Starbucks (SBUX) 10-K risk factor changes: FY2019 vs FY2018

If any of the risks and uncertainties described in the cautionary factors described below actually [removed: occurs,] [added: occur or continue to occur,] our business, financial condition and results of operations, and the trading price of our common stock could be materially and adversely affected.

| • | [removed: Economic] [added: Economic] conditions in the U.S. and international markets could adversely affect our business and financial [removed: results.] [added: results.] |

Our customers may have [added: or in the future have] less money for discretionary purchases and may stop or reduce their purchases of our products or [removed: trade down] [added: switch] to Starbucks or competitors' [removed: lower priced] [added: lower-priced] products as a result of [added: various factors, including] job losses, [removed: foreclosures, bankruptcies, increased fuel and energy costs, higher interest rates,] inflation, higher taxes, reduced access to credit, [removed: economic uncertainty and potential negative impacts relating to] [added: changes in] federal economic policy [removed: changes] and recent international trade disputes.

Decreases in customer traffic and/or average value per transaction [removed: will negatively impact our financial performance as reduced revenues] without a corresponding decrease in [removed: expenses result in sales de-leveraging, which creates] [added: costs would put] downward pressure on margins and [removed: also] [added: would] negatively [removed: impacts comparable store sales, net revenues, operating income and earnings per share.][added: impact our financial results.]

There is also a risk that if negative economic conditions or uncertainty persist for a long period of time or worsen, consumers may make long-lasting changes to their discretionary purchasing behavior, including less frequent discretionary purchases on a more permanent [removed: basis.][added: basis or there may be a general downturn in the restaurant industry.]

| • | [removed: Our] [added: Our] success depends substantially on the value of our brands and failure to preserve their [removed: value, either through our actions or those of our business partners,] [added: value] could have a negative impact on our financial [removed: results.] [added: results.] |

The Starbucks brand is recognized throughout the [removed: world] [added: world,] and we have received high ratings in global brand value studies.

To be successful in the future, particularly outside of the [removed: U.S.,] [added: U.S.] where the Starbucks brand and our other brands are less well-known, we believe we must preserve, grow and leverage the value [added: of our brands across all sales channels.]

[removed: Additionally, our] [added: 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, [removed: particularly in our international markets, and] third-party manufacturers, distributors and retailers, particularly for our entire global Channel Development business.

We [removed: provide training and support to, and] monitor the operations [removed: of,] [added: of] certain of these business partners, but the product quality and service they deliver may be diminished by any number of factors beyond our [removed: control, including financial pressures they] [added: control and it] may [removed: face.][added: be difficult to detect contamination or other defect in these products.]

We believe [added: our] customers expect the same quality of [removed: products and] service [removed: from our licensed-store operators as they do from us and we strive to ensure customers receive the same quality] [added: regardless] of [removed: products and service experience] whether they visit a [removed: company-operated store or a] licensed [removed: store.][added: or company-operated store, so we provide training and support to, and monitor the operations of, certain of these licensees and other business partners.]

We also source our food, beverage and other products from a wide variety of domestic and international business partners [removed: in our supply chain operations,] and in certain cases such products are produced or sourced by our licensees directly.

Additionally, inconsistent uses of our brand and other of our intellectual property assets, as well as failure to protect our intellectual property, [removed: including from unauthorized uses of our brand or other of our intellectual property assets,] can erode consumer trust and our brand value and have a material negative impact on our financial results.

Consumer demand for our products and our brand equity could diminish significantly if we, our [removed: employees or our] [added: employees,] licensees or other business partners fail to preserve the quality of our products, act or are perceived to act in an unethical, illegal, [removed: racially-biased or] [added: racially-biased,] unequal [removed: treatment basis] or socially irresponsible manner, including with respect to the sourcing, content or sale of our products, service and treatment [added: of customers] at Starbucks [removed: stores] [added: stores,] or the use of customer data for general or direct marketing or other [removed: purposes, fail to comply with laws and regulations, publicly 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.][added: purposes.]

| • | [removed: Incidents] [added: Incidents] involving food or beverage-borne illnesses, tampering, adulteration, contamination or mislabeling, whether or not accurate, as well as adverse public or medical opinions about the health effects of consuming our products, could harm our [removed: business.] [added: business.] |

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 [removed: sectors and could affect us as well.][added: sectors.]

Any report linking us to [removed: the use of unclean water, food or beverage-borne illnesses, tampering, adulteration, contamination, mislabeling or other food or beverage-safety issues] [added: such instances] could [removed: damage our brand value and] severely hurt [removed: sales of] our [removed: food and beverage products] [added: sales] and [added: could] possibly lead to product liability claims, litigation (including class actions) [removed: or damages.][added: and/or temporary store closures.]

[removed: We monitor the operations of certain of these business partners, but] [added: However,] the product quality and service they deliver may [added: still] be diminished by any number of factors beyond our [removed: control, which make it more difficult to detect contamination or other defect in these products.][added: control.]

[added: A decrease in customer traffic as a result of food-safety concerns or negative publicity, or as a result of a temporary] closure of any of our stores, product recalls or food or beverage-safety claims or litigation, could materially harm our business and results of operations.

[removed: Some] [added: In addition, some] of our products contain caffeine, dairy products, sugar and other compounds and allergens, the health effects of which are the subject of public and regulatory scrutiny, including the suggestion [removed: that excessive consumption] of [removed: caffeine, dairy products, sugar and other compounds can lead] [added: linkages] to a variety of adverse health effects.

Particularly in the U.S., there is increasing consumer awareness of health risks, including obesity, [removed: due in part to increased publicity and attention from health organizations,] as well as increased consumer litigation based on alleged adverse health impacts of consumption of various food and beverage products.

While we have a variety of beverage and food items, including items that are coffee-free and have reduced calories, 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 [removed: beverages,] [added: 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.

| • | [removed: The] [added: 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 [removed: revenues.] [added: revenues.] |

Many of our information technology [removed: systems, such as] [added: systems (and] those [removed: we use] [added: of our licensees and other third-party business partners, whether cloud-based or hosted in proprietary servers), including those used] for our point-of-sale, web and mobile platforms, [removed: including] online and mobile payment systems, delivery services and rewards programs, and [removed: for] administrative functions, [removed: including human resources, payroll, accounting and internal and external communications, as well as the information technology systems of our licensees, franchisees and other third-party business partners and service providers, whether cloud-based or hosted in proprietary servers,] contain personal, financial or other information that is entrusted to us by our customers and employees.

To the extent we or a third party were to experience a material breach of our or such third [removed: party’s] [added: parties'] information technology systems that result in the unauthorized access, theft, use, destruction or other compromises of customers' or employees' data or confidential information of the Company stored in such systems, including through cyber-attacks or other external or internal methods, it could result in a material loss of revenues from the potential adverse impact to our reputation and brand, our ability to retain or attract new customers and the potential disruption to our business and plans.

[removed: For example,] the European Union adopted a new regulation that became effective in May 2018, called the General Data Protection Regulation (“GDPR”), which requires companies to meet new requirements regarding the handling of personal data, including its use, protection and transfer and the ability of persons whose data is stored to correct or delete such data about themselves.

Our reputation and brand and our ability to attract new customers could also be adversely impacted if we fail, or are perceived to have failed, to properly respond to [removed: these incidents.][added: security breaches of our or third party’s information technology systems.]

Compliance with the [removed: GDPR] [added: GDPR, the CCPA] and other [added: current and future] applicable international and U.S. privacy, cybersecurity and related laws can be costly and time-consuming.

Media or other reports of existing or perceived security vulnerabilities in our systems or those of our third-party business partners or service providers can also adversely impact our brand and reputation and materially impact our [removed: business, even if no breach has been attempted or has occurred.][added: business.]

Additionally, the techniques and sophistication used to conduct cyber-attacks and [removed: breaches of] [added: breach] 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.

| • | [removed: We] [added: We] rely heavily on information technology in our operations and growth initiatives, and any material failure, inadequacy, interruption or security failure of that technology could harm our ability to effectively operate and grow our business and could adversely affect our financial [removed: results.] [added: results.] |

We rely heavily on information technology systems across our [removed: operations,] [added: operations for numerous purposes] including for administrative functions, point-of-sale processing and payment in our stores and online, management of our supply chain, Starbucks Cards, online business, delivery services, mobile technology, including mobile payments and ordering apps, reloads and loyalty functionality and various other processes and transactions, and many of these systems are interdependent on one another for their functionality.

Additionally, the success of several of our initiatives to drive growth, including our [removed: priority] [added: ability] to increase digital relationships with our customers to drive incremental traffic and spend, is highly dependent on our technology systems.

| • | [removed: We] [added: We] may not be successful in implementing important strategic initiatives or effectively managing growth, which may have an adverse impact on our business and financial [removed: results.] [added: results.] |

| • | reducing our [added: operating costs, particularly] general and administrative [removed: costs.] [added: expenses.] |

[removed: | • | increases] [added: Increases] in labor costs, including wages and benefits, which, in a retail business such as ours, are two of our most significant costs, both domestically and [removed: internationally; these increases include significant and sudden] [added: internationally, including those] increases [removed: in labor costs] triggered by regulatory actions regarding [removed: wages and] [added: wages,] scheduling and [removed: benefits requirements; they also include] [added: benefits;] increased health care and workers’ compensation insurance [removed: costs, as well as] [added: costs and] increased wages and costs of other [removed: |][added: benefits necessary to attract and retain high quality employees with the right skill sets.]

| • | 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; [added: and] |

[removed: | • |] [added: Our financial results could be adversely affected by a shift in consumer spending away from outside-the-home food and beverages (such as the disruption caused by on-line commerce that results in reduced foot traffic to "brick & mortar" retail stores);] lack of customer acceptance of new products (including due to price increases necessary to cover the costs of new products or higher input costs), brands (such as the global expansion of the Teavana brand in our Starbucks® retail stores and other channels) and platforms (such as features of our mobile technology, changes in our loyalty rewards programs and our delivery services [removed: initiatives),] [added: initiatives);] or customers reducing their demand for our current offerings as new products are [removed: introduced; |][added: introduced.]

[removed: | • |] [added: The growth of our business relies on] the [added: ability of our licensee partners to implement our growth platforms and product innovations as well as on the] degree to which we [added: are able to] enter into, maintain, develop and [removed: are able to] negotiate appropriate terms and conditions of, and enforce, commercial and other agreements and the performance of our business partners under such [removed: agreements; |][added: agreements.]

Additionally, [added: the growth of] our Channel Development business is [removed: also] in part dependent on the level of [added: discretionary] support [added: provided by] our retail [removed: business partners provide our products,] and [removed: in some markets there are only a few retailers.][added: licensed store businesses.]

You should carefully consider the risks described below in addition to the other information set forth in this Annual Report on Form 10-K, including the Management’s Discussion and Analysis of Financial Conditions and Results of Operations section and the consolidated financial statements and related notes.

