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What changed in Starbucks's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Starbucks's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+401 added−323 removedSource: 10-K (2024-11-20) vs 10-K (2023-11-17)

Top changes in Starbucks's 2024 10-K

401 paragraphs added · 323 removed · 264 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

51 edited+17 added−21 removed47 unchanged
Biggest changeIn 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 1, 2023: Stores Open as of Stores Open as of Oct 2, 2022 Opened Closed Transfers Net Oct 1, 2023 North America: U.S. 6,608 206 (113) — 93 6,701 Canada 471 17 (7) — 10 481 Total North America 7,079 223 (120) — 103 7,182 International: Korea 1,750 153 (33) — 120 1,870 Latin America 1,549 108 (8) — 100 1,649 U.K. 838 77 (4) — 73 911 Turkey 604 81 (9) — 72 676 Taiwan 544 30 (11) — 19 563 Indonesia 523 58 — — 58 581 Thailand 446 29 (1) — 28 474 Philippines 418 29 — — 29 447 All Other 3,707 469 (82) (1) 386 4,093 Total International 10,379 1,034 (148) (1) 885 11,264 Total licensed 17,458 1,257 (268) (1) 988 18,446 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.
Biggest changeIn 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 September 29, 2024: Stores Open as of Stores Open as of Oct 1, 2023 Opened Closed Transfers Net Sep 29, 2024 North America: U.S. 6,701 232 (158) 2 76 6,777 Canada 481 26 (21) — 5 486 Total North America 7,182 258 (179) 2 81 7,263 International: Korea 1,870 144 (34) — 110 1,980 Latin America 1,649 139 (83) — 56 1,705 U.K. 911 87 (22) — 65 976 Turkey 676 46 — — 46 722 Taiwan 563 24 (16) — 8 571 Indonesia 581 30 (8) — 22 603 Thailand 474 40 (1) — 39 513 Philippines 447 33 (1) — 32 479 All Other 4,093 426 (150) — 276 4,369 Total International 11,264 969 (315) — 654 11,918 Total licensed 18,446 1,227 (494) 2 735 19,181 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.
Partners can contribute pre-tax or Roth after-tax dollars, and Starbucks matches 5% of eligible contributions with immediate vesting in those matching contributions. • 100% paid parental leave is available to new parents that welcome a child through birth, adoption or foster placement and work an average of 20 hours or more each week. • A Partner and Family Sick Time program is provided and allows partners to accrue paid sick time based on hours worked and use that time for themselves or family members in need of care. 4 Table of Contents • We view mental health as a fundamental part of our humanity and provide a comprehensive suite of related programs and benefits.
Partners can contribute pre-tax or Roth after-tax dollars, and Starbucks matches 5% of eligible contributions with immediate vesting in those matching contributions. 4 Table of Contents • 100% paid parental leave is available to new parents that welcome a child through birth, adoption, or foster placement and work an average of 20 hours or more each week. • A Partner and Family Sick Time program is provided and allows partners to accrue paid sick time based on hours worked and use that time for themselves or family members in need of care. • We view mental health as a fundamental part of our humanity and provide a comprehensive suite of related programs and benefits.
Practices), the Company’s third-party verification program and the cornerstone of our approach to ethical sourcing of coffee with over 98% of our coffee having been historically verified through C.A.F.E. Practices as ethically sourced. Human Capital Management We invest in the well-being – the mental, physical and financial health – of every partner through our practices, policies and benefits.
Practices”), the Company’s third-party verification program and the cornerstone of our approach to ethical sourcing of coffee with over 98% of our coffee having been historically verified through C.A.F.E. Practices as ethically sourced. Human Capital Management We invest in the well-being – the mental, physical, and financial health – of every partner through our practices, policies, and benefits.
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.
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, as well as optimizing the mix of company-operated and licensed stores around the world.
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.
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 initiatives.
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 and Africa, Latin America and Caribbean; and 3) Channel Development. Non-reportable operating segments 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 the Caribbean; and 3) Channel Development. Unallocated corporate expenses are reported within Corporate and Other.
Our Channel Development segment includes roasted whole bean and ground coffees, Starbucks- and Teavana-branded single-serve products, a variety of ready-to-drink beverages, such as Frappuccino ® and Starbucks Doubleshot ® , foodservice products and other branded products sold worldwide outside of our company-operated and licensed stores.
Our Channel Development segment includes roasted whole bean and ground coffees, Starbucks-branded single-serve products, a variety of ready-to-drink beverages, such as Frappuccino ® and Starbucks Doubleshot ® , foodservice products, and other branded products sold worldwide outside of our company-operated and licensed stores.
In addition to our flagship Starbucks Coffee ® brand, we sell goods and services under the following brands: Teavana ® , 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 ® , Ethos ® , and Starbucks Reserve ® . Our primary objective is to maintain Starbucks standing as one of the most recognized and respected brands in the world.
Our coffee and tea products sold through our Channel Development segment compete directly against specialty coffees and teas sold through grocery stores, warehouse clubs, specialty retailers, convenience stores and foodservice accounts and compete indirectly against all other coffees and teas on the market.
Our coffee and tea products sold through our Channel Development segment compete directly against specialty coffees and teas sold through grocery stores, warehouse clubs, specialty retailers, convenience stores, and foodservice accounts and also compete indirectly against all other coffees and teas on the market.
However, since revenues from Starbucks Cards are recognized upon redemption and not when cash is loaded onto the Card, the impact of seasonal fluctuations on the consolidated statements of earnings is much less pronounced.
However, since revenues from Starbucks Cards are recognized upon redemption and not when cash is loaded onto the Starbucks Cards, the impact of seasonal fluctuations on the consolidated statements of earnings is much less pronounced.
Supply and price can be affected by multiple factors in the producing countries, including 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 and political and economic conditions. Climate change may further exacerbate many of these factors.
Supply and price can be affected by multiple factors in the producing countries, including weather, water supply quality and availability throughout the coffee production chain, natural disasters, crop disease and pests, general increases in farm inputs and costs of production, inventory levels, and political and economic conditions. Climate change may further exacerbate many of these factors.
Stored Value Cards and Loyalty Program The Starbucks Card, our branded stored value card program, is designed to provide customers with a convenient payment method, support gifting and increase the frequency of store visits by cardholders, in part through the related Starbucks ® Rewards loyalty program where available, as discussed below.
Stored Value Cards and Loyalty Program Our branded stored value card program (the “Starbucks Card”) is designed to provide customers with a convenient payment method, support gifting, and increase the frequency of store visits by cardholders, in part through the related Starbucks ® Rewards loyalty program where available, as discussed below.
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.
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.
Our work to uplift one another extends well beyond our partners to the communities where we do business around the world. We are committed to responsible and ethical sourcing led by Coffee and Farmer Equity Practices (C.A.F.E.
Our work to uplift one another extends well beyond our partners to the communities where we do business around the world. We are committed to responsible and ethical sourcing led by Coffee and Farmer Equity Practices (“C.A.F.E.
Farmer support centers are staffed with agronomists and sustainability experts who work with coffee farming communities to promote best practices in coffee production designed to improve both coffee quality and yields and agronomy support to address climate change and other impacts.
Farmer support centers are staffed with agronomists and sustainability experts who work with coffee farming communities to promote best practices in coffee production designed to improve both coffee quality and yields as well as agronomy support to address climate change and other impacts.
With coffee at our core, we pursue ambitious goals for our partners (employees), our communities and our planet, which we believe also contributes to the long-term sustainability of our business to create a thriving business powered by thriving people for a thriving planet and communities.
With coffee at our core, we pursue ambitious goals for our partners (employees), our communities, and our planet, which we believe also contributes to the long-term sustainability of creating a thriving business powered by thriving people for a thriving planet and communities.
Total purchase commitments, together with existing inventory, are expected to provide an adequate supply of green coffee through fiscal 2024. 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 2025. We depend upon our relationships with coffee producers, outside trading companies, and exporters for our supply of green coffee.
Stored value cards can also be obtained online, via the Starbucks ® Mobile App and through other U.S. and international retailers. Customers may access their card balances by utilizing their stored value card or the Starbucks Mobile App in participating stores.
Starbucks Cards can also be obtained online, via the Starbucks ® Mobile App, and through other U.S. and international retailers. Customers may access their card balances by utilizing their Starbucks Card or the Starbucks Mobile App in participating stores.
We regularly conduct anonymous surveys to seek feedback from our partners on a variety of topics, including confidence in company leadership, competitiveness of our compensation and benefits package, career growth opportunities and 3 Table of Contents recommendations on how we can remain an employer of choice.
We regularly conduct anonymous surveys to seek feedback from our partners on a variety of topics, including confidence in company leadership, competitiveness of our compensation and benefits package, career growth opportunities, and recommendations on how we can remain an employer of choice.
Stored value cards are issued to customers when they initially load them with an account balance. They can be obtained in our company-operated and most licensed stores in North America, China, Japan and many of our other markets in our International segment.
Starbucks Cards are issued to customers when they initially load them with an account balance. They can be obtained in our company-operated and most licensed stores in North America, China, Japan, and many of our other markets in our International segment.
Pay Equity To be an employer of choice and maintain the strength of our workforce, we consistently assess the current business environment and labor market to refine our compensation and benefits programs and other resources available to our partners.
Pay Equity To be an employer of choice and maintain the strength of our workforce, we consistently assess the current business environment and labor market to refine our compensation and benefits programs and other resources available to our partners. Starbucks is committed to pay equity.
We believe, based on relationships established with our suppliers, the risk of non-delivery on such purchase commitments is remote. 9 Table of Contents 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.
We believe, based on the established relationship and historical performance of our suppliers, that the risk of non-delivery on such purchase commitments is remote. 9 Table of Contents 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.
Kelly served as vice president, Partner Resources, supporting partners in our global markets. Brad Lerman joined Starbucks in April 2023 as executive vice president and general counsel. In this role, he leads the Company’s Legal and Corporate Affairs organization. Prior to Starbucks, Mr.
Kelly served as vice president, Partner Resources, supporting partners in our global markets. Brad Lerman joined Starbucks in April 2023 as executive vice president and general counsel and has served as executive vice president and chief legal officer since April 2024. In this role, he leads the Company’s Legal and Corporate Affairs organization. Prior to Starbucks, Mr.
Sara Kelly joined Starbucks in 2001 and was named executive vice president and chief partner officer in 2022, where she is responsible for helping partners realize their career potential and building global partner capability to enable growth and deliver on the Company’s strategic plan. Prior to her current role, Ms.
Sara Kelly joined Starbucks in 2001 and has served as executive vice president and chief partner officer since 2022, where she is responsible for helping partners realize their career potential and building global partner capability to enable growth and deliver on the Company’s strategic plan. Prior to her current role, Ms.
Company-operated Stores Revenue from company-operated stores accounted for 82% of total net revenues during fiscal 2023.
Company-operated Stores Revenue from company-operated stores accounted for 82% of total net revenues during fiscal 2024.
In the U.S., our largest and most mature market, these include: • Comprehensive health insurance coverage is offered to partners working an average of 20 hours or more each week. • 100% upfront tuition coverage through the Starbucks College Achievement Plan for partners to earn a first-time bachelor's degree online at Arizona State University is offered to partners working an average of 20 hours or more each week. • Our Future Roast 401(k) savings plan helps partners save for their financial goal through convenient payroll deductions.
The following list summarizes key benefits provided in the U.S., which is our largest and most mature market: • Comprehensive health insurance coverage is offered to partners working an average of 20 hours or more each week. • 100% upfront tuition coverage through the Starbucks College Achievement Plan for partners to earn a first-time bachelor’s degree online at Arizona State University is offered to partners working an average of 20 hours or more each week. • Our Future Roast 401(k) savings plan helps partners save for their financial goal through convenient payroll deductions.
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. Competition Our primary competitors for coffee beverage sales are specialty coffee retailers and shops.
We believe, based on the established relationship and historical performance of our suppliers and manufacturers, that the risk of non-delivery of sufficient amounts of these items generally is remote. Competition Our primary competitors for coffee beverage sales are specialty coffee retailers and shops.
Revenues from our reportable operating segments as a percentage of total net revenues for fiscal 2023 were as follows: North America (74%), International (21%) and Channel Development (5%). 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 2024 were as follows: North America (75%), International (20%), and Channel Development (5%). 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.
Lerman served as senior vice president, general counsel and corporate secretary of Medtronic plc from 2014 to 2022; and prior to that he was an executive vice president, general counsel and corporate secretary for the Federal National Mortgage Association (Fannie Mae) from 2012 to 2014. Mr.
Lerman served as senior vice president, general counsel and corporate secretary of Medtronic plc from 2014 to 2022; and executive vice president, general counsel and corporate secretary for the Federal National Mortgage Association (Fannie Mae) from 2012 to 2014. Mr.
We believe, based on relationships established with our dairy and plant-based dairy-free suppliers, that the risk of non-delivery of sufficient fluid milk and plant-based dairy-free alternatives to support our stores generally is remote.
We believe, based on the established relationship and historical performance of our dairy and plant-based dairy-free suppliers, that the risk of non-delivery of sufficient fluid milk and plant-based dairy-free alternatives to support our stores generally is remote.
Item 1. Business General In this Annual Report on Form 10-K (“10-K” or “Report”) for the fiscal year ended October 1, 2023 (“fiscal 2023”), 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 86 markets.
Item 1. Business General In this Annual Report on Form 10-K (“10-K” or “Report”) for the fiscal year ended September 29, 2024 (“fiscal 2024”), 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 87 markets.
Further, we have formulated pay-equity principles which provide equal footing, transparency and accountability as best practices that help address known, systemic barriers to global pay equity. As of October 1, 2023, Starbucks employed approximately 381,000 people worldwide.
Further, we have formulated pay-equity principles, which provide equal footing, transparency, and accountability as best practices that help address known, systemic barriers to global pay equity. As of September 29, 2024, Starbucks employed approximately 361,000 people worldwide.
In the U.S., Starbucks employed approximately 228,000 people, with approximately 219,000 in company-operated stores and the remainder in corporate support, store development, roasting, manufacturing, warehousing and distribution operations. Approximately 153,000 employees were employed outside of the U.S., with approximately 148,000 in company-operated stores and the remainder in regional support operations.
In the U.S., Starbucks employed approximately 211,000 people, with approximately 201,000 in company-operated stores and the remainder in corporate support, store development, roasting, manufacturing, warehousing, and distribution operations. Approximately 150,000 employees were employed outside of the U.S., with approximately 144,000 in company-operated stores and the remainder in regional support operations.
