2 Depreciation and amortization expenses 141.9 149.7 (5.2) General and administrative expenses 1,261.3 1,114.7 13.2 Restructuring and impairments 15.0 22.4 (33.0) Total operating expenses 1,519.5 1,364.0 11.4 Operating loss $ (1,422.0) $ (1,297.8) 9.6 % (1) Corporate and other general and administrative expenses and operating loss for the fiscal year ended September 27, 2020, have been restated to conform with current period presentation.
Operating margin decreased 520 basis points to 44.3%, primarily due to a decline in our North American Coffee Partnership joint venture income due to inflationary pressures and supply chain constraints (approximately 340 basis points) and business mix shift (approximately 170 basis points). 32 Table of Contents Corporate and Other Fiscal Year Ended Oct 2, 2022 Oct 3, 2021 % Change Net revenues: Other $ 95.8 $ 97.5 (1.7) % Total net revenues 95.8 97.5 (1.7) Product and distribution costs 88.3 86.4 2.2 Other operating expenses 16.4 14.9 10.1 Depreciation and amortization expenses 126.4 141.9 (10.9) General and administrative expenses 1,371.2 1,261.3 8.7 Restructuring and impairments 12.7 15.0 (15.3) Total operating expenses 1,615.0 1,519.5 6.3 Operating loss $ (1,519.2) $ (1,422.0) 6.8 % Corporate and Other primarily consists of our unallocated corporate expenses and Evolution Fresh.
Corporate and Other operating loss increased to $1.4 billion for fiscal 2021, or 10%, compared to $1.3 billion in fiscal 2020. This increase was primarily driven by incremental investments in technology ($81 million) and higher performance-based compensation, due to better than expected business recovery ($57 million).
Corporate and Other operating loss increased to $1.5 billion for fiscal 2022, or 7%, compared to $1.4 billion in fiscal 2021. This increase was primarily driven by incremental investments in technology ($84 million), increased support costs to address labor market conditions ($36 million) and increased partner wages and benefits ($31 million).
In fiscal 2020, we announced a restructuring plan to optimize our North America store portfolio, primarily in dense, metropolitan markets, by blending store formats to better cater to changing customer tastes and preferences.
In fiscal 2021, we substantially completed our plan to reposition our North America store portfolio, primarily in dense metropolitan markets by pursuing strategic store closures and focusing on new store formats that better cater to changing customer tastes and preferences. During fiscal year 2021, we recorded approximately $155.4 million to restructuring and impairments on our consolidated statements of earnings.
Also contributing to this increase was lapping temporary royalty relief provided to licensees in the prior year (approximately 60 basis points). 31 Table of Contents Channel Development Fiscal Year Ended Oct 3, 2021 Sep 27, 2020 Oct 3, 2021 Sep 27, 2020 As a % of Channel Development Total Net Revenues Net revenues $ 1,593.6 $ 1,925.0 Product and distribution costs 1,011.2 1,338.1 63.5 69.5 Other operating expenses 31.3 108.2 2.0 5.6 Depreciation and amortization expenses 1.2 1.2 0.1 0.1 General and administrative expenses 10.8 10.5 0.7 0.5 Total operating expenses 1,054.5 1,458.0 66.2 75.7 Income from equity investees 250.0 220.2 15.7 11.4 Operating income $ 789.1 $ 687.2 49.5 % 35.7 % Revenues Channel Development total net revenues for fiscal 2021 decreased $331 million, or 17%, compared to fiscal 2020, primarily due to the transition of certain single-serve product activities to Nestlé ($348 million) and the lapping of higher transition activities related to the Global Coffee Alliance in the prior year ($85 million).
These decreases were partially offset by sales leverage across markets outside of China. 31 Table of Contents Channel Development Fiscal Year Ended Oct 2, 2022 Oct 3, 2021 Oct 2, 2022 Oct 3, 2021 As a % of Channel Development Total Net Revenues Net revenues $ 1,843.6 $ 1,593.6 Product and distribution costs 1,194.2 1,011.2 64.8 % 63.5 % Other operating expenses 51.6 31.3 2.8 2.0 Depreciation and amortization expenses 0.1 1.2 0.0 0.1 General and administrative expenses 12.2 10.8 0.7 0.7 Total operating expenses 1,258.1 1,054.5 68.2 66.2 Income from equity investees 231.8 250.0 12.6 15.7 Operating income $ 817.3 $ 789.1 44.3 % 49.5 % Revenues Channel Development total net revenues for fiscal 2022 increased $250 million, or 16%, compared to fiscal 2021, primarily due to higher Global Coffee Alliance product sales and royalty revenue ($216 million) and growth in our ready-to-drink business ($44 million).