Moreover, the risks below are not the only risks we face and additional risks not currently known to us or that we presently deem immaterial may emerge or become material at any time and may negatively impact our business, reputation, financial condition, results of operations or the trading price of our common stock.

Business incidents, whether isolated or recurring and whether originating from us or our business partners, that erode consumer trust can significantly reduce brand value, potentially trigger boycotts of our stores or result in civil or criminal liability and can have a negative impact on our financial results.

Such incidents include actual or perceived breaches of privacy or violations of domestic or international privacy laws, contaminated food, product recalls, store employees or other food handlers infected with communicable diseases or other potential incidents discussed in this risk factors section.

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.

Additionally, if we fail to comply with laws and regulations, publicly 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, our brand value may be diminished.

| • | If our business partners and third-party providers do not satisfactorily fulfill their responsibilities and commitments, it could damage our brand and our financial results could suffer. |

We are also continuing to incorporate more products in our food and beverage lineup that require freezing or refrigeration, which increases the risk of food safety related incidents if correct temperatures are not maintained due to mechanical malfunction or human error.

For example,

Additionally, the California Privacy Act of 2018 (“CCPA”), which was enacted in June 2018 and will come into effect on January 1, 2020, provides a new private right of action for data breaches and requires companies that process information on California residents to make new disclosures to consumers about their data collection, use and sharing practices and allow consumers to opt out of certain data sharing with third parties.

| • | Evolving consumer preferences and tastes may adversely affect our business. |

Our continued success depends on our ability to retain and convert customers.

| • | Our reliance on key business partners may adversely affect our business and operations. |

Our international joint venture partners or licensees may face capital constraints or other factors that may limit the

speed at which they are able to expand and develop in a certain market.

There are generally a relatively small number of licensee partners operating in specific markets.

| • | Changes in the availability of and the cost of labor could adversely affect our business. |

| • | We face risks as a global business that could adversely affect our financial performance. |

We operate in over 80 markets globally.

The availability and prices of coffee beans and other commodities are subject to significant volatility.

| • | the discontinuation of the London Interbank Offered Rate (“LIBOR”) after 2021 and the replacement with an alternative reference rate may adversely impact interest rates. |

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

Changes in applicable environmental regulations, including increased or additional regulations 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.

In addition, our business is subject to complex and rapidly evolving U.S. and international laws and regulations regarding data privacy and data protection, and companies are under increased regulatory scrutiny relating to these matters.

The Federal Trade Commission and many state attorneys general are also interpreting federal and state consumer protection laws to impose standards for the online collection, use, dissemination and security of data.

The interpretation and application of existing laws and regulations regarding data privacy and data protection are in flux and authorities around the world are considering a number of additional legislative and regulatory proposals in this area.

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.

The burdens imposed by these and other laws and regulations that may be enacted, or new interpretations of existing and future laws and regulations, may also require us to incur substantial costs in reaching compliance in a manner adverse to our business.

In addition, the European Commission in July 2016 and the Swiss Government in January 2017 approved the EU-U.S. and the Swiss-U.S. Privacy Shield frameworks, respectively, which are designed to allow U.S. companies that self-certify to the U.S. Department of Commerce and publicly commit to comply with the Privacy Shield requirements to freely import personal data from the EU and Switzerland.

However, these frameworks face a number of legal challenges and their validity remains subject to legal, regulatory and political developments in both Europe and the U.S. The EU-U.S. Privacy Shield framework approved by the European Commission which is relied upon for transfers of personal data outside the European Economic Area could be invalidated by the Court of Justice of the European Union.

The potential invalidation of this mechanism could have a significant adverse impact on our ability to process and transfer personal data outside of the European Economic Area.

You should carefully consider the risks described below.

Moreover, we operate in an increasingly competitive and rapidly changing environment.

New factors emerge from time to time and it is not possible to predict the impact of all these factors on our business, financial condition or results of operations.

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These factors may also result in a general downturn in the restaurant industry.

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of our brands across all sales channels.

Business incidents, whether isolated or recurring and whether originating from us or our business partners, that erode consumer trust, such as actual or perceived breaches of privacy or violations of domestic or international privacy laws, contaminated food, product recalls, store employees or other food handlers infected with communicable diseases or other potential incidents discussed in this risk factors section, particularly if the incidents receive considerable publicity, including rapidly through social or digital media (including for malicious reasons), or result in litigation, and failure to respond appropriately to these incidents (or being perceived to not have reacted appropriately), can significantly reduce brand value, trigger boycotts of our stores or products or demonstrations at our stores, result in civil and criminal liability and have a negative impact on our financial results.

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We are also continuing to incorporate more products in our food and beverage lineup that require freezing or refrigeration, including produce (such as fruits and vegetables in our salads and juices), dairy products (such as milk and cheeses), non-dairy alternative products (such as soymilk and almondmilk), ice for our cold drinks and meats.

If customers become ill from food or beverage-borne illnesses, tampering, adulteration, contamination, mislabeling or other food or beverage-safety issues, we could be forced to temporarily close some stores and/or supply chain facilities, as well as recall products.

A decrease in customer traffic as a result of food-safety concerns or negative publicity, or as a result of a temporary

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Our ability to effectively manage our business, launch digital and other initiatives, and coordinate the production, distribution, administration and sale of our products depends significantly on the reliability, integrity and capacity of these systems.

benefits necessary to attract and retain high quality employees with the right skill sets, whether due to changing industry practices, competition or our expansion into new channels or technology dependent operations;

| • | not successfully developing and implementing new technologies necessary to effectuate our growth strategies, including increasing our digital relationships with customers to drive growth, due to inability to attract and retain qualified high-tech personnel or other factors; |

| • | increasing competition in channels in which we operate or seek to operate from new and existing large competitors or well-funded smaller ones that sell high-quality specialty coffee beverages; |

| • | continuing disruption in retail caused by on-line commerce, resulting in reduced foot traffic to “brick & mortar” retail stores; |

| • | consumers shifting categories of where they spend their discretionary income away from outside-the-home food and beverage; |

| • | the ability of our licensee partners to implement our growth platforms and product innovation; |

| • | not successfully consummating and implementing favorable strategic transactions or integrating acquired businesses, including our East China business; |

| • | the effects of the Tax Cuts and Jobs Act and related guidance and regulations that may be promulgated; and |

If our retail business partners do not provide sufficient levels of support for our products, which is at their discretion, it could limit our ability to grow our Channel Development business.

Also, a relatively small number of licensee partners own a large number of licensed stores.

experience.

country-specific regulatory requirements.

| • | disruption in energy supplies affecting our markets. |

The price of coffee is subject to significant volatility and has and may again increase significantly due to one or more of the factors described below.

These are known as price-to-be-fixed contracts.

adverse impact on our profitability.

We must continue to recruit, retain and motivate management and other employees sufficiently, both to maintain our current business and to execute our strategic initiatives, some of which involve ongoing expansion in business channels outside of our traditional company-operated store model.

Accordingly, our performance

[removed: General][added: General]

[removed: Financial Highlights][added: Financial Highlights]

| • | Total net revenues increased [removed: 10%] [added: 7%] to [removed: $24.7] [added: $26.5] billion in fiscal [removed: 2018] [added: 2019] compared to [removed: $22.4] [added: $24.7] billion in fiscal [removed: 2017.] [added: 2018.] |

[removed: | • |] Restructuring and impairment [removed: charges] [added: expenses] increased [removed: to $224 million in fiscal 2018 compared to $154 million in fiscal 2017. Increased costs were] [added: $71 million,] primarily [removed: related] [added: due] to higher asset impairments associated with the decision to close certain [removed: Starbucks®] company-operated stores in the U.S. and [removed: Canada,] [added: Canada ($23 million),] higher goodwill impairment charges [removed: related to] [added: associated with] our Switzerland [added: company-operated] retail reporting unit [added: ($20 million)] and [removed: EMEA] [added: International] restructuring [removed: costs. |][added: costs, including severance and asset impairments ($18 million).]

| • | Earnings per share (“EPS”) for fiscal [removed: 2018 increased] [added: 2019 decreased] to [removed: $3.24,] [added: $2.92,] compared to EPS of [removed: $1.97] [added: $3.24] in fiscal [removed: 2017.] [added: 2018.] The [removed: increase] [added: decrease] was primarily driven by [added: lapping] the [added: prior year] gains from the acquisition of our East China joint venture and the sale of our Tazo [removed: brand. Additionally,] [added: brand, partially offset by] the [removed: net favorable impact] [added: gain] from the [removed: Tax Cuts and Jobs Act (the “Tax Act”) also contributed to the increase.] [added: sale of our Thailand retail operations during fiscal 2019.] |

| • | Capital expenditures were [removed: $2.0] [added: $1.8] billion in fiscal [removed: 2018] [added: 2019] compared to [removed: $1.5] [added: $2.0] billion in fiscal [removed: 2017.] [added: 2018.] |

| • | We returned [removed: $8.9] [added: $12.0] billion to our shareholders in fiscal [removed: 2018] [added: 2019] through share repurchases and dividends compared to [removed: $3.5] [added: $8.9] billion in fiscal [removed: 2017.] [added: 2018.] |

[removed: Overview][added: Overview]

Starbucks results for fiscal [removed: 2018] [added: 2019] reflect the [removed: impact] [added: impacts] of [removed: certain restructuring and] [added: continued] streamlining efforts, [removed: beginning in] [added: initiated during] the fourth quarter of fiscal 2017, to focus on accelerating growth in high-returning businesses and [removed: removing non-core, slow growth activities.][added: converting several market operations, including Thailand, France, and the Netherlands, to fully licensed models in fiscal 2019.]

Concurrent with the change in reportable [added: segments and realignment of certain] operating [removed: segments,] [added: expenses noted above,] we revised our prior period financial information to [removed: reflect comparable financial information for] [added: be consistent with] the [removed: new segment structure.][added: current period presentation.]

[removed: Consolidated] [added: International] total net revenues [added: for fiscal 2018] increased [removed: 10% to $24.7] [added: $1.3] billion, [added: or 32%,] primarily driven by [removed: incremental revenues from 1,997 net new store openings over] the [removed: past 12 months, incremental revenues from the] impact of our ownership change in East [removed: China, 2% growth in global comparable] [added: China ($850 million), 433 net new Starbucks® company-operated] store [removed: sales] [added: openings, or a 12.1% increase, over the past 12 months ($298 million),] and favorable foreign currency [removed: translation.][added: translation ($121 million).]

[removed: Operating margin declined 280] [added: Cost of sales as a percentage of total net revenues increased 50] basis [removed: points to 15.7%,] [added: points,] primarily due to food and beverage-related mix [removed: shifts,] [added: shifts (approximately 120 basis points),] largely in the Americas segment, [added: partially offset by] the impact of our ownership change in East [removed: China, higher restructuring and impairment costs and higher salaries and benefits related to digital platforms, technology infrastructure and innovations.][added: China (approximately 40 basis points).]