Licensed stores generally have a lower gross margin and a higher operating margin than company-operated stores. Under the licensed model, Starbucks receives a margin on branded products and supplies sold to the licensed store operator along with a royalty on retail sales.
Licensed Stores Revenues from our licensed stores accounted for 12% of total net revenues in fiscal 2024. Licensed stores generally have a lower gross margin and a higher operating margin than company-operated stores. Under the licensed model, Starbucks receives a margin on branded products and supplies sold to the licensed store operator along with a royalty on retail sales.
Our management and cross-functional teams also work closely to evaluate human capital management issues such as partner retention, workplace safety, harassment and bullying, as well as to implement measures to mitigate these risks. Diversity, Equity and Inclusion We are committed to creating a welcoming, supportive and inclusive environment.
Our management and cross-functional teams also work closely to evaluate human capital management issues such as partner retention, workplace safety, harassment, and bullying, as well as to implement measures to mitigate these issues.
However, trademarks are generally valid and may be renewed indefinitely as long as they are in use and/or their registrations are properly maintained. We own numerous copyrights for items such as product packaging, promotional materials, in-store graphics and training materials.
However, trademarks are generally valid and may be renewed indefinitely as long as they are in use and/or their registrations are properly maintained. We own numerous copyrights for items such as product packaging, promotional materials, in-store graphics, and training materials. We also hold patents on certain products, systems, and designs, which have an average remaining duration of approximately thirteen years.
Approximately 3.6% of Starbucks partners in U.S. company-operated stores are represented by unions. We believe our efforts in managing our workforce have been effective, evidenced by improved retention, lower turnover, and employee satisfaction during fiscal 2023.
Approximately 5% of Starbucks partners in U.S. company-operated stores are represented by unions. We believe our efforts in managing our workforce have been effective, evidenced by low turnover, a strong culture, and active employee participation.
Lerman currently serves on the Board of Directors of McKesson Corporation, a NYSE-listed health care, pharmaceutical, and medical supply company. Rachel Ruggeri joined Starbucks in 2001 as a member of the accounting team and was named executive vice president and chief financial officer in 2021.
Niccol currently serves on the Board of Directors of Walmart Inc., a NYSE-listed omni-channel retailer. 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 2021.
Company-operated and Licensed Store Summary as of October 1, 2023: 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 10,628 60 % 8,964 44 % 19,592 52 % Licensed stores 7,182 40 % 11,264 56 % 18,446 48 % Total 17,810 100 % 20,228 100 % 38,038 100 % 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 September 29, 2024: 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 11,161 61 % 9,857 45 % 21,018 52 % Licensed stores 7,263 39 % 11,918 55 % 19,181 48 % Total 18,424 100 % 21,775 100 % 40,199 100 % 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.
In this leadership role, Rachel is responsible for the global finance function for Starbucks, which includes developing and executing the financial strategies that enable the long-term growth of the Company.
In August 2024, she served as interim chief executive officer during Starbucks recent chief executive officer transition. In her role as chief financial officer, Ms. Ruggeri is responsible for the global finance function for Starbucks, which includes developing and executing the financial strategies that enable the long-term growth of the Company.
Retail sales mix by product type for company-operated stores: Fiscal Year Ended Oct 1, 2023 Oct 2, 2022 Oct 3, 2021 Beverages 74 % 74 % 74 % Food 22 % 22 % 21 % Other (1) 4 % 4 % 5 % Total 100 % 100 % 100 % (1) “Other” primarily consists of sales of serveware, packaged and single-serve coffees and teas and ready-to-drink beverages, among other items.
We are continuing the expansion of our stores, particularly drive-thru formats that provide a higher degree of access and convenience, as well as other store formats that cater to a variety of customer needs. 7 Table of Contents Retail sales mix by product type for company-operated stores: Fiscal Year Ended Sep 29, 2024 Oct 1, 2023 Oct 2, 2022 Beverages 74 % 74 % 74 % Food 23 % 22 % 22 % Other (1) 3 % 4 % 4 % Total 100 % 100 % 100 % (1) “Other” primarily consists of serveware, packaged and single-serve coffees and teas, and ready-to-drink beverages, among other items.
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.
We have consistently made enhancements in wages in order to attract talent to support our growth strategy and to elevate the customer experience. 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.
Using the Mobile Order and Pay functionality of the Starbucks Mobile App, customers can also place orders in advance for pick-up at certain participating locations in several markets.
Using the Mobile Order and Pay functionality of the Starbucks Mobile App, customers can also place orders in advance for pick-up at certain participating locations in several markets. 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 Starbucks Cards and loyalty program.
Total Rewards We have demonstrated a history of investing in our workforce by offering competitive salaries and wages by continuously assessing the current business environment and labor market. We have consistently made enhancements in wages in order to attract talent to support our growth strategy and to elevate the customer experience.
To do this, we reach a broader pool of candidates and talent by prioritizing inclusivity in our recruitment practices, in partner engagement, and by continuing to foster inclusive leadership. Total Rewards We have demonstrated a history of investing in our workforce by offering competitive salaries and wages by continuously assessing the current business environment and labor market.
Company-operated store data for the fiscal year-ended October 1, 2023: Stores Open as of Stores Open as of Oct 2, 2022 Opened Closed Transfers Net Oct 1, 2023 North America: U.S. 9,265 483 (103) — 380 9,645 Canada 946 43 (12) — 31 977 Siren Retail 5 1 — — 1 6 Total North America 10,216 527 (115) — 412 10,628 International: China 6,019 857 (72) — 785 6,804 Japan 1,630 110 (8) 1 103 1,733 U.K. 318 42 (5) — 37 355 All Other 65 3 (1) — 2 67 Siren Retail 5 — — — — 5 Total International 8,037 1,012 (86) 1 927 8,964 Total company-operated 18,253 1,539 (201) 1 1,339 19,592 Starbucks company-operated stores are typically located in high-traffic, high-visibility locations.
Company-operated store data for the fiscal year-ended September 29, 2024: Stores Open as of Stores Open as of Oct 1, 2023 Opened Closed Transfers Net Sep 29, 2024 North America: U.S. 9,645 611 (96) (2) 513 10,158 Canada 977 37 (17) — 20 997 Siren Retail 6 — — — — 6 Total North America 10,628 648 (113) (2) 533 11,161 International: China 6,804 855 (65) — 790 7,594 Japan 1,733 90 (14) — 76 1,809 U.K. 355 32 (9) — 23 378 All Other 67 4 — — 4 71 Siren Retail 5 — — — — 5 Total International 8,964 981 (88) — 893 9,857 Total company-operated 19,592 1,629 (201) (2) 1,426 21,018 Starbucks company-operated stores are typically located in high-traffic, high-visibility locations.
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.
The information on our website (or any webpages referenced in this Report) or our social media channels is not part of this or any other report Starbucks files with, or furnishes to, the SEC, and all website addresses in this report are intended to be inactive textual references only.
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.
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. Our corporate governance policies, code of ethics, and Board committee charters and policies are also posted on the Investor Relations section of our website.
She also served as vice president of Finance from 2010 to 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.
She also served as vice president of Finance from 2010 to 2016 supporting Corporate Financial Planning & Analysis and the U.S. Retail business. Ms. Ruggeri currently serves on the Board of Directors of Stryker Corporation, a NYSE-listed medical technologies company.
Our Audit and Compliance Committee works closely with the Risk Management Committee, led by Starbucks cfo and general counsel, to monitor and mitigate current and emerging labor and human capital management risks. Furthermore, our Nominating and Corporate Governance Committee, in consultation with management, annually evaluates the effectiveness of our social responsibility policies, goals and programs, which also include partner-related issues.
Our Audit and Compliance Committee works closely with the Risk Management Committee, led by Starbucks chief financial officer (“cfo”) and chief legal officer, to monitor and mitigate current and emerging labor and human capital management risks.
Information about our Executive Officers Name Age Position Laxman Narasimhan 56 chief executive officer Michael Conway 57 group president, International and Channel Development Sara Kelly 44 executive vice president and chief partner officer Brad Lerman 67 executive vice president and general counsel Rachel Ruggeri 54 executive vice president and chief financial officer Laxman Narasimhan joined Starbucks as its chief executive officer-elect in 2022 and has served as chief executive officer and has been a Starbucks director since March 2023.
Information about our Executive Officers Name Age Position Brian Niccol 50 chairman and chief executive officer Rachel Ruggeri 55 executive vice president, chief financial officer Brady Brewer 51 chief executive officer, Starbucks International Sara Kelly 45 executive vice president, chief partner officer Brad Lerman 68 executive vice president, chief legal officer Brian Niccol joined Starbucks as its chairman and chief executive officer in September 2024.
We previously achieved and currently maintain 100 percent pay equity in the U.S. for women and men and people of all races for partners performing similar work. We have made a commitment to achieve gender pay equity in all company-operated markets.
We’ve achieved and maintained racial and gender pay equity for partners in the U.S. who are performing similar work, and we’re working toward achieving gender pay equity for Starbucks partners who are performing similar work in all of our company-operated markets globally.
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We are committed to advancing inclusion and racial and social equity, and we seek to further that work with intention, transparency and accountability. We continue to welcome our partners, customers, civil rights and community leaders, along with our senior vice president, talent and inclusion, to advise us along this journey.
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Our Environmental, Partner, and Community Impact Committee annually reviews and assesses the effectiveness of the Company’s environmental and social 3 Table of Contents strategies, policies, practices, goals, programs, disclosure, and risks, including review of the Company’s annual global climate and social impact report.
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Starbucks has made specific 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 prioritize our partners’ sense of belonging by creating an inclusive and supportive environment.
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Diversity, Equity, Inclusion, and Belonging As we create the future of Starbucks, we are continuing to work to improve the partner experience so our partners can thrive at work, individually, and together.
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Mentors offer guidance, encouragement and a safe space for partners to share their experiences, challenges and aspirations.
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Core to this is taking steps to ensure that Starbucks is an inclusive, diverse, equitable, and accessible company—a place where all are welcome and where our partners know they belong. Under the leadership of our senior vice president of Talent and Inclusion and our executive leadership team, we remain committed to accountability at every level of the Company.
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As of 2023, the program has welcomed nearly 1,400 partners and was expanded to include U.S. based store and district managers in 2023. • Being transparent in our approach to Inclusion and Diversity goal setting and progress. ◦ Publicly sharing workforce diversity data. ◦ Setting aspirational Inclusion and Diversity goals based on retention rates and progress towards achieving racial and ethnic diversity.
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We prioritize transparency with our partners, Inclusion and Diversity Executive Council, Partner Networks, Inclusion and Diversity Business Council, community leaders, customers, and stakeholders. At Starbucks, we are committed to creating environments where everyone is welcome and belongs. In 2024, we reaffirmed this commitment by cementing “Belonging” as one of our company values.
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Our goal is to achieve racial and ethnic diversity of at least 30% of all corporate roles and at least 40% of all retail and manufacturing roles in the U.S. by 2025, by setting broad recruiting parameters and through inclusive and legally compliant employment practices. • Holding ourselves accountable at the highest levels of the organization. ◦ Incorporating our efforts to build and retain inclusive and diverse teams into our executive compensation programs. ◦ Joining the Board Diversity Action Alliance to act alongside other companies similarly committed to increasing diverse representation on corporate boards. ◦ Publicizing self-identified race/ethnicity/gender of each member of our Board.
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These values have long been part of our culture, and we are working to build a more inclusive, equitable, accessible, and diverse company, to make substantial progress in the representation of our partners and to expand opportunities for our partners.
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Prior to joining Starbucks, Mr. Narasimhan served as Chief Executive Officer of Reckitt Benckiser Group Plc (“Reckitt”), a FTSE 12 listed British multinational consumer health, hygiene, and nutrition company, from 2019 to 2022. Prior to joining Reckitt, Mr.
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To further this: • we worked to reach a broader pool of candidates, prioritizing inclusivity in our recruitment, in partner engagement, and by continuing to foster inclusive leadership; • we established and expanded our mentorship program to make valuable guidance and networking opportunities available to all partners; and • we remained focused on addressing barriers impeding equal pay for equal work.
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Narasimhan held various executive roles at PepsiCo from 2012 to 2019 including as PepsiCo’s Group Chief Commercial Officer and 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.
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At the end of fiscal 2024, our U.S. partner base is made up 70.9% female and 28.4% male. Additionally, in the U.S. diverse partners represent more than 51.9% of our retail team and more than 37.9% of our corporate roles. We are expanding workforce diversity to bring new perspectives and experiences that improve our business and workplace.
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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. Narasimhan is a trustee of the Brookings Institution and a member of the Council on Foreign Relations .
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Furthermore, we offer comprehensive, locally relevant and innovative benefits to all eligible partners.
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Michael Conwa y joined Starbucks in 2013 and was named group president, International and Channel Development in 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, 5 Table of Contents PepsiCo, and other key business partners.
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Mr. Niccol spent more than 25 years in leadership, marketing, and operations roles for some of the world’s most respected brands. Mr.
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Prior to this, he served as executive vice president and president, International Licensed Markets, from 2020 to 2021.
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Niccol joined Starbucks after leading Chipotle Mexican Grill, Inc. through a period of growth and transformation, having served as a director and as its chief executive officer from 2018 to 2024 and as its chairman, from 2020 to 2024. Before joining Chipotle, he served as chief executive officer of Taco Bell, a division of Yum!
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He also served as executive vice president and president of Starbucks Canada from 2018 to 2020, president of Starbucks Licensed Stores Operations for the United States and Latin America from 2016 to 2018, and president of Starbucks Global Channel Development from 2013 to 2016.
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Brands, Inc., from 2015 to 2018, after having served as its President (2013 to 2014) and chief marketing and innovation officer (2011 to 2012). Mr. Niccol also served in leadership roles at Pizza Hut, another division of Yum! Brands from 2005 to 2011. Mr.
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He currently serves on the Board of Directors of McCormick & Company, Incorporated, a NYSE-listed a spice and extract manufacturing company.
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Brady Brewer joined Starbucks in 2001 and has served as chief executive officer, Starbucks International since April 2024, where he is responsible for the teams across Asia Pacific, Europe, Middle East, Africa, Japan, Latin America, and the Caribbean, as well as Global Channel Development and the Company’s international licensed partners.
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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.
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From February 2020 through March 2024, he served as Starbucks executive vice president and chief marketing officer, leading the Starbucks brand, marketing, food and beverage portfolio, digital customer experience innovation, R&D/Engineering, creative and brand management, consumer insights, data analytics, and sustainability.