Also contributing to these increases were the performance of new stores compared to the closure of underperforming stores, including stores related to our restructuring plan ($394 million), higher product and equipment sales to and royalty revenues from our licensees ($151 million) primarily due to lapping the severe impact of the COVID-19 pandemic in the prior year and favorable foreign currency translation ($76 million).
Also contributing to these increases were the performance of net new company-operated store openings over the past 12 months ($628 million) and higher product and equipment sales to and royalty revenues from our licensees ($487 million), primarily due to business recovery from the impact of the COVID-19 pandemic.
Depreciation and amortization expenses as a percentage of total net revenues decreased 110 basis points, primarily due to sales leverage.
Depreciation and amortization expenses as a percentage of total net revenues decreased 50 basis points, primarily due to sales leverage. General and administrative expenses increased $99 million, primarily due to incremental investments in technology ($92 million), increased partner wages and benefits ($59 million) and higher support costs to address labor market conditions ($36 million).
Operating Margin North America operating income for fiscal 2021 increased 136% to $4.3 billion, compared to $1.8 billion in fiscal 2020.
These increases were partially offset by the impact of the extra week in fiscal 2021 ($427 million). Operating Margin North America operating income for fiscal 2022 increased 5% to $4.5 billion, compared to $4.3 billion in fiscal 2021.
During the fourth quarter of fiscal 2021, we declared a cash dividend of $0.49 per share to be paid on November 26, 2021, with an expected payout of approximately $578.1 million. In March 2019, we entered into accelerated share repurchase agreements (“ASR agreements”) with third-party financial institutions totaling $2.0 billion, effective March 22, 2019.
During the fourth quarter of fiscal 2022, we declared a cash dividend of $0.53 per share to be paid on November 25, 2022, with an expected payout of approximately $608.3 million. During the first quarter of fiscal 2022, we resumed our share repurchase program which had been temporarily suspended in March 2020.
Licensed stores revenue of $357 million also contributed to the increase in total net revenues, driven by higher product and equipment sales to and royalty revenues from our licensees ($270 million), the impact of the extra week in fiscal 2021 ($57 million) and the impact of favorable foreign currency translation ($28 million).
Licensed stores revenue increased $972 million, primarily driven by higher product and equipment sales to and royalty revenues from our licensees ($922 million) and the conversion of our Korea market from a joint venture to a fully licensed market in the fourth quarter of fiscal 2021 ($187 million).
Also contributing to this increase were 746 net new Starbucks ® company-operated stores, or an 11% increase, over the past 12 months ($388 million).
Additionally, there were 765 net new Starbucks company-operated stores, or a 11% increase over the past 12 months ($406 million). Also contributing to the increase was the conversion of our Korea market from a joint venture to a fully licensed market in the fourth quarter of fiscal 2021 ($187 million).
Income from equity investees increased $63 million, primarily due to higher income from our North American Coffee Partnership joint venture ($30 million) and growth in our South Korea joint venture prior to divestiture ($22 million).
Income from equity investees decreased $151 million, primarily due to the conversion of our Korea market from a joint venture to a fully licensed market in the fourth quarter of fiscal 2021 ($140 million) and lower income from our North American Coffee Partnership joint venture ($18 million).
Restructuring and impairment expenses decreased $108 million, primarily due to lower asset impairment related to our North America store portfolio optimization ($65 million), lapping the intangible asset impairment from the prior year ($22 million) and lower severance costs.
Restructuring and impairment expense s decreased $124 million, primarily due to lower costs incurred related to our Reinvention Plan in the current year compared to prior year's North America store portfolio optimization, including lower accelerated lease right-of-use asset amortization costs ($84 million) and asset impairment charges ($68 million), partially offset by higher professional fees and higher severance costs ($27 million).
These unfavorable drivers were partially offset by lapping valuation allowances recorded against deferred tax assets of certain international jurisdictions in the prior year (approximately 990 basis points).