Operating [removed: income grew 13% to $867 million, while operating] margin [removed: declined] [added: decreased] 420 basis points to [removed: 19.4%,] [added: 15.7%,] primarily due to the impact of our ownership change in East [removed: China.][added: China (approximately 350 basis points).]

[removed: Operating margin declined 400 basis points to 5.9% primarily due to] [added: Also contributing were] higher [removed: impairment of] goodwill [removed: related to] [added: impairment charges associated with] our Switzerland retail [removed: business] [added: reporting unit (approximately 40 basis points)] and restructuring costs, including [removed: severance,] [added: severance and] asset impairments [removed: and business process optimization expenses.][added: (approximately 40 basis points).]

[removed: These increases were partially offset by] [added: Additionally, in fiscal 2019, we saw] the [removed: net] [added: full] impact from the [removed: sale] [added: licensing] of [removed: our Tazo brand in] the [removed: first quarter] [added: majority] of [removed: fiscal 2018 and licensing] our CPG and [removed: foodservice] [added: Foodservice] businesses to Nestlé [removed: beginning on August 26,] [added: in the fourth quarter of fiscal] 2018.

Operating margin [removed: declined] [added: decreased] 250 basis points to 40.4%, primarily driven by business taxes associated with the [removed: upfront] [added: up-front] payment received from [removed: Nestlé,] [added: Nestlé (approximately 120 basis points),] Global Coffee Alliance [removed: headcount related] [added: headcount-related] costs, including employee bonus and retention [removed: costs,] [added: costs (approximately 80 basis points),] and the impact of our ownership changes, including licensing our CPG and [removed: foodservice] [added: Foodservice] businesses to Nestlé and the sale of our Tazo brand.

[removed: Acquisitions] [added: Acquisitions] and [removed: Divestitures][added: Divestitures]

See [Note [removed: 2](#sE2821A6AA0695803B4FA5149E09B9429),] [added: 2](#s259E6698836B575D8F55CA4B8F62CBC2),] 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.

[removed: RESULTS] [added: RESULTS] OF OPERATIONS — [removed: FISCAL 2018 COMPARED] [added: FISCAL 2018 COMPARED] TO [removed: FISCAL 2017][added: FISCAL 2017]

[removed: Consolidated] [added: Consolidated] results of [removed: operations (in millions):][added: operations (in millions):]

| [removed: Fiscal] [added: Fiscal] Year [removed: Ended] [added: Ended] | [removed: Sep] [added: Sep] 30, [removed: 2018] [added: 2018] | | | | [removed: Oct] [added: Oct] 1, [removed: 2017] [added: 2017] | | | | [removed: % Change] [added: % Change] | |

| [removed: Total] [added: Total] net [removed: revenues] [added: revenues] | [removed: $] [added: $] | [removed: 24,719.5] [added: 24,719.5] | | | [removed: $] [added: $] | [removed: 22,386.8] [added: 22,386.8] | | | [removed: 10.4] [added: 10.4] | [removed: %] [added: %] |

Licensed store revenue growth also contributed to the increase in total net revenues ($297 million), primarily due to increased product and equipment sales to and royalty revenues from our licensees ($298 million), largely due to the opening of 1,181 net new Starbucks® licensed stores over the past 12 [removed: months,] [added: months and] the conversions of both the Singapore and Taiwan markets to fully licensed in the fourth quarter of fiscal 2017 and the first quarter of fiscal 2018, respectively ($44 million).

Other revenues decreased $4 million, primarily driven by the absence of revenue [removed: from] [added: due to] the sale of our Tazo brand in the first quarter of fiscal 2018 ($56 million), the closure of our e-commerce business in the fourth quarter of fiscal 2017 ($51 million) and licensing our CPG and [removed: foodservice] [added: Foodservice] businesses to Nestlé late in the fourth quarter of fiscal 2018 ($50 million).

| [removed: Fiscal] [added: Fiscal] Year [removed: Ended] [added: Ended] | [removed: Sep] [added: Sep] 30, [removed: 2018] [added: 2018] | | | | [removed: Oct] [added: Oct] 1, [removed: 2017] [added: 2017] | | | | [removed: Sep] [added: Sep] 30, [removed: 2018] [added: 2018] | | | [removed: Oct] [added: Oct] 1, [removed: 2017] [added: 2017] | |

| | | | | | | | | | [removed: As] [added: As] a % of [removed: Total Net Revenues] [added: Total Net Revenues] | | | | |

| Other operating expenses | [removed: 539.3] [added: 371.0] | | | | [removed: 500.3] [added: 554.9] | | | | [removed: 2.2] [added: 1.4] | | | 2.2 | |

| [removed: Operating income] [added: Operating income] | [removed: $] [added: $] | [removed: 3,883.3] [added: 3,883.3] | | | [removed: $] [added: $] | [removed: 4,134.7] [added: 4,134.7] | | | [removed: 15.7] [added: 15.7] | [removed: %] [added: %] | | [removed: 18.5] [added: 18.5] | [removed: %] [added: %] |

| Store operating expenses as a % of related revenues | | | | | | | | | [removed: 36.5] [added: 48.1] | % | | [removed: 36.8] [added: 48.1] | % |

Store operating expenses as a percentage of total net revenues increased [removed: 10] [added: 130] basis points.

Store operating expenses as a percentage of company-operated store revenues [removed: decreased 30 basis points,] [added: were flat,] primarily driven by the impact of our ownership change in East China (approximately [removed: 60] [added: 40] basis [removed: points).][added: points), partially offset by increased partner investments, largely in the Americas segment.]

General and administrative expenses [removed: as a percentage of total net revenues] increased [removed: 60 basis points,] [added: $300 million,] primarily due to higher salaries and benefits related to digital platforms, technology infrastructure and innovations [removed: (approximately 20 basis points)] and the 2018 U.S. stock award [removed: (approximately 20 basis points).][added: granted in the third quarter of fiscal 2018, which was funded by savings from the Tax Act and vests over one year.]

| [removed: Fiscal] [added: Fiscal] Year [removed: Ended] [added: Ended] | [removed: Sep] [added: Sep] 30, [removed: 2018] [added: 2018] | | | | [removed: Oct] [added: Oct] 1, [removed: 2017] [added: 2017] | | | | [removed: Sep] [added: Sep] 30, [removed: 2018] [added: 2018] | | | [removed: Oct] [added: Oct] 1, [removed: 2017] [added: 2017] | |

| | | | | | | | | | [removed: As] [added: As] a % of [removed: Total Net Revenues] [added: Total Net Revenues] | | | | |

| Net [removed: earnings/(loss)] [added: earnings] attributable to noncontrolling interests | (0.3 | | ) | | 0.2 | | | | — | | | — | |

| [removed: Net] [added: Net] earnings attributable to [removed: Starbucks] [added: Starbucks] | [removed: $] [added: $] | [removed: 4,518.3] [added: 4,518.3] | | | [removed: $] [added: $] | [removed: 2,884.7] [added: 2,884.7] | | | [removed: 18.3] [added: 18.3] | [removed: %] [added: %] | | [removed: 12.9] [added: 12.9] | [removed: %] [added: %] |

Net gain resulting from divestiture of certain operations primarily [removed: consists] [added: consisted] of sales of our Tazo brand and Taiwan joint venture, partially offset by the net loss from the sale of our Brazil retail operations in fiscal 2018.

Interest income and other, net increased $10 million, primarily due to recognizing higher income on unredeemed stored value card balances, partially offset by [removed: lapping] the [added: lapping of prior year's] gain on the sale of our investment in Square, Inc. warrants in the prior year period.

The decrease in the effective tax rate was primarily due to the gain on the purchase of our East China joint venture that [removed: is] [added: was] not subject to income tax (approximately 580 basis points) and the Tax Act (approximately 480 basis points).

See [Note [removed: 13](#s362FCB202BD257809EB03FC542A13A66),] [added: 13](#s8897E88EDF2054D4BE54216AD3BD5371),] Income Taxes, for further discussion.

In the fourth quarter of fiscal 2019, we realigned our operating segment reporting structure to better reflect the cumulative effect of our streamlining efforts.

Specifically, our previous China/Asia Pacific ("CAP") segment and Europe, Middle East, and Africa ("EMEA") segment have been combined into one International segment.

Results of Siren Retail, a non-reportable operating segment consisting of Starbucks ReserveTM Roastery & Tasting Rooms, certain stores under the Starbucks Reserve brand and Princi operations, which were previously included within Corporate and Other, are now reported within the Americas and International segments based on the geographical location of the operations.

As a result, we have three reportable operating segments: Americas, International and Channel Development.

Non-reportable operating segments and unallocated corporate expenses are reported within Corporate and Other.

Further, to better support the review of our results, we have changed the classification of certain costs.

The most significant change was the reclassification of company-owned store occupancy costs from cost of sales to store operating expenses.

We also made certain other immaterial changes.

There was no impact on consolidated net revenues, total operating expenses, operating income, or net earnings per share as a result of these changes.

In December 2017, the U.S. government enacted comprehensive tax legislation into law H.R. 1, commonly referred to as the Tax Cuts and Jobs Act (the “Tax Act”), which significantly changed existing U.S. tax law and included numerous provisions that affect our business.

Our U.S. corporate income tax rate for fiscal 2019 and future years is 21%, while a blended rate of 24.5% was applied in fiscal 2018.

| • | Consolidated operating income increased to $4.1 billion in fiscal 2019 compared to operating income of $3.9 billion in fiscal 2018. Fiscal 2019 operating margin was 15.4% compared to 15.7% in fiscal 2018. Operating margin compression in fiscal 2019 was primarily driven by partner (employee) investments and growth in wages and benefits, licensing our CPG and Foodservice businesses to Nestlé and other strategic investments. These decreases were partially offset by sales leverage, cost savings initiatives, lower restructuring and impairment costs and the impact of the adoption of new revenue recognition guidance on stored value card breakage. |

| Company-operated stores | $ | 21,544.4 | | | $ | 19,690.3 | | | 9.4 | % |

| Licensed stores | 2,875.0 | | | | 2,652.2 | | | | 8.4 | |

| Other | 2,089.2 | | | | 2,377.0 | | | | (12.1 | ) |

These increases were partially offset by unfavorable foreign currency translation ($189 million) and the conversion of our Thailand, France, and the Netherlands retail businesses to fully licensed markets during fiscal 2019 ($161 million).

Other revenues decreased $288 million, primarily driven by the licensing of our CPG and Foodservice businesses to Nestlé.