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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”).
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His prior roles at Starbucks include senior vice president of Digital Customer Experience for Starbucks (2019 through February 2020), where he focused on delivering new innovations that made the Starbucks Experience continually more effortless and delightful for customers; chief operating officer for Starbucks Japan (2016 to 2019), where he led store operations as well as brand and marketing strategy; and senior vice president, Marketing and Product for the Company’s China and Asia Pacific region (2014 to 2016).
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We believe the company-operated market investments in partner wages and trainings have 7 Table of Contents increased retention and productivity while the acceleration of purpose-built store concepts and innovations in technologies have provided additional convenience and connection with our customers.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur 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 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. 15 Table of Contents Moreover, many of the foregoing risks are particularly acute in developing countries, which are important to our long-term growth prospects.
Biggest changeOur international operations are also subject to additional inherent risks of conducting business abroad, such as: • 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; • 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; • 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. • 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; • economic or trade sanctions affecting our ability to source products or conduct business in one or more of the markets in which we operate; • in developing economies, the growth rate in the portion of the population achieving sufficient levels of disposable income may not meet our projections; • interpretation and application of laws and regulations, including those relating to taxes, tariffs, labor, merchandise, anti-bribery, privacy, and environmental, social, and governance issues; • local laws, policies, and conditions that make it more expensive and complex to negotiate with, retain, or terminate employees; • labor strikes or work stoppages resulting from geopolitical instability or social unrest affecting one or more of the markets in which we operate; • local regulations, health guidelines, and safety protocols affecting our operations; • the enforceability of intellectual property and contract rights; • foreign currency exchange rate fluctuations or requirements to transact in specific currencies; • limitations on the repatriation of funds and foreign currency exchange restrictions due to current or new U.S. and international regulations; and 18 Table of Contents • import or other business licensing requirements.
We believe we have built an excellent reputation globally for the quality of our products, for delivery of a consistently positive consumer experience and for our global social and environmental impact programs. The Starbucks brand is recognized throughout most of the world, and we have received high ratings in global brand value studies.
We believe we have built an excellent reputation globally for the quality of our products, for delivery of a consistently positive consumer experience, and for our global environmental and social impact programs. The Starbucks brand is recognized throughout most of the world, and we have received high ratings in global brand value studies.
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.
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 if they result in litigation.
Our marketing, promotional and advertising programs may not be successful in reaching consumers 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, allows us to reach consumers effectively and efficiently, and in ways that are meaningful to them.
Our marketing, promotional, and advertising programs may not be successful in reaching consumers 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, allows us to effectively and efficiently reach consumers in ways that are meaningful to them.
If the advertising, promotional and marketing programs or our pricing strategies are not successful, or are not as successful as those of our competitors, our sales and market share could decrease. Finally, consumers are focusing more on sustainability and the environmental impacts of operations, as well as the alignment of Starbucks actions with its stated mission, values and promises.
If the advertising, promotional, and marketing programs or our pricing strategies are not successful or are not as successful as those of our competitors, our sales and market share could decrease. Finally, consumers are focusing more on sustainability and the environmental impacts of Starbucks operations, as well as the alignment of Starbucks actions with its stated mission, values, and promises.
An unfavorable report on the health effects of caffeine or other compounds present in our products, whether accurate or not, imposition of additional taxes on certain types of food and beverage components, or negative publicity or litigation arising from certain health risks could significantly reduce the demand for our beverages and food products and could materially harm our business and results of operations.
An unfavorable report on the health effects of caffeine or other compounds present in our products, whether or not accurate, imposition of additional taxes on certain types of food and beverage components, or negative publicity or litigation arising from certain health risks could significantly reduce the demand for our beverages and food products and materially harm our business and results of operations.
Additionally, some factors that will be critical to the success of our international operations overall are different than those affecting our U.S. stores and licensees. Tastes naturally vary by region, and consumers in some MBUs may not embrace our products to the same extent as consumers in the U.S. or other international markets.
Additionally, some factors that will be critical to the success of our international operations overall are different than those affecting our U.S. stores and licensees. Tastes naturally vary by region, and consumers in some international MBUs may not embrace our products to the same extent as consumers in the U.S. or other international markets.
Furthermore, we have experienced, and could continue to experience, a shortage of labor for store positions, and the increased availability of alternative telecommuting employment options by other employers could decrease the pool of available qualified talent for key functions. In addition, our wages and benefits programs may be insufficient to attract and retain the best talent.
Furthermore, we have experienced, and could continue to experience, a shortage of labor for store positions, and the increased availability of alternative telecommuting employment options by other employers could decrease the pool of available qualified talent for other key functions. In addition, our wages and benefits programs may be insufficient to attract and retain the best talent.
Many of our information technology systems (whether cloud-based or hosted in proprietary servers), including those used for our point-of-sale, web and mobile platforms, online and mobile payment systems, delivery services and rewards programs and administrative functions, contain personal, financial or other information that is entrusted to us by our customers, business partners and employees.
Many of our information technology systems (whether cloud-based or hosted in proprietary servers), including those used for our point-of-sale, web and mobile platforms, online and mobile payment systems, delivery services, rewards programs, and administrative functions, contain personal, financial, or other information that is entrusted to us by our customers, business partners, and employees.
Consumer demand for our products and our brand value could diminish significantly if we, our employees, licensees or other business partners fail to preserve the quality of our products, act or are perceived to act in an unethical, illegal, racially-biased, unequal, inequitable or socially irresponsible manner, including with respect to the sourcing, content or sale of our products, service and treatment of customers at Starbucks stores, treatment of employees, including our responses to unionization efforts, or the use of customer data for general or direct marketing or other purposes.
Additionally, consumer demand for our products and our brand value could diminish significantly if we, our employees, licensees, or other business partners fail to preserve the quality of our products, act or are perceived to act in an unethical, illegal, racially-biased, unequal, inequitable, or socially irresponsible manner, including with respect to the sourcing, content, or sale of our products, service and treatment of customers at Starbucks stores, treatment of employees, including our responses to unionization efforts, or the use of customer data for general or direct marketing or other purposes.
Our failure to comply with applicable laws and regulations or other obligations to which we may be subject relating to personal data, or to protect personal data from unauthorized access, use or other processing, could result in enforcement actions and regulatory investigations against us, claims for damages by customers and other affected individuals, fines and damage to our brand reputation, any of which could have a material adverse effect on our operations, financial performance and business.
Our failure to comply with applicable laws and regulations or other obligations to which we may be subject relating to personal data, or to protect personal data from unauthorized access, use, or other processing, could result in enforcement actions and regulatory investigations against us, claims for damages by customers and other affected individuals or parties, or fines and damage to our brand reputation, any of which could have a material adverse effect on our operations, financial performance, and business.
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.
Changes in applicable environmental laws and regulations, including expanded 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.
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.
Additionally, there is intense competition for qualified technology systems developers, who are 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.
However, the product quality and service they deliver may still be diminished by any number of factors beyond our control, including financial constraints or solvency, adherence to sanitation protocols and guidance, labor shortages and other factors. We do not have direct control over our business partners and may not have visibility into their practices.
However, the product quality and service they deliver may still be diminished by any number of factors beyond our control, including financial constraints or solvency issues, adherence to sanitation protocols and guidance, labor shortages, and other factors. We do not have direct control over our business partners and may not have visibility into their practices.
Instances or reports, whether true or not, of unclean water supply or food-safety issues, such as food or beverage-borne illnesses, tampering, adulteration, contamination or mislabeling, either during growing, manufacturing, packaging, storing or preparation, have in the past severely injured the reputations of companies in the food and beverage processing, grocery and quick-service restaurant sectors.
Instances or reports, whether true or not, of unclean water supply or food-safety issues, such as food- or beverage-borne illnesses, tampering, adulteration, contamination, and/or mislabeling, either during growing, manufacturing, packaging, transporting, storing, or preparation, have in the past severely injured the reputations of companies in the food and beverage processing, grocery, and quick-service restaurant sectors.
For example, developing and acting on initiatives within the scope of ESG, and 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 proposed climate-related reporting requirements, and similar proposals by other international regulatory bodies.
For example, developing and acting on initiatives within the scope of ESG, and 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 climate-related reporting requirements and similar proposals by other international regulatory bodies.
We frequently enter into supply contracts whereby the quality, quantity, delivery period and other negotiated terms are agreed upon, but the date, and therefore price, at which the base “C” coffee commodity price component will be fixed has not yet been established.
We frequently enter supply contracts whereby the quality, quantity, delivery period, and other negotiated terms are agreed upon, but the date, and therefore price, at which the base “C” coffee commodity price component will be fixed has not yet been established.
Risks Related to Supply Chain • Increases in the cost of high-quality arabica coffee beans or other commodities or decreases in the availability of high-quality arabica coffee beans or other commodities could have an adverse impact on our business and financial results. The availability and prices of coffee beans and other commodities are subject to significant volatility.
Risks Related to Supply Chain Increases in the cost of high-quality arabica coffee beans or other commodities or decreases in the availability of high-quality arabica coffee beans or other commodities could have an adverse impact on our business operations and financial results. The availability and prices of coffee beans and other commodities are subject to significant volatility.
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.
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 largely outside our control.
In addition to potential damage to our reputation and brand, failure by us or our business partners to comply with the various applicable laws and regulations, as well as changes in laws and regulations or the manner in which they are interpreted or applied, may result in litigation, civil and criminal liability, damages, fines and penalties, increased cost of regulatory compliance and restatements of our financial statements and have an adverse impact on our business and financial results.
In addition to potential damage to our reputation and brand, failure by us or our business partners to comply with the various applicable laws and regulations, as well as changes in laws and regulations or the manner in which they are interpreted or applied, may result in litigation, civil and criminal liability, damages, fines and penalties, increased cost of regulatory compliance, and restatements of our financial statements, all of which could have an adverse impact on our business and financial results.
Additionally, if we fail to comply with laws and regulations, take controversial positions or actions or fail to deliver a consistently positive consumer experience in each of our markets, including by failing to invest in the right balance of wages and benefits to attract and retain employees that represent the brand well or to foster an inclusive and diverse environment, our brand value may be diminished.
Additionally, if we fail to comply with laws and regulations, take controversial positions or actions, fail to deliver a consistently positive consumer experience in each of our markets, including by failing to invest in the right balance of wages and benefits to attract and retain employees who represent the brand well, or fail to foster an inclusive and diverse environment, our brand value may be diminished.
Such failures may be caused by various factors, including power outages, climate change-related impacts, catastrophic events, physical theft, computer and network failures, inadequate or ineffective redundancy, problems with transitioning to upgraded or replacement systems or platforms, flaws in third-party software or services, errors or improper use by our employees or third-party service providers, or a breach in the security of these systems or platforms, including through cyber-attacks such as those that result in the blockage of our or our third-party business partners’ or service providers’ systems and platforms and those discussed in more detail in this risk factors section.
Such failures may be caused by various factors, including power outages, climate change-related impacts, catastrophic events, physical theft, computer and network failures, inadequate or ineffective redundancy, problems with transitioning to upgraded or replacement systems or platforms, flaws in third-party software or 27 Table of Contents services, errors or improper use by our employees or third-party service providers, or a breach in the security of these systems or platforms, including through cyber-attacks such as those that result in the blockage of our or our third-party business partners’ or service providers’ systems and platforms and those discussed in more detail in this risk factors section.
Erosion of trust in our brand value can be caused by isolated or recurring incidents originating both from us or our business partners, or from external events. Such incidents can potentially trigger boycotts of our stores or result in civil or criminal liability and can have a negative impact on our financial results.
Erosion of trust in our brand value can be caused by isolated or recurring incidents originating both from us or our business partners, or from external events. Such incidents can potentially trigger boycotts of our stores or result in civil or criminal liability, which can have a negative impact on our financial results.
Changes in the enforcement priorities of regulators may also shift the impact of applicable regulations on the business and the costs necessary to ensure compliance therewith, including through an expansion in the nature, scope or complexity of matters on which we are required to report.
For example, changes in the enforcement priorities of regulators may also shift the impact of applicable regulations on the business and the costs necessary to ensure compliance therewith, including through an expansion in the nature, scope, or complexity of matters on which we are required to report.
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.
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. These factors may be caused by or exacerbated by climate change.
The performance of these international operations may be adversely affected by economic downturns in one or more of the countries in which our large MBUs operate. A decline in performance of one or more of our significant international MBUs could have a material adverse impact on our consolidated results.
The performance of these international operations may be adversely affected by economic downturns in one or more of the markets in which our large MBUs operate. A decline in performance of one or more of our significant international MBUs could have a material adverse impact on our consolidated results.
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.
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 increases in farm input costs 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.
Our ability to attract and retain corporate, retail and other personnel is also acutely impacted in certain international and domestic markets where the competition for a relatively small number of qualified employees is intense or in markets where large high-tech companies are able to offer more competitive salaries and benefits.
Our ability to attract and retain corporate, retail, and other personnel is also acutely impacted in certain international and domestic markets where the competition for a relatively small number of qualified 21 Table of Contents employees is intense or in markets where large high-tech companies are able to offer more competitive salaries and benefits.
In addition, we provide some customer and employee data, as well as Starbucks proprietary information and other confidential information important to our business, to third parties to conduct our business, including licensees and business partners. Individuals performing work for Starbucks and such third parties also may access some of this data, including on personally-owned digital devices.
In addition, to conduct our business, we provide customer and employee data, as well as Starbucks proprietary information and other confidential information important to our business, to third parties, including licensees and business partners. Individuals performing work for Starbucks and such third parties also may access 26 Table of Contents some of this data, including on personally-owned digital devices.
Our financial results could be adversely affected by a shift in consumer spending away from outside-the-home food and beverages (such as a reduction in discretionary spending as a result of the resumption of student loan payments); 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 a reduction in discretionary spending); 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 ability to find qualified suppliers who meet our standards and supply products in a timely and efficient manner is a significant challenge as we increase our fresh and prepared food offerings, especially with respect to goods sourced from outside the U.S. and from countries or regions with diminished infrastructure, developing or failing economies or which are experiencing political instability or social unrest.
Our ability to find qualified suppliers who meet our standards and supply products in a timely and efficient manner is a significant challenge as we increase our fresh and prepared food offerings, especially with respect to goods sourced from outside the U.S. and from countries or regions with diminished infrastructure, developing or failing economies, or which are experiencing political instability, labor discord, disruption or shortages, or social unrest.