The increase was due to lapping a prior year remeasurement of deferred tax assets due to an enacted foreign corporate rate change (approximately 130 basis points) and lapping the release of income tax reserves upon expiration of statute of limitations (approximately 70 basis points), partially offset by the release of valuation allowances recorded against deferred tax assets of a certain international jurisdiction (approximately 120 basis points).
Absent significant and prolonged COVID-19 relapses or global economic disruptions, and based on the current trend of our business operations and our focused efforts to elevate customer experiences, enhance digital capabilities and drive beverage innovation, we are confident in the strength of our brand and the durability of long-term “Growth at Scale” strategy to deliver consistent revenue and income growth.
Absent significant and prolonged COVID-19 relapses or global economic disruptions, and based on the current trend of our business operations and our focused efforts on the Reinvention Plan, we are confident in the strength of our brand and strategy for sustainable, profitable growth over the long-term. 26 Table of Contents Financial Highlights • Total net revenues increased 11% to $32.3 billion in fiscal 2022 compared to $29.1 billion in fiscal 2021, inclusive of $576 million attributable to the extra week in fiscal 2021. • Consolidated operating income decreased to $4.6 billion in fiscal 2022 compared to $4.9 billion in fiscal 2021.
We returned $3.6 billion in fiscal 2020 through share repurchases and dividends. We temporarily suspended our share repurchase program in March 2020. Due to our business recovery and restoration of certain leverage metrics, we have resumed our share repurchase program in the first quarter of fiscal 2022.
We returned $2.1 billion in fiscal 2021 through dividends. In April 2022, we announced a temporary suspension of our share repurchase program to allow us to augment investments in our stores and partners. We resumed our share repurchase program in the first quarter of fiscal 2023.
Other revenues decreased $256 million, primarily driven by the transition of certain single-serve product activities to Nestlé. Partially offsetting this decrease was growth in our ready-to-drink business ($43 million) and the impact of the extra fiscal week in fiscal 2021 ($23 million).
Partially offsetting these increases were unfavorable foreign currency translation ($81 million) and the impact of the extra week in fiscal 2021 ($57 million). Other revenues increased $249 million, primarily due to higher product sales and royalty revenue in the Global Coffee Alliance ($216 million) and growth in our ready-to-drink business ($44 million).
Prior to the suspension, we repurchased 20.3 million shares of common stock for $1.7 billion on the open market during the year ended September 27, 2020. As of October 3, 2021, 48.9 million shares remained available for repurchase under current authorizations.
During the fiscal year ended October 2, 2022, we repurchased 36.3 million shares of common stock for $4.0 billion on the open market. On March 15, 2022, we announced that our Board authorized the repurchase of up to an additional 40 million shares under our ongoing share repurchase program.
The effective tax rate for fiscal 2021 was 21.6% compared to 20.6% for fiscal 2020.
Interest expense increased $13 million primarily due to additional interest incurred on long-term debt issued in February 2022. The effective tax rate for fiscal 2022 was 22.4% compared to 21.6% for fiscal 2021.
These decreases were partially offset by increased supply chain costs due to accelerated inflationary pressures in the latter half of fiscal 2021. Store operating expenses as a percentage of total net revenues decreased 470 basis points.
Store operating expenses as a percentage of total net revenues increased 100 basis points.
Removed
The fiscal 2021 Latin America and Caribbean licensed store market resegmentation did not have a material impact to prior year North America and International operating segment business trends and operating margins. Overview In the fourth quarter of fiscal 2021, certain changes were made to our management team, and our operating segment reporting structure was realigned as a result.
Added
Consolidated revenues increased 11% to $32.3 billion in fiscal 2022 compared to $29.1 billion in fiscal 2021, primarily driven by strength in our U.S. business and growth in our International segment excluding China, partially offset by the impact of the extra week in fiscal 2021 ($496 million) and unfavorable foreign currency translation.
Removed
We realigned our fully licensed Latin America and Caribbean markets from our Americas operating segment to our International operating segment. Additionally, we renamed the Americas operating segment to the North America operating segment, since it is comprised of our company-operated and licensed stores in the U.S. and Canada.

… 77 more changes not shown on this page.

Other SBUX 10-K year-over-year comparisons