Partially offsetting this decrease was growth in product revenue, primarily premium single-serve products, in connection with the Global Coffee Alliance.

| Fiscal Year Ended | Sep 29, 2019 | | | | Sep 30, 2018 | | | | Sep 29, 2019 | | | Sep 30, 2018 | |

| Cost of sales | $ | 8,526.9 | | | $ | 7,930.7 | | | 32.2 | % | | 32.1 | % |

| Store operating expenses | 10,493.6 | | | | 9,472.2 | | | | 39.6 | | | 38.3 | |

| Depreciation and amortization expenses | 1,377.3 | | | | 1,247.0 | | | | 5.2 | | | 5.0 | |

| Restructuring and impairments | 135.8 | | | | 224.4 | | | | 0.5 | | | 0.9 | |

| Total operating expenses | 22,728.7 | | | | 21,137.4 | | | | 85.7 | | | 85.5 | |

| Operating income | $ | 4,077.9 | | | $ | 3,883.3 | | | 15.4 | % | | 15.7 | % |

Other operating expenses decreased $184 million, primarily due to cost savings related to licensing our CPG and Foodservice businesses to Nestlé ($176 million) and lapping prior year costs associated with the establishment of the Global Coffee Alliance ($34 million), including business taxes associated with the up-front prepaid royalty from Nestlé and headcount-related costs, primarily relating to employee bonus and retention costs.

General and administrative expenses increased $116 million, primarily driven by higher performance-based compensation ($89 million) and the 2019 Starbucks Leadership Experience in Chicago, heavily concentrated in our fiscal fourth quarter ($52 million).

Restructuring and impairment expenses decreased $89 million, primarily due to lower restructuring and impairment costs related to TeavanaTM/MC retail store closures ($128 million) and lower impairments related to our Switzerland retail market ($27 million), partially offset by higher exit costs associated with the closure of certain Starbucks® company-operated stores ($32 million) and severance costs ($25 million).

This decrease was partially offset by improved comparable store sales from our joint venture in South Korea and higher income from our North American Coffee Partnership joint venture.

| Fiscal Year Ended | Sep 29, 2019 | | | | Sep 30, 2018 | | | | Sep 29, 2019 | | | Sep 30, 2018 | |

| Operating income | $ | 4,077.9 | | | $ | 3,883.3 | | | 15.4 | % | | 15.7 | % |

| Gain resulting from acquisition of joint venture | — | | | | 1,376.4 | | | | — | | | 5.6 | |

| Interest expense | (331.0 | | ) | | (170.3 | | ) | | (1.2 | ) | | (0.7 | ) |

| Earnings before income taxes | 4,466.2 | | | | 5,780.0 | | | | 16.8 | | | 23.4 | |

| Income tax expense | 871.6 | | | | 1,262.0 | | | | 3.3 | | | 5.1 | |

| Net earnings including noncontrolling interests | 3,594.6 | | | | 4,518.0 | | | | 13.6 | | | 18.3 | |

| Net earnings attributable to Starbucks | $ | 3,599.2 | | | $ | 4,518.3 | | | 13.6 | % | | 18.3 | % |

Gain resulting from acquisition of joint venture in fiscal 2018 was due to remeasuring our preexisting 50% ownership interest in our East China joint venture to fair value upon acquisition.

The gain in fiscal 2018 was primarily due to the sale of our Tazo brand and Taiwan joint venture, partially offset by the net loss from the sale of our Brazil retail operations in fiscal 2018.

Interest income and other, net decreased $95 million, primarily due to the adoption of the new revenue recognition guidance on a prospective basis, which required estimated breakage on unredeemed store value cards to be recorded as revenue.

The fiscal years ended on September 30, 2018 and October 1, 2017 included 52 weeks.

The fiscal year ended on October 2, 2016 included 53 weeks, with the extra week falling in our fourth fiscal quarter.

Comparable store sales percentages for fiscal 2016 are calculated excluding the 53rd week.

| | |

| --- | --- |

| | |

| --- | --- |

| • | Global comparable store sales grew 2% driven by a 3% increase in average ticket. |

| | |

| --- | --- |

| • | Consolidated operating income decreased to $3.9 billion in fiscal 2018 compared to operating income of $4.1 billion in fiscal 2017. Fiscal 2018 operating margin was 15.7% compared to 18.5% in fiscal 2017. Operating margin compression in fiscal 2018 was primarily driven by food and beverage-related mix shifts, largely in the Americas segment, the impact of our ownership change in East China at the end of the first quarter of fiscal 2018, higher restructuring and impairment costs and higher salaries and benefits related to digital platforms, technology infrastructure and innovations. |

| | |

| --- | --- |

| | |

| --- | --- |

| | |

| --- | --- |

| • | Cash flows from operations were $11.9 billion in fiscal 2018 compared to $4.3 billion in fiscal 2017. The change was primarily due to receipt of the upfront payment from Nestlé related to the Global Coffee Alliance. |

These efforts primarily include the acquisition of our East China joint venture, the conversion of our Singapore, Taiwan and Brazil operations to licensed models, the closure of TeavanaTM/MC retail stores, the sale of the Tazo brand, the licensing of our CPG and foodservice businesses to Nestlé, and the closure of certain company-operated stores in the U.S. and Canada, among other actions.

These streamlining efforts span across all segments and our corporate functions.

On August 26, 2018, our Channel Development segment finalized licensing and distribution agreements with Nestlé to sell and market our CPG and foodservice products.

The scope of the arrangement converts the majority of our previously defined Channel Development segment operations, as well as certain smaller businesses previously reported in the Americas, EMEA and Corporate and Other (previously All Other Segment), from company-owned to licensed operations with Nestlé.

As a result, we realigned our organizational and operating segment structures in support of the newly established Global Coffee Alliance.

Our reportable segments have been restated as if those smaller businesses were previously within our Channel Development segment.

Further, in an effort to report operating expenses in line with the corresponding revenue generating activities, we have changed the classification of certain costs, primarily within our CAP segment and mainly from other operating expenses to general and administrative expenses.

This reclassification has been retrospectively applied and was determined to be immaterial.

Starbucks largest acquisition to date affects our CAP segment.

As a result of acquiring the remaining interest in our East China joint venture at the end of the first quarter of fiscal 2018, we began recording 100% of its revenues and expenses on our consolidated statements of earnings at the beginning of the second quarter of fiscal 2018.

This is in contrast with our previous joint venture model, where we recorded only revenues and expenses from products sales to and royalties received from East China, as well as our proportionate share of the joint venture's net profit.

The change from equity method to consolidation

method lowered the operating margin of our Consolidated and CAP segment, primarily due to incremental depreciation and amortization expenses and lower income from equity investees.

Starbucks results for fiscal 2018 continued to demonstrate the strength of our global business model and our ability to successfully make disciplined investments in our business and our partners.

These increases were partially offset by the absence of revenue related to the closure of our TeavanaTM/MC retail stores, initiated in the fourth quarter of fiscal 2017 and substantially ceased during fiscal 2018 and the sale of our Singapore retail operations to a licensed partner in the fourth quarter of fiscal 2017.

Consolidated operating income declined $251 million, or 6%, to $3.9 billion.

Earnings per share of $3.24 increased 64% over the prior year earnings per share of $1.97.

Americas revenue grew by 7% to $16.7 billion, primarily driven by incremental revenues from 895 net new store openings over the last 12 months and comparable store sales growth of 2%, partially offset by the absence of revenue related to the conversion of our Brazil retail business to fully licensed operations in the second quarter of fiscal 2018.

Operating income declined $39 million to $3.6 billion and operating margin of 21.6% declined 180 basis points from a year ago, primarily due to food and beverage-related mix shifts, increased investments in our store partners and the impact of the May 29th anti-bias training.

These increases were partially offset by sales leverage.

In our CAP segment, revenue grew by 38% to $4.5 billion, primarily driven by the impact of our ownership change in East China at the end of the first quarter of fiscal 2018, incremental revenues from 756 net new stores over the past 12 months.

These increases were partially offset by the absence of revenue related to the sale of our Singapore retail operations to fully licensed operations in the fourth quarter of fiscal 2017.

[removed: General][added: General]

Starbucks is the premier roaster, marketer and retailer of specialty coffee in the world, operating in [removed: 78] [added: 81] markets.

We also sell a variety of coffee and tea products and license our trademarks through other channels such as licensed stores, [added: as well as] grocery and foodservice [removed: accounts.][added: through our Global Coffee Alliance with Nestlé S. A. ("Nestlé").]

In addition to our flagship Starbucks Coffee brand, we sell goods and services under the following brands: Teavana, Seattle’s Best Coffee, Evolution Fresh, [removed: La Boulange,] Ethos, Starbucks Reserve and Princi.

In this Annual Report on Form 10-K (“10-K” or “Report”) for the fiscal year ended September [removed: 30, 2018] [added: 29, 2019] (“fiscal [removed: 2018”),] [added: 2019”),] Starbucks Corporation (together with its subsidiaries) is referred to as “Starbucks,” the “Company,” “we,” “us” or “our.”

[removed: Segment] [added: Segment] Financial [removed: Information][added: Information]

We have [removed: four] [added: three] reportable operating segments: 1) Americas, which is inclusive of the U.S., Canada, and Latin America; 2) [removed: China/Asia Pacific (“CAP”); 3)] [added: International, which is inclusive of China, Japan, Asia Pacific,] Europe, Middle East, and [removed: Africa (“EMEA”)] [added: Africa;] and [removed: 4)] [added: 3)] Channel Development.

[removed: Collectively, the combined group of non-reportable] [added: Non-reportable] operating segments [removed: is] [added: such as Evolution Fresh and unallocated corporate expenses are] reported within Corporate and Other.

Revenues from our reportable [added: operating] segments [removed: and Corporate and Other] as a percentage of total net revenues for fiscal [removed: 2018] [added: 2019] were as follows: Americas [removed: (68%), CAP (18%), EMEA (4%),] [added: (69%), International (23%) and] Channel Development [removed: (9%) and Corporate and Other (1%).][added: (8%).]

Our [removed: Americas, CAP] [added: Americas] and [removed: EMEA] [added: International] segments include both company-operated and licensed stores.

Certain markets within our [removed: CAP and EMEA] [added: International] operations are either in various stages of development or undergoing transformations of their business models.

Historically our consumer packaged goods [added: ("CPG")] have been sold directly to grocery, warehouse club and specialty retail stores and through institutional foodservice companies.