The trademarks that we currently use have not been registered in all of the countries outside of the U.S. in which we do business or may do business in the future and may never be registered in all of these countries.
The trademarks that we currently use have not been registered in all of the markets outside of the U.S. in which we do business or may do business in the future and may never be registered in all of these markets.
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.
We may also communicate certain initiatives and goals related to environmental matters, diversity, responsible sourcing, social investments, and other ESG-related matters in our SEC filings or in other public disclosures.
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.
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 23 Table of Contents effective and may not advance at a sufficient pace, and we could be criticized for the accuracy, adequacy, or completeness of the disclosure.
Our global business strategy, including our plans for new stores, branded products and other initiatives, relies significantly on a variety of business partners, including licensee and joint venture relationships, third-party manufacturers, distributors and retailers, particularly for our entire global Channel Development business.
Our global business strategy, including our plans for new stores, branded products, and other initiatives, relies significantly on a variety of business partners, including licensees, joint venture partners, third-party manufacturers, distributors, and retailers, particularly for our entire global Channel Development business.
Our customers may have or in the future have less money for discretionary purchases and may stop or reduce their purchases of our products or switch to Starbucks or competitors’ lower-priced products as a result of various factors, including job losses, inflation, changes in prevailing interest rates, higher taxes, reduced access to credit, changes in federal economic policy, a global health pandemic, international trade disputes or geopolitical instability.
Our customers may have less money for discretionary purchases and may stop or reduce their purchases of our products or switch to our or our competitors’ lower-priced products as a result of various factors, including job loss, inflation, changes in prevailing interest rates, higher taxes, reduced access to credit, changes in federal economic policy, a global health pandemic, international trade disputes, or geopolitical instability.
Similarly, continued competition from well-established competitors, or competition from large new entrants or well-funded smaller companies, in our domestic and international markets could hinder growth and adversely affect our sales and results of operations in those markets.
Similarly, continued competition from well-established competitors, or 22 Table of Contents competition from large new entrants or well-funded smaller companies, in our domestic and international markets could hinder growth and adversely affect our sales and results of operations in those markets.
These strategic initiatives, which include 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); • adjusting rapidly to changing customer preferences and behaviors as a result of the COVID-19 pandemic, changing economic conditions, increased global interest rates and inflation; • moving to a more licensed store model in certain markets and a more company-operated 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 include our Back to Starbucks 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 partners 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 continuing to introduce flexible and unique store formats in certain markets; • adjusting rapidly to changing customer preferences and behaviors as a result of changing economic conditions and increased global interest rates and inflation; • moving to a more licensed store model in certain markets and a more company-operated 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.
The CCPA also provides for civil penalties for violations as well as a private right of action for data breaches that may increase data breach litigation. Further, the California Privacy Rights Act, which became effective in January 2023, significantly modified the CCPA and includes additional compliance obligations.
The CCPA also provides for civil penalties for violations as well as a private right of action for data breaches that may increase data breach litigation. Further, the California Privacy Rights Act, which became effective in January 2023, significantly modified the CCPA to include additional compliance obligations.
The growth of our business can make it increasingly difficult to locate and hire sufficient numbers of employees, to maintain an effective system of internal controls for a globally dispersed enterprise and to train employees worldwide to deliver a consistently high-quality product and customer experience, which could materially harm our business and results of operations.
The growth of our business can make it increasingly difficult to locate and hire sufficient numbers of employees, to maintain an effective system of operational internal controls for a globally dispersed enterprise, and to train employees worldwide to deliver a consistently high-quality product and customer experience; the failure to do so could materially harm our business and results of operations.
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 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.
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 74% of consolidated total net revenues in fiscal year 2023.
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 75% of consolidated total net revenues in fiscal year 2024.
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.
Our operating results have been, and will continue to be, subject to a number of macroeconomic and other factors, many of which are largely outside our control.
Furthermore, if we are not effective in making sufficient progress toward our social and environmental program goals or in executing on our Reinvention Plan, consumer trust in our brand may suffer, and this perception could result in negative publicity or litigation.
Furthermore, if we are not effective in making sufficient progress toward our environmental and social program goals, consumer trust in our brand may suffer, and this perception could result in negative publicity or litigation.
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 and changes in prevailing interest rates; • 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 or severity of extreme 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 health pandemics that lead to avoidance of public places or restrictions on public gatherings such as in our stores.
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, or results of operations: • increases in real estate costs in certain domestic and international markets; • disruptions to our supply chain; • changes in climate, including changes to the frequency or severity of extreme weather events, that impact the price and availability or cost of goods and services, energy, and other materials throughout our supply chain; • changes in governmental rules and approaches to taxation; • adverse outcomes of litigation; • inflationary pressures and changes in prevailing interest rates; • severe weather or other natural or man-made disasters affecting a large market or several closely located markets that may temporarily or for extended periods of time affect our retail business in such markets; • government shutdowns or the risk of government shutdowns, as well as the impact or expected impact of elections, both in the U.S. and in other markets around the world; • 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- 20 Table of Contents American sentiment in certain markets, or hostilities, social unrest, or health pandemics that lead to avoidance of public places or restrictions on public gatherings such as in our stores; and • fluctuations in foreign currency exchange rates.
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 19 Table of Contents meeting such regulations and expectations.
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.
It may be costly and time consuming to protect our intellectual property, and the steps we have taken to protect our intellectual property in the U.S. and foreign countries may not be adequate.
It may be costly and time consuming to protect our intellectual property, particularly in rapidly evolving areas, and the steps we have taken to protect our intellectual property in the U.S. and foreign countries may not be adequate.
Current and future data privacy and data protection laws and regulations (including the GDPR and the CCPA, discussed in more detail in this risk factors section, and other applicable international and U.S. privacy laws), or new interpretations of existing laws and regulations, may limit our ability to collect and use data, require us to otherwise modify our data processing practices and policies or result in the possibility of fines, litigation or orders, which may have an adverse effect on our business and results of operations.
Current and future data privacy and data protection laws and regulations (including the General Data Protection Regulation and the California Consumer Privacy Act, discussed in more detail in this risk factors section, and other applicable international and U.S. privacy laws), or new interpretations of existing laws and regulations, may limit our ability to collect and use data, require us to otherwise modify our data processing practices and policies, or result in the possibility of fines, litigation, or orders, which may have an adverse effect on our business and 24 Table of Contents results of operations.
Competition to attract and retain high-quality marketing partners and endorsers has increased. Our decisions to collaborate or to cease collaborating with certain endorsers or marketing partners in light of actions taken or statements made by them could seriously harm our brand image with consumers and, as a result, could have an adverse effect on our sales and financial condition.
Our decisions to collaborate or to cease collaborating with certain endorsers or marketing partners in light of actions taken or statements made by them could seriously harm our brand image with consumers and, as a result, could have an adverse effect on our sales and financial condition.
Because of the significance of coffee beans to our operations, combined with our ability to only partially mitigate future price risk through purchasing practices and hedging activities, increases in the cost of high-quality arabica coffee beans could have a material adverse impact on our profitability.
Speculative trading in coffee commodities can also influence coffee prices. Because of the significance of coffee beans to our operations, combined with our ability to only partially mitigate future price risk through purchasing practices and hedging activities, increases in the cost of high-quality arabica coffee beans could have a material adverse impact on our profitability.
In the United States, the California Consumer Privacy Act (“CCPA”) requires, among other things, covered companies to provide new disclosures to California consumers and allows such consumers new abilities such as the right to opt-out of certain sales of personal information.
In the United States, the California Consumer Privacy Act (“CCPA”) requires, among other things, covered companies to provide new disclosures to California consumers and allows such consumers to exercise certain rights in connection with their personal information, such as the right to opt-out of certain sales of personal information.
We do not monitor the quality of non-Starbucks products served by foodservice operators we have authorized to use our logos and provide branded products as part of their foodservice business.
We do not monitor the quality of non-Starbucks products served by foodservice operators who are authorized to use our logos and provide branded products as part of their foodservice businesses.
Our future growth increasingly depends on the growth and sustained profitability of certain international markets. Some or all of our international market business units (“MBUs”), which we generally define by the countries in which they operate, may not be successful in their operations or in achieving expected growth, which ultimately requires achieving consistent, stable net revenues and earnings.
Some or all of our international market business units (“MBUs”), which we generally define by the markets in which they operate, may not be successful in their operations or in achieving expected growth, which ultimately requires achieving consistent, stable net revenues and earnings.
Other newly enacted and proposed privacy and data protection laws in other jurisdictions served by Starbucks and its licensees may impose similar requirements, including 20 Table of Contents restrictions on cross-border data transfers. Such laws may impact Starbucks business operations and increase the cost and expense of compliance.
Other newly enacted and proposed privacy and data protection laws in other jurisdictions served by Starbucks and its licensees may impose similar requirements, including restrictions on cross-border data transfers and stringent safeguards on personal and non-personal data. Such laws may impact our business operations and increase the cost and expense of compliance.
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: 14 Table of Contents • 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 lingering 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; • 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; • data-privacy and cybersecurity risks unique to the conduct of business in China; 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 MBU for our profit and growth, we are exposed to risks in China, including the risks mentioned elsewhere and the following: • a highly competitive retail environment and the 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; • the effects of U.S.-China relations, including escalating U.S.-China tension and increased anti-Americanism, potential tariff increases, retaliations, restrictive regulations, or boycotts, and increasing political sensitivities in China; • ongoing government regulatory reform, including relating to public health, food safety, tariffs and taxes, sustainability, and responses to climate change, which result in regulatory uncertainty as well as potential significant increases in compliance costs; • data privacy and cybersecurity risks unique to the conduct of business in China; and 17 Table of Contents • food safety related matters, including compliance with food safety regulations and ability to ensure product quality and safety.
Our 18 Table of Contents ability to do so has been and may continue to be impacted by challenges in the labor market, which has experienced and may continue to experience wage inflation, labor shortages, increased employee turnover, changes in availability of our workforce and a shift toward remote or hybrid work arrangements.
Our ability to do so has been and may continue to be impacted by challenges in the labor market (which has experienced, and may continue to experience, wage inflation and labor shortages), our position with respect to unions and the unionization of partners, increased employee turnover, changes in availability of our workforce and a shift toward remote or hybrid work arrangements.
If we are unable to meet our ESG-related goals or evolving stakeholder or industry expectations and standards, or if we are perceived to have not responded appropriately to the growing concern for ESG issues, customers and consumers may choose to stop purchasing our products or purchase products from another company or a competitor, and our reputation, business or financial condition may be adversely affected.
If we are unable to meet our ESG-related goals, commitments, initiatives, or evolving stakeholder or industry expectations and standards, if we change or are perceived to have changed our goals, commitments, or initiatives, or if we are perceived to have not responded appropriately to stakeholder interests in ESG issues, customers and consumers may choose to stop purchasing our products or purchase products from another company or a competitor, and our reputation, business, or financial condition may be adversely affected.
Additionally, other commodities, including tea and those related to food and beverage inputs, such as cocoa, produce, baking ingredients, meats, eggs and energy, as well as the processing of these inputs, are important to our operations.
Additionally, other commodities, including tea and those related to food and beverage inputs, such as cocoa, produce, baking ingredients, meats, eggs, and energy, as well as non-food and beverage inputs, such as the components that comprise our packaging materials, are important to our operations, as is the processing of these inputs.
We operate in 86 markets globally. Our properties and operations may be vulnerable to the adverse effects of climate change, which are predicted to increase the frequency and severity of extreme weather events and other natural cycles such as wildfires and droughts.
Our properties and operations may be vulnerable to the various adverse effects of climate change, which are predicted to increase the frequency and severity of extreme weather events and other natural cycles such as wildfires and droughts.
Additionally, the techniques and sophistication used to conduct cyber-attacks and compromise information technology systems, as well as the sources and targets of these attacks, change frequently and are often not recognized until such attacks are launched or have been in place for a period of time. The rapid evolution and increased adoption of artificial intelligence technologies amplifies these concerns.
Additionally, the techniques and sophistication used to conduct cyber-attacks and compromise information technology systems, as well as the sources and targets of these attacks, change frequently and are often not recognized until such attacks are launched or have been in place for a period of time.
The ongoing relevance of our brand may depend on making sufficient progress toward our social and environmental program goals as well as the successful execution of the Reinvention Plan, each of which requires company-wide coordination and alignment.
The ongoing relevance of our brand may depend on making sufficient progress toward our environmental and social program goals, each of which requires company-wide coordination and alignment.
There is no assurance that we will be able to implement important strategic initiatives in accordance with our expectations or that they will generate expected returns, which may result in an adverse impact on our business and financial results.
We may not be able to implement important strategic initiatives in accordance with our expectations or that generate expected returns, which may result in an adverse impact on our business and financial results.
We could also be subjected to negative responses by governmental actors (such as anti-ESG legislation or retaliatory legislative treatment) or consumers (such as boycotts or negative publicity campaigns) targeting Starbucks that could adversely affect our reputation, business, financial performance and growth.
We have been and could continue to be subject to negative responses by governmental actors (such as anti-ESG legislation or retaliatory legislative treatment) or consumers (such as boycotts or negative publicity campaigns) targeting Starbucks, which could adversely affect our reputation, business, financial performance, and growth.
For example, extreme weather conditions such as drought or frost in Brazil have impacted coffee prices in the past, and in the likely event that such weather conditions were to reoccur in the future, they would have similar consequences on coffee price volatility.
For example, extreme weather conditions such as drought or frost in Brazil have impacted coffee prices in the past, and in the likely event that such weather conditions were to reoccur, become more frequent, and/or increase in severity in the future, they may have similar or worse consequences on coffee price volatility.
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.
We are subject to changing rules and regulations promulgated by a number of regulators and organizations, including the SEC, the European Union, the Nasdaq Stock Market, and the Financial Accounting Standards Board.
Risks Related to Intellectual Property • We may not be able to adequately protect our intellectual property or adequately ensure that we are not infringing the intellectual property of others, which could harm the value of our brand and our business.
Risks Related to Intellectual Property Failure to adequately protect our intellectual property or ensure that we are not infringing on the intellectual property of others could harm the value of our brand and our business.
Some third parties may object to the scope or nature of our social and environmental program initiatives or goals, or any revisions to these initiatives or goals, which could give rise to negative responses by governmental actors (such as retaliatory legislative treatment) or consumers (such as boycotts or negative publicity campaigns) that could adversely affect our brand value. • We may not be successful in our marketing, promotional and advertising plans and pricing strategies.
Some third parties may object to the scope or nature of our environmental and social program initiatives or goals, or any revisions to these initiatives or goals, which could give rise to negative responses by governmental actors (such as retaliatory legislative treatment), consumers (such as boycotts or negative publicity campaigns), or other third parties that could adversely affect our brand value.
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 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; 13 Table of Contents • not successfully adapting to customer or market factors affecting our supply chain as we work to address sustainability and climate change; • 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; and • geopolitical instability and international conflicts.
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: • delays or cancellations of store openings for reasons beyond our control, such as potential shortages of materials and labor, delays in permits, 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 in the U.S. and internationally; • not successfully scaling our supply chain infrastructure as we continue to expand; • not successfully adapting to customer or market factors affecting our supply chain as we work to address sustainability goals and mitigate the impacts of climate change; 14 Table of Contents • inability to timely innovate with new product offerings, or the potential that such offerings may not be well-received by consumers; • delays or cancellations of remodels based on changes in macroeconomic conditions, changes in expected project benefits, or other factors; • construction cost increases associated with new store openings and remodeling of existing stores; • the challenges of company-wide coordination and alignment; • inability to identify or act on opportunities to deliver anticipated cost savings; • imposition of additional taxes by jurisdictions, such as on certain types of beverages or based on number of employees; • governmental regulations or other health guidelines concerning operations of stores, including due to public health emergencies; • deterioration in our credit ratings, which could limit the availability of additional financing and increase the cost of obtaining financing to fund our initiatives; and • geopolitical instability and international conflicts.
The amount and scope of insurance we maintain may not cover all types of claims that may arise. • The unauthorized access, use, theft or destruction of customer or employee personal, financial or other data or of Starbucks proprietary or confidential information that is stored in our information systems or by third parties on our behalf could impact our reputation and brand and expose us to potential liability and loss of revenues.
The unauthorized access, use, theft, or destruction of customer or employee data (personal, financial, or other), or of Starbucks proprietary or confidential information that is stored in our information systems or by third parties on our behalf, could impact our reputation and brand and expose us to potential liability and loss of revenues.
Similarly, increases in the cost of, or lack of availability, whether due to supply shortages, delays or interruptions in the processing of plant-based alternatives could have a material adverse impact on our profitability. • Interruption of our supply chain could affect our ability to produce or deliver our products and could negatively impact our business and profitability. 16 Table of Contents Any material interruption in our supply chain, such as material interruption of roasted coffee supply due to the casualty loss of any of our roasting plants, interruptions in service by our third-party logistic service providers or common carriers that ship goods within our distribution channels, trade restrictions, such as increased tariffs or quotas, embargoes or customs restrictions, pandemics, social or labor unrest, labor shortages, natural disasters or political disputes and military conflicts that cause a material disruption in our supply chain could have a negative material impact on our business and our profitability.
Any material interruption in our supply chain (such as material disruption of roasted coffee supply), whether due to the casualty loss of any of our roasting plants, interruptions in service by our third-party logistic service providers or common carriers that ship goods within our distribution channels, trade restrictions (such as increased tariffs or quotas, embargoes, or customs restrictions), pandemics, social or labor unrest, labor shortages, natural disasters, or political disputes and military conflicts that cause a material disruption in our supply chain could have a negative material impact on our business and our profitability.
These limitations could negatively affect our costs, change our employee culture, and decrease our flexibility. They also present the potential to disrupt our current operational model by affecting our ability to fully implement operational changes to enhance our efficiency and adapt to changing business needs. Moreover, we have experienced job actions in some company-operated stores.
They also present the potential to disrupt our current operational model by affecting our ability to fully implement operational changes to enhance our efficiency and adapt to changing business needs. Moreover, we have experienced job actions in some company-operated stores.
In addition, we could be criticized by ESG detractors for the scope or nature of our ESG initiatives or goals or for any revisions to these goals.
In addition, we could be criticized by shareholders, stakeholders, regulators, or other interested parties for the scope or nature of our ESG initiatives or goals or for any revisions to these goals.
Unauthorized access, theft, use, destruction or other compromises are becoming increasingly sophisticated and may occur through a variety of methods, including attacks using malicious code, vulnerabilities in software, hardware or other infrastructure (including systems used by our supply chain), system misconfigurations, phishing or social engineering. The rapid evolution and increased adoption of artificial intelligence technologies may intensify our cybersecurity risks.
Unauthorized access, theft, use, destruction, or other compromises are becoming increasingly sophisticated and may occur through a variety of methods, including attacks using malicious code, vulnerabilities in software, hardware, or other infrastructure (including systems used by our supply chain), system misconfigurations, phishing, deepfakes, ransomware, malware, or social engineering.
We purchase, roast and sell high-quality whole bean arabica coffee beans and related coffee products. The high-quality arabica coffee of the quality we seek tends to trade on a negotiated basis at a premium above the “C” price. This premium depends upon the supply and demand at the time of purchase and the amount of the premium can vary significantly.
We purchase, roast, and sell high-quality whole bean arabica coffee beans and related coffee products. The high-quality arabica coffee of the quality we seek tends to trade on a negotiated basis at a premium above the “C” price.
If we are not successful in implementing our strategic initiatives, or, in the event we undertake large acquisitions, integrations and divestitures, we may be required to evaluate whether certain assets, including goodwill and other intangibles, have become impaired.
If we are not successful in implementing our strategic initiatives, or, in the event we undertake large acquisitions, integrations, and divestitures, we may be required to evaluate whether certain assets, including goodwill and other intangibles, have become impaired. In the event we record an impairment charge, it could have a material impact on our financial results.
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.
We may not be successful in our marketing strategies, promotional and advertising plans, and pricing strategies. Our continued success depends in part on our ability to adjust our marketing strategies, promotional and advertising plans, and pricing strategies to respond quickly and effectively to shifting economic and competitive conditions as well as evolving customer preferences.
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.
Further, the degree to which we are able to enter into, maintain, develop, negotiate, and enforce appropriate terms and conditions of commercial and other agreements, as well as the performance of our business partners under such agreements, are critical to our business.
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.
Since 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 our shareholders.
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 applicable markets.
Our retail licensed operations are concentrated in a relatively small number of large licensees. If they are not able to access sufficient capital 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 applicable markets.
The International segment is a significant profit center driving our global returns, along with our North America segment. In particular, our China MBU contributes meaningfully to both consolidated and International net revenues and operating income. China is expected to be our fastest growing market in terms of percentage growth, our second largest market overall and 100% company-owned.
The International segment is an important profit center driving our global returns, along with our North America segment. In particular, our China MBU, as our second-largest market overall and 100% company-operated, contributes meaningfully to both consolidated and International net revenues and operating income.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeProperties 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 1,294,000 Corporate administrative Minden, NV (Carson Valley) 1,080,000 Roasting, warehousing and distribution Lebanon, TN 680,000 Warehousing and distribution Kunshan, China 630,000 Roasting, 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.
Biggest changeProperties 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 1,294,000 Corporate administrative Minden, NV (Carson Valley) 1,080,000 Roasting, warehousing and distribution Auburn, WA 750,000 Warehousing and distribution Lebanon, TN 680,000 Warehousing and distribution Kunshan, China 630,000 Roasting, warehousing and distribution Kent, WA 510,000 Roasting 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 1, 2023, Starbucks h ad 19,592 company-operated stores, almost all of which are leased. We also lease space in various locations 23 Table of Contents 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 September 29, 2024, Starbucks h ad 21,018 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

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Biggest changeThe 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. 25 Table of Contents Performance Comparison Graph The following graph depicts the total return to shareholders from September 30, 2018, through October 1, 2023, 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.
Biggest changeThe following graph depicts the total return to shareholders from September 29, 2019, through September 29, 2024, 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.
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.
This does not include persons whose stock is in nominee or “street name” accounts through brokers. Future decisions to pay comparable cash dividends to those paid in the past 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.
All indices shown in the graph have been reset to a base of 100 as of September 30, 2018, 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 September 29, 2019, 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.
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 10, 2023, 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 13, 2024, we had approximately 17,000 shareholders of record.
(3) This column includes the total number of shares available for repurchase under the Company's ongoing share repurchase program. 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, 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.
Removed
ISSUER PURCHASES OF EQUITY SECURITIES The following table provides information regarding repurchases of our common stock during the quarter ended October 1, 2023 .
Added
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.
Removed
Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2) Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (3) Period (1) July 3, 2023 - July 30, 2023 — $ — — 45,720,818 July 31, 2023 - August 27, 2023 1,072,090 98.16 1,072,090 44,648,728 August 28, 2023 - October 1, 2023 2,059,067 95.39 2,059,067 42,589,661 Total 3,131,157 $ 96.34 3,131,157 (1) Monthly information is presented by reference to our fiscal months during the fourth quarter of fiscal 2023.
Added
During the fiscal fourth quarter ended September 29, 2024, there was no share repurchase activity . 31 Table of Contents Performance Comparison Graph The following graph shall not be deemed “filed” for purposes of section 18 of the Exchange Act, or otherwise subject to the liabilities under that section and shall not be deemed to be incorporated by reference into any filing of Starbucks Corporation under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
Removed
(2) Share repurchases are conducted under our ongoing share repurchase program announced in September 2001, which has no expiration date, and for which the authorized number of shares has been increased by our Board numerous times, with our Board most recently authorizing the repurchase of up to an additional 40 million shares in March 2022.
Added
Sep 29, 2019 Sep 27, 2020 Oct 3, 2021 Oct 2, 2022 Oct 1, 2023 Sep 29, 2024 Starbucks Corporation $ 100.00 $ 97.36 $ 132.65 $ 101.19 $ 111.93 $ 122.41 S&P 500 100.00 115.15 149.70 126.54 153.89 209.84 Nasdaq Composite 100.00 140.96 183.61 135.42 170.76 236.74 S&P Consumer Discretionary 100.00 128.89 153.57 121.48 138.22 177.00 32 Table of Contents
Removed
Sep 30, 2018 Sep 29, 2019 Sep 27, 2020 Oct 3, 2021 Oct 2, 2022 Oct 1, 2023 Starbucks Corporation $ 100.00 $ 158.45 $ 154.26 $ 210.18 $ 160.32 $ 177.34 S&P 500 100.00 104.25 120.05 156.07 131.92 160.44 Nasdaq Composite 100.00 100.52 141.70 184.58 136.12 171.65 S&P Consumer Discretionary 100.00 102.36 131.93 157.19 124.35 141.47 26 Table of Contents

Item 7. Management's Discussion & Analysis

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

78 edited+22 added−18 removed56 unchanged
Biggest changeThese were partially offset by previously-committed investments in store partner wages and benefits (approximately 300 basis points) and increased spend on partner training (approximately 40 basis points), as well as inflationary pressures on commodities and our supply chain (approximately 80 basis points). 32 Table of Contents International Fiscal Year Ended Oct 1, 2023 Oct 2, 2022 Oct 1, 2023 Oct 2, 2022 As a % of International Total Net Revenues Net revenues: Company-operated stores $ 5,556.9 $ 5,361.9 74.2 % 77.3 % Licensed stores 1,853.6 1,505.0 24.8 21.7 Other 77.1 73.2 1.0 1.1 Total net revenues 7,487.6 6,940.1 100.0 100.0 Product and distribution costs 2,608.4 2,357.7 34.8 34.0 Store operating expenses 2,761.1 2,701.8 36.9 38.9 Other operating expenses 219.0 191.4 2.9 2.8 Depreciation and amortization expenses 335.1 513.0 4.5 7.4 General and administrative expenses 335.8 345.3 4.5 5.0 Total operating expenses 6,259.4 6,109.2 83.6 88.0 Income from equity investees 2.7 2.3 0.0 0.0 Operating income $ 1,230.9 $ 833.2 16.4 % 12.0 % Store operating expenses as a % of related revenues 49.7 % 50.4 % Revenues International total net revenues for fiscal 2023 increased $548 million, or 7.9%, primarily due to 927 net new Starbucks company-operated stores, or a 12% increase over the past 12 months ($421 million), as well as higher product sales to and royalty revenues from our licensees ($411 million).
Biggest changeOperating margin contracted 90 basis points to 19.8%, primarily due to investments in store partner wages and benefits (approximately 150 basis points), deleverage (approximately 150 basis points), and increased promotional activity (approximately 100 basis points), partially offset by pricing (approximately 220 basis points) and in-store operational efficiencies (approximately 150 basis points). 39 Table of Contents International Fiscal Year Ended Sep 29, 2024 Oct 1, 2023 Sep 29, 2024 Oct 1, 2023 As a % of International Total Net Revenues Net revenues: Company-operated stores $ 5,507.2 $ 5,556.9 75.0 % 74.2 % Licensed stores 1,757.7 1,853.6 24.0 24.8 Other 74.0 77.1 1.0 1.0 Total net revenues 7,338.9 7,487.6 100.0 100.0 Product and distribution costs 2,575.2 2,608.4 35.1 34.8 Store operating expenses 2,819.4 2,761.1 38.4 36.9 Other operating expenses 225.1 219.0 3.1 2.9 Depreciation and amortization expenses 338.3 335.1 4.6 4.5 General and administrative expenses 338.8 335.8 4.6 4.5 Total operating expenses 6,296.8 6,259.4 85.8 83.6 Income from equity investees 3.6 2.7 0.0 0.0 Operating income $ 1,045.7 $ 1,230.9 14.2 % 16.4 % Store operating expenses as a % of related revenues 51.2 % 49.7 % Revenues International total net revenues for fiscal 2024 decreased $149 million, or 2%, primarily due to unfavorable foreign currency translation impacts ($252 million), as well as a 4% decline in comparable store sales ($210 million), driven by a 4% decline in average ticket.
Our income tax expense, deferred tax assets and liabilities for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid.
Our income tax expense and deferred tax assets and liabilities for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid.
When assessing goodwill for impairment, our decision to perform a qualitative impairment assessment for an individual reporting unit is influenced by a number of factors, inclusive of the carrying value of the reporting unit’s goodwill, the significance of the excess of the reporting unit’s estimated fair value over carrying value at the last quantitative assessment date, the amount of time in between quantitative fair value assessments and the date of acquisition.
When assessing goodwill for impairment, our decision to perform a qualitative impairment assessment for an individual reporting unit is influenced by a number of factors, inclusive of the carrying value of the reporting unit’s goodwill, the significance of the excess of the reporting unit’s estimated fair value over carrying value at the last quantitative assessment date, and the amount of time in between quantitative fair value assessments and the date of acquisition.