[removed: Revenue Components][added: Revenue Components]

[removed: Company-operated] [added: Company-operated] and Licensed Store Summary as [removed: of September 30, 2018][added: of September 29, 2019]

| [removed: | Americas | | | As a% of] Total [removed: Americas Stores | | | CAP | | | As a% of Total CAP Stores | |] [added: Corporate and Other] | [removed: EMEA] [added: 12] | | | [removed: As a% of Total EMEA Stores] [added: —] | | | [removed: Corporate and Other] [added: (12] | [added: )] | | [removed: As a% of Total Corporate and Other] [added: —] | | | [removed: Total] [added: (12] | [added: )] | | [removed: As a% of Total Stores] [added: —] | |

[removed: | Company-operated stores | 9,684 | | | 55 | % | | 5,159 | | | 60 | % | | 490 | | | 15 | % | | 8 | | | 40 | % | | 15,341 | | | 52 | % |][added: Company-operated Stores]

[added: |] Company-operated [removed: Stores][added: stores | 9,974 | | | 55 | % | | 5,860 | | | 44 | % | | 15,834 | | | 51 | % |]

Revenue from company-operated stores accounted for [removed: 80%] [added: 81%] of total net revenues during fiscal [removed: 2018.][added: 2019.]

Our retail objective is to be the leading retailer and brand of coffee and tea in each of our target markets by selling the finest quality coffee, tea and related products, as well as complementary food offerings, and by providing each customer with a unique [removed: Starbucks Experience.][added: *Starbucks Experience*.]

The [removed: Starbucks Experience] [added: *Starbucks Experience*] is built upon superior customer service and a seamless digital experience as well as clean and well-maintained stores that reflect the personalities of the communities in which they operate, thereby building a high degree of customer loyalty.

Company-operated store data for the year-ended September [removed: 30, 2018:][added: 29, 2019:]

| | [removed: Stores Open as of] [added: Stores Open as of] | | | | | | | | | | | | | | | [removed: Stores Open as of] [added: Stores Open as of] | |

| | [removed: Oct 1, 2017] [added: Sep 30, 2018] | | | [removed: Opened] [added: Opened] | | | [removed: Closed] [added: Closed] | | | [removed: Transfers] [added: Transfers] | | | [removed: Net] [added: Net] | | | [removed: Sep 30, 2018] [added: Sep 29, 2019] | |

| [removed: Americas(1):] [added: Americas:] | | | | | | | | | | | | | | | | | |

| Canada | [removed: 1,083] [added: 1,109] | | | [removed: 65] [added: 82] | | | [removed: (39] [added: (16] | ) | | — | | | [removed: 26] [added: 66] | | | [removed: 1,109] [added: 1,175] | |

| Japan | [removed: 1,218] [added: 1,286] | | | [removed: 84] [added: 105] | | | [removed: (16] [added: (12] | ) | | — | | | [removed: 68] [added: 93] | | | [removed: 1,286] [added: 1,379] | |

| Thailand | [removed: 312] [added: 352] | | | [removed: 41] [added: 29] | | | [removed: (1] [added: (4] | ) | | [removed: —] [added: (377] | [added: )] | | [removed: 40] [added: (352] | [added: )] | | [removed: 352] [added: —] | |

| U.K. | [removed: 345] [added: 335] | | | [removed: 15] [added: 6] | | | [removed: (23] [added: (53] | ) | | [removed: (2] [added: —] | [removed: )] | | [removed: (10] [added: (47] | ) | | [removed: 335] [added: 288] | |

| All Other | [removed: 157] [added: 155] | | | [removed: 3] [added: 1] | | | [removed: (5] [added: (9] | ) | | [removed: —] [added: (82] | [added: )] | | [removed: (2] [added: (90] | ) | | [removed: 155] [added: 65] | |

| Teavana | [removed: 288] [added: 12] | | | — | | | [removed: (288] [added: (12] | ) | | — | | | [removed: (288] [added: (12] | ) | | — | |

| Siren Retail | [removed: 2] [added: 6] | | | [removed: 6] [added: 3] | | | [removed: —] [added: (1] | [added: )] | | — | | | [removed: 6] [added: 2] | | | 8 | |

[added: |] (1) [removed: Americas] [added: | International] store data includes the transfer of [removed: 112] [added: 377] company-operated [removed: retail] stores in [removed: Brazil] [added: Thailand] to licensed stores as a result of the sale of [removed: our Brazil retail] operations [added: late] in the [added: third quarter of fiscal 2019, and the transfer of 82 company-operated stores in France and the Netherlands to licensed stores as a result of the sales of operations in the] second quarter of fiscal [removed: 2018.][added: 2019. |]

We are continuing the expansion of our stores, [removed: inclusive of] [added: particularly] Drive Thru formats that provide a higher degree of access and convenience, and alternative store formats, which are focused on an elevated [removed: Starbucks Experience] [added: *Starbucks Experience*] for our customers.

| [removed: Fiscal] [added: Fiscal] Year [removed: Ended] [added: Ended] | [removed: Sep 30, 2018] [added: Sep 29, 2019] | | | [removed: Oct 1, 2017] [added: Sep 30, 2018] | | | [removed: Oct 2, 2016] [added: Oct 1, 2017] | |

| Beverages | 74 | % | | [removed: 73] [added: 74] | % | | [removed: 74] [added: 73] | % |

| Food | 20 | % | | 20 | % | | [removed: 19] [added: 20] | % |

| Packaged and single-serve coffees and teas | [removed: 2] [added: 1] | % | | [removed: 3] [added: 2] | % | | 3 | % |

| [removed: Other(1)] [added: Other (1)] | [removed: 4] [added: 5] | % | | 4 | % | | 4 | % |

| (1) | “Other” primarily consists of sales of [removed: serveware, ready-to-drink beverages] [added: serveware] and [removed: coffee-making equipment,] [added: ready-to-drink beverages,] among other items. |

[removed: Stored] [added: *Stored] Value Cards and Loyalty [removed: Program][added: Program*]

In the fourth quarter of fiscal 2019, we realigned Starbucks operating segment reporting structure to better reflect the cumulative effect of our streamlining efforts.

Specifically, our previous China/Asia Pacific ("CAP") segment and Europe, Middle East, and Africa ("EMEA") segment have been combined into one International segment.

Concurrently, results of Siren Retail, a non-reportable operating segment consisting of Starbucks ReserveTM Roastery & Tasting Rooms, certain stores under the Starbucks Reserve brand and Princi operations, which were previously included within Corporate and Other, are now reported within the Americas and International segments based on the geographical location of the operations.

| | Americas | | | As a% of Total Americas Stores | | | International | | | As a% of Total International Stores | | | Total | | | As a% of Total Stores | |

| Licensed stores | 8,093 | | | 45 | % | | 7,329 | | | 56 | % | | 15,422 | | | 49 | % |

| Total | 18,067 | | | 100 | % | | 13,189 | | | 100 | % | | 31,256 | | | 100 | % |

| U.S. | 8,575 | | | 412 | | | (196 | ) | | — | | | 216 | | | 8,791 | |

| Total Americas | 9,690 | | | 497 | | | (213 | ) | | — | | | 284 | | | 9,974 | |

| International (1): | | | | | | | | | | | | | | | | | |

| China | 3,521 | | | 629 | | | (27 | ) | | — | | | 602 | | | 4,123 | |

| Siren Retail | 2 | | | 3 | | | — | | | — | | | 3 | | | 5 | |

| Total International | 5,651 | | | 773 | | | (105 | ) | | (459 | ) | | 209 | | | 5,860 | |

| Total company-operated | 15,341 | | | 1,270 | | | (318 | ) | | (459 | ) | | 493 | | | 15,834 | |

| | |

| --- | --- |

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.

Licensees are responsible for operating costs and capital investments which more than offset the lower revenues we receive under the licensed store model.

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | |

| U.S. | 6,031 | | | 318 | | | (99 | ) | | — | | | 219 | | | 6,250 | |

| Total Americas | 7,770 | | | 446 | | | (123 | ) | | — | | | 323 | | | 8,093 | |

| International (1): | | | | | | | | | | | | | | | | | |

| Korea | 1,231 | | | 128 | | | (25 | ) | | — | | | 103 | | | 1,334 | |

| Thailand | — | | | 15 | | | — | | | 377 | | | 392 | | | 392 | |

| All Other | 2,681 | | | 396 | | | (55 | ) | | 82 | | | 423 | | | 3,104 | |

| Total International | 6,201 | | | 776 | | | (107 | ) | | 459 | | | 1,128 | | | 7,329 | |

| Total licensed | 13,983 | | | 1,222 | | | (242 | ) | | 459 | | | 1,439 | | | 15,422 | |

| | |

| --- | --- |

See [Note 1](#s5D815956884D590C810E9ABCDCDAFD4B), [Summary of Significant Accounting Policies](#sF96547A17F655DED9D44E4434E0DAAFE) - Deferred Revenues, for further information.

Our collaborative relationships with PepsiCo, Inc., Anheuser-Busch InBev, Tingyi Holding Corp., Arla Foods and others for our global ready-to-drink beverages businesses in this segment are excluded from the Global Coffee Alliance.

In

We also utilize forward contracts, futures contracts, and collars to hedge "C" price exposure under our price-to-be-fixed green coffee contracts and our long-term forecasted coffee demand where underlying fixed price and price-to-be-fixed contracts are not yet available.

Information about our Executive Officers

| John Kelly | | 53 | | executive vice president, Global Public Affairs and Social Impact |

She currently serves on the Board of Directors of Amazon.com, Inc. and as the Chair of the Board of Trustees for Spelman College.

On April 1, 2019 Mr. Burrows took an extended unpaid leave, also known as a "coffee break" or sabbatical.

Mr. Culver

John Kelly joined Starbucks in October 2013, and serves as executive vice president, Public Affairs and Social Impact.

On August 26, 2018, our Channel Development segment finalized licensing and distribution agreements with Nestlé S.A. (“Nestlé”) to sell and market our consumer packaged goods (“CPG”) and foodservice products and received an upfront prepaid royalty payment of approximately $7 billion.

As a result, we realigned our organizational and operating segment structures in support of the newly established Global Coffee Alliance.

The scope of the arrangement converts the majority of our previously defined Channel Development segment operations, as well as certain smaller businesses previously reported in the Americas, EMEA and Corporate and Other (previously All Other Segments), to licensed operations with Nestlé, and our reportable segments have been restated as if those smaller businesses were previously within our Channel Development segment.

We also have several non-reportable operating segments, including Siren Retail, which consists of Starbucks ReserveTM Roastery & Tasting Rooms, Starbucks Reserve brand stores and products and Princi operations, as well as Evolution Fresh and the Teavana retail business which substantially ceased operations during fiscal 2018.

Additionally, the CPG and foodservice businesses previously included in our Americas, EMEA and Corporate and Other (previously All Other Segments) were also transitioned to a licensed model under the Global Coffee Alliance and realigned to the Channel Development segment.