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 and Africa, Latin America and the Caribbean; and 3) Channel Development. Non-reportable operating segments 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. Unallocated corporate expenses are reported within Corporate and Other.
Use of Cash We expect to use our available cash and investments, including, but not limited to, additional potential future borrowings under the credit facilities, commercial paper program and the issuance of debt to support and invest in our core businesses, including investing in new ways to serve our customers and supporting our store partners, repaying maturing debts, as well as returning cash to shareholders through common stock cash dividend payments and discretionary share repurchases and investing in new business opportunities related to our core and developing businesses.
Use of Cash We expect to use our available cash and investments, including, but not limited to, additional potential future borrowings under the credit facilities, commercial paper program, and the issuance of debt to support and invest in our core businesses, including investing in new ways to serve our customers and supporting our store partners, repaying maturing debts, returning cash to shareholders through common stock cash dividend payments and discretionary share repurchases, and investing in new business opportunities related to our core and developing businesses.
(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 92% of total purchase obligations. (3) Other obligations include other long-term liabilities primarily consisting of long-term income taxes payable, asset retirement obligations, equity investment capital commitments and finance lease obligations.
(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 86% of total purchase obligations. (3) Other obligations include other long-term liabilities primarily consisting of long-term asset retirement obligations, income taxes payable, equity investment capital commitments, and finance lease obligations.
We also use cross-currency swaps and foreign exchange debt instruments to hedge against changes in the fair value of our net investments in foreign operations. Excluding interest rate hedging instruments, cross currency swaps and foreign currency debt, hedging instruments generally do not have maturities in excess of three years.
We also use cross-currency swaps to hedge against changes in the fair value of our net investments in foreign operations. Excluding interest rate hedging instruments and cross currency swaps, hedging instruments generally do not have maturities in excess of three years.
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. 40 Table of Contents In fiscal 2022, we announced our Reinvention Plan in the U.S. market to increase efficiency while elevating the partner and customer experience.
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 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 $ 1.2 $ (1.2) $ 33 $ (33) 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 $ 2 $ (2) $ 21 $ (21) Foreign Currency Exchange Risk The majority of our revenue, expense, and capital purchasing activities are transacted in U.S. dollars.
We continue to believe the fair value of each of our reporting units is significantly in excess of its carrying value, and absent a sustained multi-year global decline in our business in key markets such as the U.S. and China, we do not anticipate incurring significant goodwill impairment in the next 12 months.
We continue to believe the fair value of each of our reporting units is significantly in excess of its carrying value, and absent a sustained multi-year global decline in our business in key markets such as the U.S. and China, we do not anticipate incurring significant 48 Table of Contents goodwill impairment in the next 12 months.
We believe that our significant accounting estimates involve a higher degree of judgment and/or complexity for the reasons discussed below: Income Taxes We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the respective tax bases of our assets and liabilities.
We believe that our significant accounting estimates involve a higher degree of judgment and/or complexity for the reasons discussed below. 46 Table of Contents Income Taxes We recognize deferred tax assets and liabilities based on the differences between the financial statement carrying amounts and the respective tax bases of our assets and liabilities.
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 $ 27 $ (27) $ 197 $ (197) 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 $ 24 $ (24) $ 489 $ (489) 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.
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. Corporate and Other operating loss increased to $1.8 billion for fiscal 2023, or 20%, compared to $1.5 billion in fiscal 2022.
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. Corporate and Other operating loss increased to $1.9 billion for fiscal 2024, or 5%, compared to $1.8 billion in fiscal 2023.
We use a combination of pricing features embedded within supply contracts, such as fixed-price and price-to-be-fixed contracts and financial derivatives to manage our commodity price risk exposure. The following table summarizes the potential impact as of October 1, 2023 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 and financial derivatives, to manage our commodity price risk exposure. The following table summarizes the potential impact as of September 29, 2024, to Starbucks future net earnings and other comprehensive income (“OCI”) from changes in commodity prices.
Our fiscal 2023 annual goodwill impairment testing was completed in the third fiscal quarter. Where a quantitative assessment was performed, the estimated fair value of our reporting units exceeded carrying value by approximately $101 billion.
Our fiscal 2024 annual goodwill impairment testing was completed in the third fiscal quarter. Where a quantitative assessment was performed, the estimated fair value of our reporting units exceeded carrying value by approximately $124 billion.
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 2, 2022.
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 1, 2023.
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 1, 2023, approximately $2.5 billion of cash and short-term investments were 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 September 29, 2024, approximately $2.1 billion of cash and short-term investments were held in foreign subsidiaries.
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 1, 2023.
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 September 29, 2024.
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 1, 2023, 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 September 29, 2024, we were in compliance with all applicable covenants.
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 1, 2023 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 September 29, 2024, and determined that such a change would not have a significant impact on the fair value of these instruments.
Credit Facilities in Japan Additionally, we hold the following Japanese yen-denominated credit facilities that are are available for working capital needs and capital expenditures within our Japanese market: • A ¥5 billion, or $33.5 million, credit facility is currently set to mature on January 4, 2024.
Credit Facilities in Japan Additionally, we hold the following Japanese yen-denominated credit facilities that are available for working capital needs and capital expenditures within our Japanese market: • A ¥5.0 billion, or $34.5 million, credit facility is currently set to mature on December 30, 2024.
As of October 1, 2023, we were in compliance with all applicable covenants. No amounts were outstanding under our 2021 credit facility as of October 1, 2023 or October 2, 2022. 35 Table of Contents Our total contractual borrowing capacity for general corporate purposes was $3.0 billion as of the end of fiscal 2023.
As of September 29, 2024, we were in compliance with all applicable covenants. No amounts were outstanding under our 2021 credit facility as of September 29, 2024, or October 1, 2023. 42 Table of Contents Our total available contractual borrowing capacity for general corporate purposes was $3.0 billion as of the end of fiscal 2024.
The primary objective of these investments is to preserve capital and liquidity. Available-for-sale securities are recorded on the consolidated balance sheets at fair value with unrealized gains and losses reported as a component of accumulated other comprehensive income. We do not hedge the interest rate exposure on our investments.
Available-for-sale securities are recorded on the consolidated balance sheets at fair value with unrealized gains and losses reported as a component of accumulated other comprehensive income. We do not hedge the interest rate exposure on our investments.
Risk limits are set annually and speculative trading activities are prohibited. We also monitor and limit the amount of associated counterparty credit risk, which we consider to be low. We use interest rate swap agreements and treasury locks to primarily hedge against changes in benchmark interest rates related to anticipated debt issuances.
We also monitor and limit the amount of associated counterparty credit risk, which we consider to be low. We use interest rate swap agreements and treasury locks to primarily hedge against changes in benchmark interest rates related to anticipated debt issuances.
Borrowings under this 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 $67.0 million, credit facility is currently set to mature on March 27, 2024.
Borrowings under this credit facility are subject to terms defined within the facility and will bear interest at a variable rate based on Tokyo Interbank Offered Rate (“TIBOR”) plus an applicable margin of 0.400%. • A ¥10.0 billion, or $69.1 million, credit facility is currently set to mature on March 27, 2025.
Other than normal operating expenses, cash requirements for fiscal 2024 are expected to consist primarily of capital expenditures for investments in our new and existing stores, our supply chain and corporate facilities. Total capital expenditures for fiscal 2024 are expected to be approximately $3.0 billion.
Other than normal operating expenses, cash requirements for fiscal 2025 are expected to consist primarily of capital expenditures for investments in our new and existing stores, our supply chain, and corporate facilities. Total capital expenditures for fiscal 2025 are expected to be reasonably consistent with fiscal 2024.
As a result of the restructuring efforts in connection with the Reinvention Plan, we recorded immaterial impairment charges on our consolidated statements of earnings during the fiscal years ended October 1, 2023 and October 2, 2022. Future impairment charges attributed to our Reinvention Plan are not expected to be material.
As a result of the restructuring efforts in connection with the Reinvention Plan, we recorded immaterial impairment charges in our consolidated statements of earnings during the fiscal years ended October 1, 2023, and October 2, 2022.
As of October 2, 2022, we had no borrowings outstanding under these credit facilities. See Note 9 , Debt, to the consolidated financial statements included in Item 8 of Part II of this 10-K for details of the components of our long-term debt.
As of October 1, 2023, we had ¥5.0 billion, or $33.5 million, of borrowings outstanding under these credit facilities. See Note 9 , Debt, to the consolidated financial statements included in Item 8 of Part II of this 10-K for details of the components of our long-term debt.
Borrowings under this 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 0.300%. As of October 1, 2023 we had ¥5 billion, or $33.5 million, of borrowings outstanding under these credit facilities.
Borrowings under this 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 0.300%. As of September 29, 2024, we had no borrowings outstanding under these credit facilities.
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 years 2023 and 2022 included 52 weeks.
All references to store counts, including data for new store openings, are reported net of related store closures, unless otherwise noted. Fiscal years 2024, 2023, and 2022 included 52 weeks. The discussion of our financial condition and results of operations for the fiscal year ended October 2, 2022, included in Item 7.
The following table summarizes the impact of a change in interest rates as of October 1, 2023 on the fair value of Starbucks debt (in millions) : Fair Value Decrease in Fair Value for a 100 Basis Point Increase in Underlying Rate Long-term debt (1)(2) $ 13,426 $ (820) (1) Amount disclosed is net of $16 million change in the fair value of our designated interest rate swaps.
The following table summarizes the impact of a change in interest rates as of September 29, 2024, on the fair value of Starbucks debt (in millions) : Fair Value Decrease in Fair Value for a 100 Basis Point Increase in Underlying Rate Long-term debt (1) $ 14,647 $ (943) (1) Amount disclosed is net of $15 million change in the fair value of our designated interest rate swaps.
In the event we determine that all or another portion of such foreign earnings are no longer indefinitely reinvested, we may be subject to additional foreign withholding taxes and U.S. state income taxes, which could be material.
In the event we determine that all or another portion of such foreign earnings are no longer indefinitely reinvested, we may be subject to additional foreign withholding taxes, which could be material. Any foreign earnings that are not indefinitely reinvested may be repatriated at management’s discretion.
We returned $6.3 billion in fiscal 2022 through share repurchases and dividends. 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.
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.
RESULTS OF OPERATIONS — FISCAL 2023 COMPARED TO FISCAL 2022 Consolidated results of operations (in millions) : Revenues Fiscal Year Ended Oct 1, 2023 Oct 2, 2022 % Change Net revenues: Company-operated stores $ 29,462.3 $ 26,576.1 10.9 % Licensed stores 4,512.7 3,655.5 23.4 Other 2,000.6 2,018.7 (0.9) Total net revenues $ 35,975.6 $ 32,250.3 11.6 % Total net revenues increased $3.7 billion, or 12%, over fiscal 2022, primarily due to higher revenues from company-operated stores ($2.9 billion).
RESULTS OF OPERATIONS — FISCAL 2024 COMPARED TO FISCAL 2023 Consolidated results of operations (in millions) : Revenues Fiscal Year Ended Sep 29, 2024 Oct 1, 2023 % Change Net revenues: Company-operated stores $ 29,765.9 $ 29,462.3 1.0 % Licensed stores 4,505.1 4,512.7 (0.2) Other 1,905.2 2,000.6 (4.8) Total net revenues $ 36,176.2 $ 35,975.6 0.6 % Total net revenues increased $201 million, or 1%, over fiscal 2023, primarily due to higher revenues from company-operated stores ($304 million).
We manage our exposure to various market-based risks according to a market price risk management policy. 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 37 Table of Contents risk.
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.
The combination of these changes resulted in an overall increase in operating margin of 200 basis points in fiscal 2023 when compared to fiscal 2022. 30 Table of Contents Other Income and Expenses Fiscal Year Ended Oct 1, 2023 Oct 2, 2022 Oct 1, 2023 Oct 2, 2022 As a % of Total Net Revenues Operating income $ 5,870.8 $ 4,617.8 16.3 % 14.3 % Interest income and other, net 81.2 97.0 0.2 0.3 Interest expense (550.1) (482.9) (1.5) (1.5) Earnings before income taxes 5,401.9 4,231.9 15.0 13.1 Income tax expense 1,277.2 948.5 3.6 2.9 Net earnings including noncontrolling interests 4,124.7 3,283.4 11.5 10.2 Net earnings/(loss) attributable to noncontrolling interests 0.2 1.8 0.0 0.0 Net earnings attributable to Starbucks $ 4,124.5 $ 3,281.6 11.5 % 10.2 % Effective tax rate including noncontrolling interests 23.6 % 22.4 % Interest income and other, net decreased $16 million, primarily due to lapping higher investment gains in the prior year.
The combination of these changes resulted in an overall decrease in operating margin of 130 basis points in fiscal 2024 when compared to fiscal 2023. 37 Table of Contents Other Income and Expenses Fiscal Year Ended Sep 29, 2024 Oct 1, 2023 Sep 29, 2024 Oct 1, 2023 As a % of Total Net Revenues Operating income $ 5,408.8 $ 5,870.8 15.0 % 16.3 % Interest income and other, net 122.8 81.2 0.3 0.2 Interest expense (562.0) (550.1) (1.6) (1.5) Earnings before income taxes 4,969.6 5,401.9 13.7 15.0 Income tax expense 1,207.3 1,277.2 3.3 3.6 Net earnings including noncontrolling interests 3,762.3 4,124.7 10.4 11.5 Net earnings/(loss) attributable to noncontrolling interests 1.4 0.2 0.0 0.0 Net earnings attributable to Starbucks $ 3,760.9 $ 4,124.5 10.4 % 11.5 % Effective tax rate including noncontrolling interests 24.3 % 23.6 % Interest income and other, net increased $42 million, and i nterest expens e increased $12 million, both primarily due to higher interest rates in the current year.
In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income/(loss). 39 Table of Contents In addition, our income tax returns are periodically audited by domestic and foreign tax authorities.
In evaluating the objective evidence that historical results provide, we consider three years of cumulative operating income/(loss). In addition, our income tax returns are periodically audited by domestic and foreign tax authorities. These audits include review of our tax filing positions, such as the timing and amount of deductions taken and the allocation of income between tax jurisdictions.
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.
No restructuring and impairment costs attributable to the Reinvention Plan were recorded in our consolidated statements of earnings during the fiscal year ended September 29, 2024. 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.
The following table summarizes the potential impact as of October 1, 2023 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 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. 45 Table of Contents The following table summarizes the potential impact as of September 29, 2024, 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.
Operating Margin Channel Development operating income for fiscal 2023 increased 18% to $968 million, compared to $817 million in fiscal 2022.
Operating Margin Channel Development operating income for fiscal 2024 decreased 4% to $926 million, compared to $968 million in fiscal 2023.
Our financial results and long-term growth model will continue to be driven by new store openings, comparable store sales and margin management. We believe these key operating metrics are useful to investors because management uses these metrics to assess the growth of our business and the effectiveness of our marketing and operational strategies.
We believe these key operating metrics are useful to investors because management uses these metrics to assess the growth of our business and the effectiveness of our marketing and operational strategies.
Other revenues decreased $18 million, primarily due to the absence of revenues from the Evolution Fresh business following its sale in the fourth quarter of fiscal 2022 ($60 million), partially offset by an increase in revenue in the Global Coffee Alliance ($37 million). 29 Table of Contents Operating Expenses Fiscal Year Ended Oct 1, 2023 Oct 2, 2022 Oct 1, 2023 Oct 2, 2022 As a % of Total Net Revenues Product and distribution costs $ 11,409.1 $ 10,317.4 31.7 % 32.0 % Store operating expenses 14,720.3 13,561.8 40.9 42.1 Other operating expenses 539.4 461.5 1.5 1.4 Depreciation and amortization expenses 1,362.6 1,447.9 3.8 4.5 General and administrative expenses 2,441.3 2,032.0 6.8 6.3 Restructuring and impairments 21.8 46.0 0.1 0.1 Total operating expenses 30,494.5 27,866.6 84.8 86.4 Income from equity investees 298.4 234.1 0.8 0.7 Gain from sale of assets 91.3 — 0.3 — Operating income $ 5,870.8 $ 4,617.8 16.3 % 14.3 % Store operating expenses as a % of related revenues 50.0 % 51.0 % Product and distribution costs as a percentage of total net revenues decreased 30 basis points, primarily due to pricing (approximately 120 basis points), partially offset by inflationary pressures on commodities and our supply chain (approximately 80 basis points).
Other revenues decreased $95 million, primarily due to a decline in revenue in the Global Coffee Alliance ($125 million) following the sale of our Seattle’s Best Coffee brand to Nestlé in the second quarter of fiscal 2023 as well as product SKU optimization. 36 Table of Contents Operating Expenses Fiscal Year Ended Sep 29, 2024 Oct 1, 2023 Sep 29, 2024 Oct 1, 2023 As a % of Total Net Revenues Product and distribution costs $ 11,180.6 $ 11,409.1 30.9 % 31.7 % Store operating expenses 15,286.5 14,720.3 42.3 40.9 Other operating expenses 565.6 539.4 1.6 1.5 Depreciation and amortization expenses 1,512.6 1,362.6 4.2 3.8 General and administrative expenses 2,523.3 2,441.3 7.0 6.8 Restructuring and impairments — 21.8 — 0.1 Total operating expenses 31,068.6 30,494.5 85.9 84.8 Income from equity investees 301.2 298.4 0.8 0.8 Gain from sale of assets — 91.3 — 0.3 Operating income $ 5,408.8 $ 5,870.8 15.0 % 16.3 % Store operating expenses as a % of related revenues 51.4 % 50.0 % Product and distribution costs as a percentage of total net revenues decreased 80 basis points, primarily due to the impact of increased sales from pricing (approximately 70 basis points) and a reduction in supply chain costs (approximately 60 basis points).
See Note 14 , Income Taxes, for further discussion. 31 Table of Contents Segment Information Results of operations by segment (in millions) : North America Fiscal Year Ended Oct 1, 2023 Oct 2, 2022 Oct 1, 2023 Oct 2, 2022 As a % of North America Total Net Revenues Net revenues: Company-operated stores $ 23,905.4 $ 21,214.2 90.0 % 90.8 % Licensed stores 2,659.1 2,150.5 10.0 9.2 Other 5.1 6.1 0.0 0.0 Total net revenues 26,569.6 23,370.8 100.0 100.0 Product and distribution costs 7,530.4 6,677.2 28.3 28.6 Store operating expenses 11,959.2 10,860.0 45.0 46.5 Other operating expenses 263.8 202.1 1.0 0.9 Depreciation and amortization expenses 910.1 808.4 3.4 3.5 General and administrative expenses 389.7 303.3 1.5 1.3 Restructuring and impairments 20.7 33.3 0.1 0.1 Total operating expenses 21,073.9 18,884.3 79.3 80.8 Operating income $ 5,495.7 $ 4,486.5 20.7 % 19.2 % Store operating expenses as a % of related revenues 50.0 % 51.2 % Revenues North America total net revenues for fiscal 2023 increased $3.2 billion, or 14%, primarily due to a 9% increase in comparable store sales ($1.9 billion) driven by a 6% increase in average ticket and a 3% increase in comparable transactions.
See Note 14 , Income Taxes, to the consolidated financial statements included in Item 8 of Part II of this 10-K, for further discussion. 38 Table of Contents Segment Information Results of operations by segment (in millions) : North America Fiscal Year Ended Sep 29, 2024 Oct 1, 2023 Sep 29, 2024 Oct 1, 2023 As a % of North America Total Net Revenues Net revenues: Company-operated stores $ 24,258.7 $ 23,905.4 89.8 % 90.0 % Licensed stores 2,747.4 2,659.1 10.2 10.0 Other 3.4 5.1 0.0 0.0 Total net revenues 27,009.5 26,569.6 100.0 100.0 Product and distribution costs 7,478.0 7,530.4 27.7 28.3 Store operating expenses 12,467.1 11,959.2 46.2 45.0 Other operating expenses 280.9 263.8 1.0 1.0 Depreciation and amortization expenses 1,052.4 910.1 3.9 3.4 General and administrative expenses 375.8 389.7 1.4 1.5 Restructuring and impairments — 20.7 — 0.1 Total operating expenses 21,654.2 21,073.9 80.2 79.3 Operating income $ 5,355.3 $ 5,495.7 19.8 % 20.7 % Store operating expenses as a % of related revenues 51.4 % 50.0 % Revenues North America total net revenues for fiscal 2024 increased $440 million, or 2%, primarily driven by net new company-operated store growth of 5%, or 533 stores, over the past 12 months ($788 million) and higher product and equipment sales to, and royalty revenues from, our licensees ($80 million).
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 2023 demonstrate the overall strength 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 2024 reflect a challenging operating environment, notably driven by reduced customer traffic compared to fiscal 2023, that pressured our financial results.
The growth in company-operated store revenue was driven by an 8% increase in comparable store sales ($2.1 billion) attributed to a 5% increase in average ticket and 3% increase in comparable transactions. Also contributing were the incremental revenues from 1,339 net new Starbucks company-operated store openings, or a 7% increase, over the past 12 months ($1.2 billion).
The growth in company-operated store revenue was driven by incremental revenues from 1,426 net new company-operated stores, or a 7% increase, over the past 12 months ($1.2 billion).
As of October 1, 2023, we had no amounts outstanding under our commercial paper program. As of October 2, 2022, we had $175.0 million in borrowings outstanding under this program.
As of September 29, 2024, and October 1, 2023, we had no amounts outstanding under our commercial paper program.
To the extent we prevail in matters for which a liability has been established or are required to pay amounts in excess of our established liability, our effective income tax rate in a given financial statement period could be materially affected.
To the extent we prevail in matters for which a liability has been established or are required to pay amounts in excess of our established liability, our effective income tax rate in a given financial statement period could be materially affected. 47 Table of Contents Property, Plant and Equipment and Other Finite-Lived Assets We evaluate property, plant and equipment, operating lease right-of-use (“ROU”) assets and other finite-lived assets for impairment when facts and circumstances indicate that the carrying values of such assets may not be recoverable.
We performed a sensitivity analysis based on a 10% change in the underlying equity prices of our investments as of October 1, 2023 and determined that such a change would not have a significant impact on the fair value of these instruments. 38 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.
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.
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. During the fiscal year ended October 1, 2023, we repurchased 10.0 million shares of common stock for $1.0 billion on the open market.
Dividends are generally paid in the quarter following the declaration date. Cash returned to shareholders through dividends in fiscal 2024 and 2023 totaled $2.6 billion and $2.4 billion, respectively. During the fiscal year ended October 1, 2023, we repurchased 10.0 million shares of common stock for $1.0 billion on the open market.
Dividends are generally paid in the quarter following the declaration date. Cash returned to shareholders through dividends in fiscal 2023 and 2022 totaled $2.4 billion and $2.3 billion, respectively. During the fourth quarter of fiscal 2023, we declared a cash dividend of $0.57 per share to be paid on November 24, 2023, with an expected payout of approximately $651.2 million.
During the fourth quarter of fiscal 2023, and for each of the first three quarters of fiscal 2024, we declared a cash dividend of $0.57 per share. During the fourth quarter of fiscal 2024, we declared a cash dividend of $0.61 per share to be paid on November 29, 2024, with an expected payout of approximately $691.4 million.
Operating margin increased 680 basis points to 51.1%, primarily due to the gain from sale of our Seattle's Best Coffee brand (approximately 480 basis points) and growth in our North American Coffee Partnership joint venture income (approximately 300 basis points), partially offset by impairment charges against certain manufacturing assets (approximately 100 basis points). 34 Table of Contents Corporate and Other Fiscal Year Ended Oct 1, 2023 Oct 2, 2022 % Change Net revenues: Other $ 24.6 $ 95.8 (74.3) % Total net revenues 24.6 95.8 (74.3) Product and distribution costs 20.2 88.3 (77.1) Other operating expenses 2.0 16.4 (87.8) Depreciation and amortization expenses 117.3 126.4 (7.2) General and administrative expenses 1,707.4 1,371.2 24.5 Restructuring and impairments 1.1 12.7 (91.3) Total operating expenses 1,848.0 1,615.0 14.4 Operating loss $ (1,823.4) $ (1,519.2) 20.0 % Corporate and Other primarily consists of our unallocated corporate expenses and Evolution Fresh, prior to its sale in the fourth quarter of fiscal 2022.
These increases were partially offset by lapping the gain from the sale of our Seattle’s Best Coffee brand in the second quarter of fiscal 2023 (approximately 480 basis points). 41 Table of Contents Corporate and Other Fiscal Year Ended Sep 29, 2024 Oct 1, 2023 % Change Net revenues: Other $ 58.0 $ 24.6 135.8 % Total net revenues 58.0 24.6 135.8 Product and distribution costs 52.0 20.2 157.4 Other operating expenses 1.2 2.0 (40.0) Depreciation and amortization expenses 121.9 117.3 3.9 General and administrative expenses 1,801.0 1,707.4 5.5 Restructuring and impairments — 1.1 nm Total operating expenses 1,976.1 1,848.0 6.9 Operating loss $ (1,918.1) $ (1,823.4) 5.2 % Corporate and Other primarily consists of our unallocated corporate expenses.
Cash Flows Cash provided by operating activities was $6.0 billion for fiscal 2023, compared to $4.4 billion for fiscal 2022. The change was primarily due to a decrease in net cash used by changes in operating assets and liabilities, including lower inventory purchases driven by reduced coffee commodity prices, and higher net earnings during the period.
Cash Flows Cash provided by operating activities was $6.1 billion for fiscal 2024, compared to $6.0 billion for fiscal 2023. The change was primarily due to an increase in net cash provided by changes in other operating assets and liabilities, primarily driven by net hedging activity, largely related to our coffee hedging program.
For additional details see Product Supply in Item 1 , as well as Risk Factors in Item 1A of this 10-K. FINANCIAL RISK MANAGEMENT Market risk is defined as the risk of losses due to changes in commodity prices, foreign currency exchange rates, equity security prices and interest rates.
FINANCIAL RISK MANAGEMENT Market risk is defined as the risk of losses due to changes in commodity prices, foreign currency exchange rates, equity security prices, and interest rates. We manage our exposure to various market-based risks according to a market price risk management policy.
Refer to Note 3 , Derivative Financial Instruments, for additional information on our interest rate swap designated as a fair value hedge.
Refer to Note 3 , Derivative Financial Instruments, for additional information on our interest rate swap designated as a fair value hedge. Available-for-Sale Debt Securities Our available-for-sale securities comprise a diversified portfolio consisting mainly of investment-grade debt securities. The primary objective of these investments is to preserve capital and liquidity.
These increases were partially offset by previously-committed investments in store partner wages (approximately 250 basis points) and higher general and administrative expenses, primarily in support of our Reinvention Plan (approximately 130 basis points). • Diluted earnings per share (“EPS”) for fiscal 2023 increased to $3.58, compared to EPS of $2.83 in fiscal 2022.
These decreases were partially offset by pricing (approximately 180 basis points) and in-store operational efficiencies (approximately 130 basis points). • Diluted earnings per share (“EPS”) for fiscal 2024 decreased to $3.31, compared to EPS of $3.58 in fiscal 2023.
Operating margin increased 440 basis points to 16.4%, primarily due to sales leverage (approximately 270 basis points) and lapping amortization expenses of acquisition-related intangibles assets that are now fully amortized (approximately 240 basis points). 33 Table of Contents Channel Development Fiscal Year Ended Oct 1, 2023 Oct 2, 2022 Oct 1, 2023 Oct 2, 2022 As a % of Channel Development Total Net Revenues Net revenues $ 1,893.8 $ 1,843.6 Product and distribution costs 1,250.1 1,194.2 66.0 % 64.8 % Other operating expenses 54.6 51.6 2.9 2.8 Depreciation and amortization expenses 0.1 0.1 0.0 0.0 General and administrative expenses 8.4 12.2 0.4 0.7 Total operating expenses 1,313.2 1,258.1 69.3 68.2 Income from equity investees 295.7 231.8 15.6 12.6 Gain from sale of assets 91.3 — 4.8 — Operating income $ 967.6 $ 817.3 51.1 % 44.3 % Revenues Channel Development total net revenues for fiscal 2023 increased $50 million, or 3%, compared to fiscal 2022, primarily due to higher Global Coffee Alliance product sales and royalty revenue ($37 million) and growth in our ready-to-drink business ($22 million).