Starbucks segment information is included in [Note 16](#s1B8A618C378455F2806784127F1F86B5), Segment Reporting, to the consolidated financial statements included in Item 8 of Part II of this 10-K.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Licensed stores | 7,770 | | | 45 | % | | 3,371 | | | 40 | % | | 2,830 | | | 85 | % | | 12 | | | 60 | % | | 13,983 | | | 48 | % |

| Total | 17,454 | | | 100 | % | | 8,530 | | | 100 | % | | 3,320 | | | 100 | % | | 20 | | | 100 | % | | 29,324 | | | 100 | % |

| U.S. | 8,222 | | | 401 | | | (48 | ) | | — | | | 353 | | | 8,575 | |

| Brazil | 108 | | | 4 | | | — | | | (112 | ) | | (108 | ) | | — | |

| Total Americas | 9,413 | | | 470 | | | (87 | ) | | (112 | ) | | 271 | | | 9,684 | |

| China/Asia Pacific(2): | | | | | | | | | | | | | | | | | |

| China | 1,540 | | | 528 | | | (24 | ) | | 1,477 | | | 1,981 | | | 3,521 | |

| Total China/Asia Pacific | 3,070 | | | 653 | | | (41 | ) | | 1,477 | | | 2,089 | | | 5,159 | |

| EMEA: | | | | | | | | | | | | | | | | | |

| Total EMEA | 502 | | | 18 | | | (28 | ) | | (2 | ) | | (12 | ) | | 490 | |

| Corporate and Other: | | | | | | | | | | | | | | | | | |

| Total Corporate and Other | 290 | | | 6 | | | (288 | ) | | — | | | (282 | ) | | 8 | |

| Total company-operated | 13,275 | | | 1,147 | | | (444 | ) | | 1,363 | | | 2,066 | | | 15,341 | |

(2) China/Asia Pacific store data includes the transfer of 1,477 licensed stores in East China to company-operated retail stores as a result of the purchase of our East China joint venture in the first quarter of fiscal 2018.

Under the licensed model, Starbucks receives a reduced share of the total store revenues, but this is more than offset by the reduction in our share of costs as these are primarily incurred by the licensee.

| U.S. | 5,708 | | | 442 | | | (119 | ) | | — | | | 323 | | | 6,031 | |

| Total Americas | 7,146 | | | 645 | | | (133 | ) | | 112 | | | 624 | | | 7,770 | |

| China/Asia Pacific(2): | | | | | | | | | | | | | | | | | |

| China | 1,396 | | | 84 | | | (3 | ) | | (1,477 | ) | | (1,396 | ) | | — | |

| Korea | 1,108 | | | 138 | | | (15 | ) | | — | | | 123 | | | 1,231 | |

| Malaysia | 248 | | | 23 | | | (3 | ) | | — | | | 20 | | | 268 | |

| All Other | 596 | | | 101 | | | (8 | ) | | — | | | 93 | | | 689 | |

| Total China/Asia Pacific | 4,409 | | | 482 | | | (43 | ) | | (1,477 | ) | | (1,038 | ) | | 3,371 | |

| EMEA: | | | | | | | | | | | | | | | | | |

| United Arab Emirates | 164 | | | 26 | | | (4 | ) | | — | | | 22 | | | 186 | |

| Germany | 156 | | | 10 | | | (14 | ) | | — | | | (4 | ) | | 152 | |

| Saudi Arabia | 124 | | | 46 | | | (4 | ) | | — | | | 42 | | | 166 | |

| Kuwait | 118 | | | 24 | | | — | | | — | | | 24 | | | 142 | |

| Spain | 113 | | | 34 | | | (5 | ) | | — | | | 29 | | | 142 | |

| All Other | 804 | | | 157 | | | (25 | ) | | — | | | 132 | | | 936 | |

| Total EMEA | 2,472 | | | 426 | | | (70 | ) | | 2 | | | 358 | | | 2,830 | |

See [Note [removed: 15](#sB02C5C9282265A9EB8C2BB6F200A1B62),] [added: 15](#sC8222D0576ED5EFDABC1FBAAEC0EFEE1),] Commitments and Contingencies, to the consolidated financial statements included in Item 8 of Part II of this 10-K for information regarding certain legal proceedings in which we are involved.

[removed: UNITED] [added: UNITED] STATES SECURITIES AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] DC [removed: 20549][added: 20549]

[removed: Form 10-K][added: Form 10-K]

[removed: x ANNUAL] [added: ☒ ANNUAL] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934][added: 1934]

[removed: For] [added: For] the Fiscal Year [removed: Ended September 30, 2018][added: Ended September 29, 2019]

[removed: ¨ TRANSITION] [added: ☐ TRANSITION] REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF [removed: 1934][added: 1934]

[removed: For] [added: For] the transition period from to [removed: .][added: .]

[removed: Commission] [added: Commission] File [removed: Number: 0-20322][added: Number: 0-20322]

[removed: Starbucks Corporation][added: STARBUCKS CORPORATION]

[removed: (Exact] [added: (Exact] Name of Registrant as Specified in its [removed: Charter)][added: Charter)]

[removed: ][added: ]

| [removed: Washington |] [added: Washington] | [removed: 91-1325671] [added: 91-1325671] |

| [removed: (State] [added: *(State] of [removed: Incorporation) |] [added: Incorporation)*] | [removed: (IRS] [added: *(IRS] Employer [removed: ID)] [added: ID)*] |

[removed: 2401] [added: 2401] Utah Avenue [removed: South, Seattle, Washington 98134][added: South, Seattle, Washington 98134]

[removed: (206) 447-1575][added: (206) 447-1575]

[removed: (Address] [added: *(Address] of principal executive [removed: offices,] [added: office,] zip code, telephone [removed: number)][added: number)*]

[removed: Securities] [added: Securities] Registered Pursuant to Section 12(b) of the [removed: Act:][added: Act:]

| [removed: Title] [added: Title] of Each [removed: Class] [added: Class] | [added: Trading Symbol] | [removed: Name] [added: Name] of Each Exchange on Which [removed: Registered] [added: Registered] |

| Common Stock, $0.001 par value per share | [added: SBUX] | Nasdaq Global Select Market |

[removed: Securities] [added: Securities] Registered Pursuant to Section 12(g) of the Act: [removed: None][added: None]

Yes [removed: ¨] [added: ☐] No x

| Large accelerated filer | x | Accelerated filer | ¨ | [added: Non-accelerated filer | ¨ | Smaller reporting company | ☐ |]

| [removed: | |] Emerging growth company | [removed: ¨] [added: ☐] | [added: | | | | | |]

The aggregate market value of the voting stock held by non-affiliates of the registrant as of the last business day of the registrant’s most recently completed second fiscal quarter, based upon the closing sale price of the registrant’s common stock on [removed: April 1, 2018] [added: March 31, 2019] as reported on the NASDAQ Global Select Market was [removed: $77.8] [added: $89.8] billion.

As of November [removed: 9, 2018,] [added: 8, 2019,] there were [removed: 1,240.6] [added: 1,181.0] million shares of the registrant’s Common Stock outstanding.

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

Portions of the definitive Proxy Statement for the registrant’s Annual Meeting of Shareholders to be held on March [removed: 20, 2019] [added: 18, 2020] have been incorporated by reference into Part III of this Annual Report on Form 10-K.

[removed: Form 10-K][added: Form 10-K]

[removed: For] [added: For] the Fiscal Year [removed: Ended September 30, 2018][added: Ended September 29, 2019]

[removed: TABLE] [added: TABLE] OF [removed: CONTENTS][added: CONTENTS]

| [removed: PART I] [added: PART I] | | |

| [removed: Item 1] [added: Item 1] | [removed: [Business](#s42C4C0DA8A93522797F415813551A361)] [added: [Business](#s4B0268BC46255FE382CB8507D8208C72)] | [removed: [2](#s42C4C0DA8A93522797F415813551A361)] [added: [2](#s4B0268BC46255FE382CB8507D8208C72)] |

| [removed: Item 1A] [added: Item 1A] | [Risk [removed: Factors](#sE8DBFEB6321B55368C838E8600A3EC40)] [added: Factors](#sBBAA235699DE51D6918B492BDD8498DD)] | [removed: [10](#sE8DBFEB6321B55368C838E8600A3EC40)] [added: [9](#sBBAA235699DE51D6918B492BDD8498DD)] |

| [removed: Item 1B] [added: Item 1B] | [Unresolved Staff [removed: Comments](#s022F12A796AE5E41B4D547099A7F26E3)] [added: Comments](#s41D12915E3C25CE1B14CD17DEBD49CEC)] | [removed: [18](#s022F12A796AE5E41B4D547099A7F26E3)] [added: [17](#s41D12915E3C25CE1B14CD17DEBD49CEC)] |

| [removed: Item 2] [added: Item 2] | [removed: [Properties](#s5BE7EA95A6645263854035147FA88ED5)] [added: [Properties](#s9E9E8DC17F0C5D0A8559A12997CF42E6)] | [removed: [18](#s5BE7EA95A6645263854035147FA88ED5)] [added: [17](#s9E9E8DC17F0C5D0A8559A12997CF42E6)] |

| [removed: Item 3] [added: Item 3] | [Legal [removed: Proceedings](#s5E2D03B927475053A4CE73CDDE391324)] [added: Proceedings](#s12B71E1101D7591090E16A264E4ECD30)] | [removed: [18](#s5E2D03B927475053A4CE73CDDE391324)] [added: [17](#s12B71E1101D7591090E16A264E4ECD30)] |

| [removed: Item 4] [added: Item 4] | [Mine Safety [removed: Disclosures](#sF0F3984292DA537F8E96130E1AA50D04)] [added: Disclosures](#sF64218A322B75B4D98C1C3522701C579)] | [removed: [19](#sF0F3984292DA537F8E96130E1AA50D04)] [added: [17](#sF64218A322B75B4D98C1C3522701C579)] |

| [removed: PART II] [added: PART II] | | |

| [removed: Item 5] [added: Item 5] | [Market for the Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity [removed: Securities](#sF66D4A8A26D85D7B8262B590D2549E1F)] [added: Securities](#s5497DFCFE49A5395B2C7FF6E73ABA028)] | [removed: [20](#sF66D4A8A26D85D7B8262B590D2549E1F)] [added: [18](#s5497DFCFE49A5395B2C7FF6E73ABA028)] |

| [removed: Item 6] [added: Item 6] | [Selected Financial [removed: Data](#sF70723449CFA51D9B3D494FBC0C9E013)] [added: Data](#s14B68583CA895857B93E38650FA902B3)] | [removed: [22](#sF70723449CFA51D9B3D494FBC0C9E013)] [added: [20](#s14B68583CA895857B93E38650FA902B3)] |

or

Starbucks Corporation

| | |

| --- | --- |

| | |

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | |

| | | | | | | | |

| [SIGNATURES](#s276852C2E5225F14A174B3C5FFA952C3) | | [97](#s276852C2E5225F14A174B3C5FFA952C3) |

10-K 1 sbux-9302018x10xk.htm 10-K

or

| | | |

| --- | --- | --- |

| | | |

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation of S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

| | | | |

| --- | --- | --- | --- |

| | | | |

| Non-accelerated filer | ¨ | Smaller reporting company | ¨ |

STARBUCKS CORPORATION

| [SIGNATURES](#sE78BA1A5325354BD86DD660145FA33DC) | | [101](#sE78BA1A5325354BD86DD660145FA33DC) |

The [removed: significant] [added: material] properties used by Starbucks in connection with its roasting, manufacturing, warehousing, distribution and corporate administrative operations, serving all segments, are as follows:

| [removed: Location] [added: Location] | [removed: Approximate] [added: Approximate] Size in Square [removed: Feet] [added: Feet] | | | [removed: Purpose] [added: Purpose] |

| Minden, NV (Carson Valley) | 1,080,000 | | | [removed: Roasting] [added: Roasting, warehousing] and distribution |

| York, PA | [removed: 1,957,000] [added: 1,957,435] | | | Roasting, [removed: distribution] [added: warehousing] and [removed: warehouse] [added: distribution] |

| Lebanon, TN | 680,000 | | | [removed: Warehouse] [added: Warehousing] and distribution |

| Auburn, WA | 491,000 | | | [removed: Warehouse] [added: Warehousing] and distribution |

| Shanghai, China | [removed: 211,000] [added: 177,000] | | | Corporate administrative |