Operating margin contracted 220 basis points to 14.2%, primarily due to increased promotional activity (approximately 170 basis points) and investments in store partner wages and benefits (approximately 120 basis points), partially offset by in-store operational efficiencies (approximately 100 basis points). 40 Table of Contents Channel Development Fiscal Year Ended Sep 29, 2024 Oct 1, 2023 Sep 29, 2024 Oct 1, 2023 As a % of Channel Development Total Net Revenues Net revenues $ 1,769.8 $ 1,893.8 Product and distribution costs 1,075.4 1,250.1 60.8 % 66.0 % Other operating expenses 58.4 54.6 3.3 2.9 Depreciation and amortization expenses — 0.1 0.0 0.0 General and administrative expenses 7.7 8.4 0.4 0.4 Total operating expenses 1,141.5 1,313.2 64.5 69.3 Income from equity investees 297.6 295.7 16.8 15.6 Gain from sale of assets — 91.3 — 4.8 Operating income $ 925.9 $ 967.6 52.3 % 51.1 % Revenues Channel Development total net revenues for fiscal 2024 decreased $124 million, or 7%, compared to fiscal 2023, primarily due to a decline in revenue in the Global Coffee Alliance ($125 million) following the sale of our Seattle’s Best Coffee brand to Nestlé in the second quarter of fiscal 2023 as well as product SKU optimization.
Absent 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. 28 Table of Contents Financial Highlights • Total net revenues increased 12% to $36.0 billion in fiscal 2023 compared to $32.3 billion in fiscal 2022. • Consolidated operating income increased to $5.9 billion in fiscal 2023 compared to $4.6 billion in fiscal 2022.
We remain confident in the strength of our brand and believe that the new action plans will position the Company for sustainable long-term growth. 35 Table of Contents Financial Highlights • Total net revenues increased 1% to $36.2 billion in fiscal 2024 compared to $36.0 billion in fiscal 2023. • Consolidated operating income decreased to $5.4 billion in fiscal 2024 compared to $5.9 billion in fiscal 2023.
In addition to coffee, we also purchase significant amounts of dairy products to support the needs of our company-operated stores. The price and availability of these commodities directly impact our results of operations, and we expect commodity prices, particularly coffee, to impact future results of operations.
We purchase, roast, and sell high-quality arabica coffee and related products, and risk arises from the price volatility of green coffee. In addition to coffee, we also purchase significant amounts of dairy products to support the needs of our company-operated stores.
The following table summarizes current and long-term material cash requirements as of October 1, 2023, 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) $ 10,594.2 $ 1,577.6 $ 2,931.1 $ 2,206.9 $ 3,878.6 Debt obligations Principal payments 15,519.3 1,819.3 2,750.0 1,100.0 9,850.0 Interest payments 6,362.2 520.8 909.3 740.6 4,191.5 Purchase obligations (2) 1,078.4 694.6 311.4 72.4 — Other obligations (3) 391.4 114.4 145.6 33.4 98.0 Total $ 33,945.5 $ 4,726.7 $ 7,047.4 $ 4,153.3 $ 18,018.1 (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 September 29, 2024, 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) $ 11,942.3 $ 1,808.5 $ 3,202.2 $ 2,433.1 $ 4,498.5 Debt obligations Principal payments 15,700.0 1,250.0 3,000.0 2,350.0 9,100.0 Interest payments 6,359.4 588.3 968.9 798.6 4,003.6 Purchase obligations (2) 1,296.0 1,010.0 245.9 40.1 — Other obligations (3) 350.8 116.3 101.0 37.3 96.2 Total $ 35,648.5 $ 4,773.1 $ 7,518.0 $ 5,659.1 $ 17,698.3 (1) Amounts include direct lease obligations, excluding any taxes, insurance, and other related expenses.
During each of the first three quarters of fiscal 2022, we declared a cash dividend to shareholders of $0.49 per share. During the fourth quarter of fiscal 2022, and for each of the first three quarters of fiscal 2023, we declared a cash dividend of $0.53 per 36 Table of Contents share.
See Note 14 , Income Taxes, to the consolidated financial statements included in Item 8 of Part II of this 10-K, for further discussion. 43 Table of Contents During each of the first three quarters of fiscal 2023, we declared a cash dividend to shareholders of $0.53 per share.
Consolidated revenues increased 12% to $36.0 billion in fiscal 2023 compared to $32.3 billion in fiscal 2022, primarily driven by strength in our U.S. business and growth in our International segment, partially offset by the impact of unfavorable foreign currency translation.
Consolidated net revenues increased 1% to $36.2 billion in fiscal 2024 compared to $36.0 billion in fiscal 2023, primarily driven by incremental revenues from net new company-operated stores over the past 12 months, partially offset by a decrease in comparable store sales and the impact of unfavorable foreign currency translation.
Store operating expenses as a percentage of total net revenues decreased 120 basis points. Store operating expenses as a percentage of company-operated store revenues decreased 100 basis points, primarily due to in-store operational efficiencies (approximately 160 basis points), sales leverage (approximately 160 basis points) and pricing (approximately 160 basis points).
Store operating expenses as a percentage of company-operated store revenues increased 140 basis points, primarily due to investments in store partner wages and benefits (approximately 170 basis points), deleverage (approximately 80 basis points), and increased promotional activity (approximately 70 basis points), partially offset by in-store operational efficiencies (approximately 170 basis points).
Also contributing to the increase were the performance of net new company-operated store openings over the past 12 months ($813 million) and higher product and equipment sales to and royalty revenues from our licensees ($487 million). Operating Margin North America operating income for fiscal 2023 increased 22% to $5.5 billion, compared to $4.5 billion in fiscal 2022.
For both the North America segment and U.S. market, revenue increased 2% in fiscal 2024 compared to fiscal 2023, primarily driven by net new company-operated store growth over the past 12 months and higher product and equipment sales to, and royalty revenues from, our licensees. This growth was partially offset by a 2% decline in comparable store sales.
Revenue for our Channel Development segment increased 3% in fiscal 2023 compared with fiscal 2022, primarily driven by higher Global Coffee Alliance product sales and royalty revenue and growth in our global ready-to-drink business. In fiscal 2023, we sold the assets associated with the Seattle's Best Coffee brand to Nestlé, which resulted in a pre-tax gain of $91.3 million.
Revenue for our Channel Development segment decreased 7% in fiscal 2024 compared with fiscal 2023, primarily driven by a decline in revenue in the Global Coffee Alliance following the sale of our Seattle’s Best Coffee brand to Nestlé in the second quarter of fiscal 2023 as well as product SKU optimization.
For both the North America segment and U.S. market, comparable store sales increased 9% for fiscal 2023 compared to an increase of 12% in fiscal 2022. Average ticket for both the North America segment and the U.S. market grew 6%, primarily driven by pricing in our U.S. market.
Comparable transactions for both the North America segment and the U.S. market declined 5%, partially offset by average ticket growth for both the North America segment and the U.S. market of 4%, primarily driven by annualization of pricing.
This increase was partially offset by previously-committed investments in store partner wages and higher general and administrative expenses, primarily in support of our Reinvention Plan. • Capital expenditures were $2.3 billion in fiscal 2023 and $1.8 billion in fiscal 2022. • We returned $3.4 billion to our shareholders in fiscal 2023 through share repurchases and dividends.
The decrease was primarily driven by contraction in operating margin as compared to the prior year. • Capital expenditures were $2.8 billion in fiscal 2024 and $2.3 billion in fiscal 2023. • We returned $3.8 billion and $3.4 billion to our shareholders in fiscal 2024 and fiscal 2023, respectively, through dividends and share repurchases.
Licensed stores revenue increased $857 million, primarily driven by higher product and equipment sales to and royalty revenues from our licensees ($898 million), largely due to revenue growth from existing stores and the opening of 988 net new Starbucks licensed stores over the past 12 months, partially offset by the impact of unfavorable foreign currency translation ($64 million).
Licensed stores revenue decreased $8 million, primarily driven by lower product and equipment sales to, and royalty revenues from, our licensees in our International segment ($69 million) and unfavorable foreign currency translation impacts ($27 million), partially offset by higher product and equipment sales to, and royalty revenues from, our licensees in our North America segment ($80 million).
This increase was primarily driven by incremental investments in technology ($131 million), increased support costs of strategic initiatives including the Reinvention Plan ($86 million) and higher performance-based compensation ($56 million). FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Cash and Investment Overview Our cash and investments were $4.2 billion and $3.5 billion as of October 1, 2023 and October 2, 2022, respectively.
These increases were partially offset by lower performance-based compensation ($61 million) and the lapping of donations to The Starbucks Foundation made in fiscal 2023 ($30 million). FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES Cash and Investment Overview Our cash and investments were $3.8 billion and $4.2 billion as of September 29, 2024, and October 1, 2023, respectively.
Also contributing to the increase was a 5% increase in comparable store sales ($233 million), primarily driven by customer transactions. These were partially offset by the impact of unfavorable foreign currency translation ($543 million). Operating Margin International operating income for fiscal 2023 increased 48% to $1.2 billion, compared to $833.2 million in fiscal 2022.
This growth was partially offset by a 2% decline in comparable store sales ($420 million) driven by a 5% decrease in comparable transactions, partially offset by a 4% increase in average ticket, primarily due to annualization of pricing. Operating Margin North America operating income for fiscal 2024 decreased 3% to $5.4 billion, compared to $5.5 billion in fiscal 2023.
COMMODITY PRICES, AVAILABILITY AND GENERAL RISK CONDITIONS Commodity price risk represents our primary market risk, generated by our purchases of green coffee and dairy products, among other items. We purchase, roast and sell high-quality arabica coffee and related products and risk arises from the price volatility of green coffee.
The change was primarily due to an increase in repayments of debt and an increase in cash returned to shareholders through dividends and share repurchases, partially offset by an increase in net proceeds from issuances of debt. 44 Table of Contents COMMODITY PRICES, AVAILABILITY, AND GENERAL RISK CONDITIONS Commodity price risk represents our primary market risk, generated by our purchases of green coffee and dairy products, among other items.
Fiscal 2023 operating margin was 16.3% compared to 14.3% in fiscal 2022. Operating margin expansion of 200 basis points was primarily due to pricing (approximately 250 basis points), sales leverage (approximately 240 basis points) and in-store operational efficiencies (approximately 160 basis points).
Fiscal 2024 operating margin was 15.0% compared to 16.3% in fiscal 2023. Operating margin contraction of 130 basis points was primarily due to investments in store partner wages and benefits (approximately 140 basis points), deleverage (approximately 130 basis points), and increased promotional activity (approximately 100 basis points).
For the International segment, despite COVID-19 pandemic-related headwinds in China in the first half of the year, revenue grew 8% in fiscal 2023 compared to fiscal 2022, primarily driven by net new company-operated store openings and higher product sales to and royalty revenues from our licensees.
For the International segment, revenue declined 2% in fiscal 2024 compared to fiscal 2023, primarily driven by the impact of unfavorable foreign currency translation, a 4% decline in comparable store sales driven by a decline in average ticket of 4%, and lower product and equipment sales to, and royalty revenues from, our licensees.
Income from equity investees increased $64 million, primarily due to higher income from our North American Coffee Partnership joint venture ($64 million). Gain from sale of assets includes the sale of our Seattle's Best Coffee brand to Nestlé in the second quarter of fiscal 2023.
These increases were partially offset by lower performance-based compensation ($86 million) and the lapping of donations to The Starbucks Foundation made in fiscal 2023 ($30 million). Gain from sale of assets includes the sale of our Seattle’s Best Coffee brand to Nestlé in the second quarter of fiscal 2023.
Cash used in investing activities was $2.3 billion for fiscal 2023, compared to $2.1 billion for fiscal 2022. The change was primarily due to an increase in spend on capital expenditures and increased purchases of investments in fiscal 2023, partially offset by increased maturities and calls of investments in fiscal 2023.
These increases were partially offset by lower net earnings during the period and higher inventory purchase costs, primarily driven by increased coffee commodity prices. Cash used in investing activities was $2.7 billion for fiscal 2024, compared to $2.3 billion for fiscal 2023.
Depreciation and amortization expenses as a percentage of total net revenues decreased 70 basis points, primarily due to lapping amortization expenses of acquisition-related intangibles assets that are now fully amortized.
Other operating expenses increased $26 million, primarily due to support costs for our growing licensed markets. Depreciation and amortization expenses as a percentage of total net revenues increased 40 basis points, primarily due to deleverage.
Cash used in financing activities was $3.0 billion for fiscal 2023, compared to $5.6 billion for fiscal 2022. The change was primarily due to a decrease in share repurchase activities, partially offset by an increase in net payments of commercial paper.
Cash used in financing activities was $3.7 billion for fiscal 2024, compared to $3.0 billion for fiscal 2023.
Also contributing to the increase was a 5% increase in comparable store sales, driven by customer transactions, compared to a decrease of 9% in fiscal 2022. These increases were partially offset by the impact of unfavorable foreign currency translation.
Partially offsetting this increase were a 2% decrease in comparable store sales ($629 million), attributable to a 4% decrease in comparable transactions, partially offset by a 2% increase in average ticket, primarily due to annualization of pricing, and unfavorable foreign currency translation impacts ($235 million).
The effective tax rate for fiscal 2023 was 23.6% compared to 22.4% for fiscal 2022.The increase was due to lapping a beneficial return-to-provision adjustment related to the divestiture of certain joint venture operations (approximately 50 basis points) and a year-over-year decrease in beneficial valuation allowance activity related to international jurisdictions (approximately 40 basis points).
The effective tax rate for fiscal 2024 was 24.3% compared to 23.6% for fiscal 2023.The increase was due to lapping the release of valuation allowances recorded against certain deferred tax assets of an international jurisdiction in the prior year (approximately 80 basis points) and the accrual of foreign withholding taxes related to the current year earnings of certain foreign subsidiaries (approximately 60 basis points), partially offset by electing an alternative tax approach in a certain foreign jurisdiction that resulted in a tax benefit in the second quarter of fiscal 2024 (approximately 60 basis points).
Removed
Fiscal year 2021 included 53 weeks, with the 53rd week falling in the fourth fiscal quarter. The discussion of our financial condition and results of operations for the fiscal year ended October 3, 2021, included in Item 7.
Added
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations You should read the following discussion of our financial condition and results of operations in conjunction with the financial statements and the notes thereto included elsewhere in this 10-K. The following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeQuantitative and Qualitative Disclosures About Market Risk The information required by this item is incorporated by reference to the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Commodity Prices, Availability and General Risk Conditions” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Risk Management” in Item 7 of this Report. 41 Table of Contents
Biggest changeQuantitative and Qualitative Disclosures About Market Risk The information required by this item is incorporated by reference to the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Commodity Prices, Availability, and General Risk Conditions” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Financial Risk Management” in Item 7 of this Report. 49 Table of Contents

Other SBUX 10-K year-over-year comparisons