As of September [removed: 30, 2018,] [added: 29, 2019,] Starbucks had [removed: 15,341] [added: 15,834] company-operated stores, almost all of which are leased.

| Rancho Cucamonga, CA | 265,000 | | | Manufacturing |

| Washington, DC | 130,000 | | | Warehouse and distribution |

| Augusta, GA | 131,000 | | | Manufacturing |

| Gaston, SC (Sandy Run) | 117,000 | | | Roasting and distribution |

| Stratford, CT | 196,000 | | | Warehouse and distribution |

| Amsterdam, Netherlands | 97,000 | | | Roasting and distribution |

| Samutprakarn, Thailand | 81,000 | | | Warehouse and distribution |

[removed: PART II][added: PART II]

[removed: SHAREHOLDER INFORMATION][added: SHAREHOLDER INFORMATION]

[removed: MARKET] [added: MARKET] INFORMATION AND DIVIDEND [removed: POLICY][added: POLICY]

As of November [removed: 9, 2018,] [added: 8, 2019,] we had approximately [removed: 18,100] [added: 18,000] shareholders of record.

[removed: ISSUER] [added: ISSUER] PURCHASES OF EQUITY [removed: SECURITIES][added: SECURITIES]

The following table provides information regarding repurchases of our common stock during the quarter ended September [removed: 30, 2018:][added: 29, 2019:]

| | | [removed: Total] [added: Total] Number of Shares [removed: Purchased] [added: Purchased] | | | [removed: Average] [added: Average] Price Paid per [removed: Share] [added: Share] | | | | [removed: Total] [added: Total] Number of Shares Purchased as Part of Publicly Announced Plans or [removed: Programs(2)] [added: Programs (2)] | | | [removed: Maximum] [added: Maximum] Number of Shares that May Yet Be Purchased Under the Plans or [removed: Programs(3)] [added: Programs (3)] | |

| [removed: Period(1)] [added: Period (1)] | | | | | | | | | | | | | |

| (1) | Monthly information is presented by reference to our fiscal months during the fourth quarter of fiscal [removed: 2018.] [added: 2019.] |

| (3) | This column includes the total [removed: remaining] number of shares available for repurchase under the [removed: authorization announced on April 26, 2018 as part of our] [added: Company's] ongoing share repurchase program. [removed: These amounts do not include the additional 120 million shares authorized for repurchase announced on November 1, 2018.] 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. The timing, manner, price and amount of repurchases will be determined at [removed: the Company's] [added: our] discretion, and the share repurchase program may be suspended, terminated or modified at any time for any reason. |

[removed: Performance] [added: Performance] Comparison [removed: Graph][added: Graph]

The following graph depicts the total return to shareholders from September [removed: 29, 2013] [added: 28, 2014] through September [removed: 30, 2018,] [added: 29, 2019,] 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.

All indices shown in the graph have been reset to a base of 100 as of September [removed: 29, 2013,] [added: 28, 2014,] and assume an investment of $100 on that date and the reinvestment of dividends paid since that date.

[removed: ][added: ]

| | [removed: Sep 29, 2013 | | | | Sep] [added: Sep] 28, [removed: 2014] [added: 2014] | | | | [removed: Sep] [added: Sep] 27, [removed: 2015] [added: 2015] | | | | [removed: Oct] [added: Oct] 2, [removed: 2016] [added: 2016] | | | | [removed: Oct] [added: Oct] 1, [removed: 2017] [added: 2017] | | | | [removed: Sep] [added: Sep] 30, [removed: 2018] [added: 2018] | | | [added: | Sep 29, 2019 | | |]

| July 1, 2019 - July 28, 2019 | | 10,925,000 | | | $ | 89.32 | | | 10,925,000 | | | 41,773,146 | |

| July 29, 2019 - August 25, 2019 | | 8,267,159 | | | 95.61 | | | | 8,267,159 | | | 33,505,987 | |

| August 26, 2019 - September 29, 2019 | | 4,339,988 | | | 94.68 | | | | 4,339,988 | | | 29,165,999 | |

| Total | | 23,532,147 | | | $ | 92.52 | | | 23,532,147 | | | | |

| Starbucks Corporation | $ | 100.00 | | | $ | 156.42 | | | $ | 148.03 | | | $ | 149.49 | | | $ | 161.87 | | | $ | 256.48 | |

| S&P 500 | 100.00 | | | | 99.39 | | | | 114.72 | | | | 136.07 | | | | 160.44 | | | | 167.27 | | |

| NASDAQ Composite | 100.00 | | | | 104.00 | | | | 121.08 | | | | 149.75 | | | | 187.44 | | | | 188.43 | | |

| S&P Consumer Discretionary | 100.00 | | | | 113.18 | | | | 124.09 | | | | 142.10 | | | | 188.34 | | | | 192.78 | | |

| July 2, 2018 - July 29, 2018 | | 19,506,300 | | | $ | 50.54 | | | 19,506,300 | | | 87,808,124 | |

| July 30, 2018 - August 26, 2018 | | 15,000,000 | | | 52.70 | | | | 15,000,000 | | | 72,808,124 | |

| August 27, 2018 - September 30, 2018 | | 24,000,000 | | | 55.10 | | | | 24,000,000 | | | 48,808,124 | |

| Total | | 58,506,300 | | | $ | 52.96 | | | 58,506,300 | | | | |

| | |

| --- | --- |

| Starbucks Corporation | $ | 100.00 | | | $ | 98.58 | | | $ | 154.19 | | | $ | 145.93 | | | $ | 147.36 | | | $ | 159.57 | |

| S&P 500 | 100.00 | | | | 119.73 | | | | 119.00 | | | | 137.36 | | | | 162.92 | | | | 192.10 | | |

| NASDAQ Composite | 100.00 | | | | 121.64 | | | | 127.37 | | | | 148.79 | | | | 183.54 | | | | 230.21 | | |

| S&P Consumer Discretionary | 100.00 | | | | 111.77 | | | | 126.50 | | | | 138.69 | | | | 158.83 | | | | 210.51 | | |

[removed: Financial] [added: Financial] Information (in millions, except per share [removed: data):][added: data):]

| | [removed: As] [added: As] of and for the Fiscal Year [removed: Ended (1)] [added: Ended (1)] | Sept [added: 29, 2019 (52 Wks) | | | | Sept] 30, 2018 (52 Wks) | | | | Oct 1, 2017 (52 Wks) | | | | Oct 2, 2016 (53 Wks) | | | | Sep 27, 2015 (52 Wks) | | | [removed: | Sep 28, 2014 (52 Wks) | | |]

| | [removed: Results] [added: Results] of [removed: Operations] [added: Operations] | | | | | | | | | | | | | | | | | | | |

| | Company-operated stores | $ | [removed: 19,690.3] [added: 21,544.4] | | | $ | [removed: 17,650.7] [added: 19,690.3] | | | $ | [removed: 16,844.1] [added: 17,650.7] | | | $ | [removed: 15,197.3] [added: 16,844.1] | | | $ | [removed: 12,977.9] [added: 15,197.3] | |

| | Licensed stores | [removed: 2,652.2] [added: 2,875.0] | | | | [removed: 2,355.0] [added: 2,652.2] | | | | [removed: 2,154.2] [added: 2,355.0] | | | | [removed: 1,861.9] [added: 2,154.2] | | | | [removed: 1,588.6] [added: 1,861.9] | | |

| | Other | [removed: 2,377.0] [added: 2,089.2] | | | | [removed: 2,381.1] [added: 2,377.0] | | | | [removed: 2,317.6] [added: 2,381.1] | | | | [removed: 2,103.5] [added: 2,317.6] | | | | [removed: 1,881.3] [added: 2,103.5] | | |

| | Total net revenues | $ | [removed: 24,719.5] [added: 26,508.6] | | | $ | [removed: 22,386.8] [added: 24,719.5] | | | $ | [removed: 21,315.9] [added: 22,386.8] | | | $ | [removed: 19,162.7] [added: 21,315.9] | | | $ | [removed: 16,447.8] [added: 19,162.7] | |

| | Operating income/(loss) | $ | [removed: 3,883.3] [added: 4,077.9] | | | $ | [removed: 4,134.7] [added: 3,883.3] | | | $ | [removed: 4,171.9] [added: 4,134.7] | | | $ | [removed: 3,601.0] [added: 4,171.9] | | | $ | [removed: 3,081.1] [added: 3,601.0] | |

| | Net earnings including noncontrolling [removed: interests(2)] [added: interests (2)] | [removed: 4,518.0] [added: 3,594.6] | | | | [removed: 2,884.9] [added: 4,518.0] | | | | [removed: 2,818.9] [added: 2,884.9] | | | | [removed: 2,759.3] [added: 2,818.9] | | | | [removed: 2,067.7] [added: 2,759.3] | | |

| | Net earnings/(loss) attributable to noncontrolling interests | [removed: (0.3] [added: (4.6] | | ) | | [removed: 0.2] [added: (0.3] | | [added: )] | | [removed: 1.2] [added: 0.2] | | | | [removed: 1.9] [added: 1.2] | | | | [removed: (0.4] [added: 1.9] | | [removed: )] |

| | Net earnings attributable to [removed: Starbucks(2)] [added: Starbucks (2)] | [removed: 4,518.3] [added: 3,599.2] | | | | [removed: 2,884.7] [added: 4,518.3] | | | | [removed: 2,817.7] [added: 2,884.7] | | | | [removed: 2,757.4] [added: 2,817.7] | | | | [removed: 2,068.1] [added: 2,757.4] | | |

| | EPS — [removed: diluted(2)] [added: diluted (2)] | [removed: 3.24] [added: 2.92] | | | | [removed: 1.97] [added: 3.24] | | | | [removed: 1.90] [added: 1.97] | | | | [removed: 1.82] [added: 1.90] | | | | [removed: 1.35] [added: 1.82] | | |

| | Cash dividends declared per share | [removed: 1.32] [added: 1.49] | | | | [removed: 1.05] [added: 1.32] | | | | [removed: 0.85] [added: 1.05] | | | | [removed: 0.68] [added: 0.85] | | | | [removed: 0.55] [added: 0.68] | | |

| | Net cash provided by operating [removed: activities(3)] [added: activities (3)] | [removed: 11,937.8] [added: 5,047.0] | | | | [removed: 4,251.8] [added: 11,937.8] | | | | [removed: 4,697.9] [added: 4,251.8] | | | | [removed: 3,881.5] [added: 4,697.9] | | | | [removed: 722.2] [added: 3,881.5] | | |

| | Capital expenditures (additions to property, plant and equipment) | [removed: 1,976.4] [added: 1,806.6] | | | | [removed: 1,519.4] [added: 1,976.4] | | | | [removed: 1,440.3] [added: 1,519.4] | | | | [removed: 1,303.7] [added: 1,440.3] | | | | [removed: 1,160.9] [added: 1,303.7] | | |

| | [removed: Balance Sheet] [added: Balance Sheet] | | | | | | | | | | | | | | | | | | | |

| | Total assets | $ | [removed: 24,156.4] [added: 19,219.6] | | | $ | [removed: 14,365.6] [added: 24,156.4] | | | $ | [removed: 14,312.5] [added: 14,365.6] | | | $ | [removed: 12,404.1] [added: 14,312.5] | | | $ | [removed: 10,745.0] [added: 12,404.1] | |

| | Long-term debt (including current portion) | [removed: 9,440.1] [added: 11,167.0] | | | | [removed: 3,932.6] [added: 9,440.1] | | | | [removed: 3,585.2] [added: 3,932.6] | | | | [removed: 2,335.3] [added: 3,585.2] | | | | [removed: 2,041.3] [added: 2,335.3] | | |

| | Shareholders’ [removed: equity] [added: equity/(deficit)] | [removed: 1,169.5] [added: (6,232.2] | | [added: )] | | [removed: 5,450.1] [added: 1,169.5] | | | | [removed: 5,884.0] [added: 5,450.1] | | | | [removed: 5,818.0] [added: 5,884.0] | | | | [removed: 5,272.0] [added: 5,818.0] | | |

| (1) | Our fiscal year ends on the Sunday closest to September 30. The fiscal year [removed: ended] [added: ending] on October 2, 2016 included 53 weeks, with the 53rd week falling in our fourth fiscal quarter. |

| (3) | Net cash provided by operating activities for fiscal [removed: 2014] [added: 2015] through fiscal 2017 [removed: have] [added: has] been adjusted for the adoption of new accounting guidance related to excess tax benefits as discussed in [Note [removed: 1](#sEFCC9260C5AB54BA8B2DCB997235015F),] [added: 1](#s5D815956884D590C810E9ABCDCDAFD4B),] Summary of Significant Accounting Policies. |

[removed: Comparable] [added: Comparable] Store [removed: Sales:][added: Sales:]

| | [removed: Fiscal] [added: Fiscal] Year [removed: Ended] [added: Ended] | [removed: Sep] [added: Sep 29, 2019 | | | Sep] 30, [removed: 2018] [added: 2018] | | | [removed: Oct] [added: Oct] 1, [removed: 2017] [added: 2017] | | | [removed: Oct] [added: Oct] 2, [removed: 2016] [added: 2016] | | | [removed: Sep] [added: Sep] 27, [removed: 2015 | | | Sep 28, 2014] [added: 2015] | |

| | Percentage change in comparable store [removed: sales(1)] [added: sales (1)] | | | | | | | | | | | | | | |

| | Sales growth | [removed: 2] [added: 5] | % | | [removed: 3] [added: 2] | % | | [removed: 6] [added: 3] | % | | [removed: 7] [added: 6] | % | | [removed: 6] [added: 7] | % |

| | Change in transactions | [added: 2 | % | |] (1 | )% | | — | % | | 1 | % | | 3 | % | [removed: | 2 | % |]

| | Change in ticket | 3 | % | | [removed: 4] [added: 3] | % | | [removed: 5] [added: 4] | % | | [removed: 4] [added: 5] | % | | [removed: 3] [added: 4] | % |

| | Sales growth | [removed: 1] [added: 3] | % | | [removed: 3] [added: 1] | % | | [removed: 3] [added: 2] | % | | [removed: 9] [added: 2] | % | | [removed: 7] [added: 6] | % |

| | Change in transactions | [removed: (1] [added: 1] | [removed: )%] [added: %] | | [removed: 1] [added: (1] | [removed: %] [added: )%] | | 1 | % | | [removed: 8] [added: 1] | % | | [removed: 6] [added: 5] | % |

| | Change in ticket | 2 | % | | [removed: 1] [added: 2] | % | | [removed: 2] [added: 1] | % | | 1 | % | | [removed: —] [added: 1] | % |

| | Sales growth | [removed: —] [added: 5] | % | | [removed: 1] [added: 2] | % | | [removed: —] [added: 3] | % | | [removed: 4] [added: 5] | % | | [removed: 5] [added: 7] | % |

| | Change in transactions | [removed: (3] [added: 1] | [removed: )%] [added: %] | | (1 | )% | | [removed: 1] [added: —] | % | | [removed: 2] [added: 1] | % | | 3 | % |

| | Change in ticket | 3 | % | | [removed: 1] [added: 3] | % | | [removed: —] [added: 3] | % | | [removed: 1] [added: 4] | % | | [removed: 2] [added: 4] | % |

| (1) | Includes only Starbucks® company-operated stores open 13 months or longer. Comparable store sales exclude the effect of fluctuations in foreign currency exchange [removed: rates.] [added: rates and the results of our global Siren Retail operations.] For fiscal year 2016, comparable store sales percentages were calculated excluding the 53rd week. |

| (2) | Beginning in [added: February of fiscal 2019, comparable store sales include the results of the transfer of 1,477 licensed stores in East China to company-operated retail stores as a result of the purchase of our East China joint venture in the first quarter of fiscal 2018. Beginning in] December of fiscal 2016, comparable store sales include the results of the 1,009 company-operated stores acquired as part of the acquisition of Starbucks Japan in the first quarter of fiscal 2015. |

[removed: Store] [added: Store] Count [removed: Data:][added: Data:]

| | [removed: As] [added: As] of and for the Fiscal Year [removed: Ended] [added: Ended] | [removed: Sept] [added: Sept 29, 2019 (52 Wks) | | | Sept] 30, 2018 (52 [removed: Wks)] [added: Wks)] | | | [removed: Oct] [added: Oct] 1, 2017 (52 [removed: Wks)] [added: Wks)] | | | [removed: Oct] [added: Oct] 2, 2016 (53 [removed: Wks)] [added: Wks)] | | | [removed: Sep] [added: Sep] 27, 2015 (52 [removed: Wks) | | | Sep 28, 2014 (52 Wks)] [added: Wks)] | |

| | [removed: Americas(1)] [added: Americas (1)] | | | | | | | | | | | | | | |

| | Licensed stores | [added: 323 | | |] 624 | | | 558 | | | 456 | | | 336 | | [removed: | 381 | |]

| | Company-operated stores | [removed: (12] [added: —] | [removed: )] | | [removed: (21] [added: (288] | ) | | [removed: (214] [added: (69] | ) | | [removed: (80] [added: (17] | ) | | [removed: (9] [added: 5] | [removed: )] |

| | International (2) | | | | | | | | | | | | | | |

| | Company-operated stores | 284 | | | 275 | | | 395 | | | 348 | | | 277 | |

| | International (2) | | | | | | | | | | | | | | |

| | Company-operated stores | 209 | | | 2,079 | | | 238 | | | 145 | | | 1,240 | |

| | Licensed stores | 1,128 | | | (680 | ) | | 1,130 | | | 1,116 | | | (180 | ) |

| | Company-operated stores | 9,974 | | | 9,690 | | | 9,415 | | | 9,020 | | | 8,672 | |

| | International (2) | | | | | | | | | | | | | | |

| | Company-operated stores | 5,860 | | | 5,651 | | | 3,572 | | | 3,334 | | | 3,189 | |

| | Licensed stores | 7,329 | | | 6,201 | | | 6,881 | | | 5,751 | | | 4,635 | |

| (3) | Corporate and Other store data includes the closure of 313 Teavana retail stores in fiscal 2018 and 12 Teavana retail stores in the first quarter of fiscal 2019. |

| | |

| --- | --- |

| | |

| --- | --- |

| | China/Asia Pacific(2) | | | | | | | | | | | | | | |

| | EMEA(3) | | | | | | | | | | | | | | |

| | Sales growth | 2 | % | | 3 | % | | 5 | % | | 7 | % | | 6 | % |

| | Change in transactions | (1 | )% | | — | % | | 1 | % | | 3 | % | | 3 | % |

| | Change in ticket | 3 | % | | 3 | % | | 4 | % | | 4 | % | | 3 | % |

| (3) | Company-operated stores represent 15% of the EMEA segment store portfolio as of September 30, 2018. |

| | Company-operated stores | 271 | | | 394 | | | 348 | | | 276 | | | 317 | |

| | China/Asia Pacific(2) | | | | | | | | | | | | | | |

| | Company-operated stores | 2,089 | | | 259 | | | 359 | | | 1,320 | | | 250 | |

| | Licensed stores | (1,038 | ) | | 777 | | | 622 | | | (482 | ) | | 492 | |

| | EMEA(3) | | | | | | | | | | | | | | |

| | Licensed stores | 358 | | | 353 | | | 494 | | | 302 | | | 180 | |

| | Company-operated stores | 9,684 | | | 9,413 | | | 9,019 | | | 8,671 | | | 8,395 | |

| | China/Asia Pacific(2) | | | | | | | | | | | | | | |

| | Company-operated stores | 5,159 | | | 3,070 | | | 2,811 | | | 2,452 | | | 1,132 | |

| | Licensed stores | 3,371 | | | 4,409 | | | 3,632 | | | 3,010 | | | 3,492 | |

| | EMEA(3) | | | | | | | | | | | | | | |

| | Company-operated stores | 490 | | | 502 | | | 523 | | | 737 | | | 817 | |

| | Licensed stores | 2,830 | | | 2,472 | | | 2,119 | | | 1,625 | | | 1,323 | |

| | Company-operated stores | 8 | | | 290 | | | 358 | | | 375 | | | 369 | |

| (3) | EMEA store data also includes the transfer of 144 Germany company-operated retail stores to licensed stores as a result of the sale to AmRest Holdings SE in the third quarter of fiscal 2016. |

| (4) | As of September 30, 2018, Corporate and Other included 12 licensed Teavana-branded stores. |