Starbucks (SBUX) Financial History

Risks Related to Cybersecurity, Data Privacy, and Information Technology

Our business is subject to evolving corporate governance and public disclosure regulations and expectations, including with respect to responsible business matters, that could expose us to numerous risks.

Moreover, we have experienced work stoppages and other disruptions caused by union activities or organizing efforts in some company-operated stores.

Additionally, there is intense competition for qualified technology systems developers, who are necessary to develop and implement new technologies for our growth initiatives, including increasing our digital relation…

Much of our future success depends on the continued availability and service of key personnel and employees.

A disruption in the credit markets or a downgrade of our current credit rating could increase our future borrowing costs and impair our ability to access capital and credit markets on terms commercially acceptable to…

•Rising real estate costs in certain domestic and international markets;

Our operating results have been, and will continue to be, subject to a number of other macroeconomic and other factors, many of which are largely outside our control.

Our financial condition and results of operations have been, and may continue to be, adversely affected by a number of macroeconomic and other factors, many of which are largely outside our control.

•Health and safety regulations affecting store operations;

We are dependent on the performance of licensed and company-owned international markets to achieve our growth targets.

We source products from a broad network of domestic and international business partners, and in some cases, licensees source products independently.

Our global business strategy, including our plans for new stores, branded products, and other initiatives, relies significantly on a variety of business partners, including licensees, joint venture partners, third-par…

We may not be successful in implementing important strategic initiatives (including our restructuring plan), effectively managing growth, or executing strategic transactions, any of which may have an adverse impact on…

We may not be successful in our brand, marketing, promotional, advertising, and pricing strategies.

Our success depends substantially on the value of our brand, and failure to preserve its value could have a negative impact on our financial results.

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…

We have registered certain trademarks and have other trademark registrations pending in the U.S.

Our brand names, trademarks, and related intellectual property rights are critical assets, and our success depends on our continued ability to use our existing trademarks and service marks in order to increase brand a…

Failure to adequately protect our intellectual property or ensure that we are not infringing on the intellectual property of others could harm the value of our brand and our business.

Given the increasing complexity and sophistication of techniques used by bad actors to obtain unauthorized access to or disable information technology systems, and the fact that cyber-attacks are being made by groups…

services, errors or improper use by our employees or third-party service providers, or a breach in the security of these systems or platforms, including through cyber-attacks such as those that result in the blockage…

We also rely on third-party providers and platforms for some of these information technology systems and support.

We rely heavily on information technology systems across our operations for numerous purposes, including for administrative functions, point-of-sale processing and payment in our stores and online, management of our s…

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 oper…

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 mater…

Significant capital investments and other expenditures could also be required to investigate security incidents, remedy cybersecurity problems, recuperate lost data, prevent future compromises, and adapt systems and p…

Such security breaches also could result in a violation of applicable U.S.

some of this data, including on personally-owned digital devices.

Many of our information technology systems (whether cloud-based or hosted in proprietary servers), including those used for our point-of-sale, web and mobile platforms, online and mobile payment systems, delivery serv…

The unauthorized access, use, theft, or destruction of customer or employee data (personal, financial, or other), or of Starbucks proprietary or confidential information that is stored in our information systems or by…

Our failure to comply with applicable laws and regulations or other obligations to which we may be subject relating to personal data, or to protect personal data from unauthorized access, use, or other processing, cou…

Privacy and data protection laws, such as those referenced above, may impact Starbucks operations and new business models, such as Starbucks Digital Solutions, which rely on Starbucks functioning as controller of cust…

In the United States, the California Consumer Privacy Act (“CCPA”) requires, among other things, covered companies to provide new disclosures to California consumers and allows such consumers to exercise certain right…

For example, Europe’s General Data Protection Regulation (“GDPR”) and the U.K.

Complex local, state, national, foreign, and international laws and regulations apply to the collection, use, retention, protection, disclosure, transfer, and other processing of personal data.

Failure to maintain satisfactory compliance with certain privacy and data protection laws and regulations may result in substantial negative financial consequences, reputational harm, and civil or criminal penalties.

Risks Related to Cybersecurity and Data Privacy

We have been, and in the future may be, subject to litigation and other legal proceedings that may adversely affect our business.

We have been, and could continue to be, party to litigation or other legal proceedings that could adversely affect our business, results, operations, and reputation.

The complexity of the regulatory environment in which we operate and the related costs of compliance are both increasing due to additional or changing legal and regulatory requirements, our ongoing expansion into new…

Finally, the Organization for Economic Cooperation and Development has released guidance establishing a 15% global minimum tax applied on a country-by-country basis for multinational entities under Pillar Two of its B…

These tax measures, whatever their scope or form, have adversely impacted, and could continue to impact our business and financial performance by increasing the cost of certain of our products, reducing overall consum…

Certain jurisdictions in which our products are sold have imposed, or are considering imposing, new or increased taxes on the manufacture, distribution, or sale of some of our products, particularly our beverages, as…

results of operations.

In addition, our business is subject to complex and rapidly evolving U.S.

Our policies and procedures are designed to comply with all applicable laws, accounting and reporting requirements, tax rules, and other regulations and requirements, including those imposed by the SEC, Nasdaq, and fo…

Failure to comply with applicable laws and changing legal and regulatory requirements could harm our business and financial results.

Risks Related to Regulation and Litigation

We actively engage in discussions with our shareholders regarding further strengthening our Company and creating long-term shareholder value.

Certain activist shareholder actions have caused, and could continue to cause, us to incur expense, hinder execution of our business strategy, and adversely impact our stock price.

In addition, we could be criticized by shareholders, stakeholders, regulators, or other interested parties for the scope or nature of our ESG initiatives or goals or for any revisions to these goals.

effective and may not advance at a sufficient pace, and we could be criticized for the accuracy, adequacy, or completeness of the disclosure.

We may also communicate certain initiatives and goals related to environmental matters, diversity, responsible sourcing, social investments, and other ESG-related matters in our SEC filings or in other public disclosu…

We are subject to changing rules and regulations promulgated by a number of regulators and organizations, including the SEC, the European Union, the Nasdaq Stock Market, and the Financial Accounting Standards Board.

Our business is subject to evolving corporate governance and public disclosure regulations and expectations, including with respect to environmental, social, and governance matters, that could expose us to numerous ri…

We recognize that there are inherent climate-related risks wherever business is conducted.

Climate change may have an adverse impact on our business.

competition from large new entrants or well-funded smaller companies, in our domestic and international markets could hinder growth and adversely affect our sales and results of operations in those markets.

The specialty coffee market is intensely competitive, including with respect to product quality, innovation, service, convenience (such as delivery service and mobile ordering), and price, and we face significant and…

We face intense competition in each of our channels and markets, which could lead to reduced profitability.

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

The loss of key personnel, difficulties with recruiting and retaining qualified personnel, or ineffectively managing changes in our workforce could adversely impact our business and financial results.

Failure to meet our announced guidance or market expectations for our financial performance will likely adversely affect the market price and increase the volatility of our stock, and fluctuations in the stock market…

As a retailer that is dependent upon consumer discretionary spending, our results of operations are sensitive to changes in or uncertainty about macroeconomic conditions.

Economic conditions in the U.S.

•fluctuations in foreign currency exchange rates.

American sentiment in certain markets, or hostilities, social unrest, or health pandemics that lead to avoidance of public places or restrictions on public gatherings such as in our stores; and

•especially in our largest markets, including the U.S.

•government shutdowns or the risk of government shutdowns, as well as the impact or expected impact of elections, both in the U.S.

•severe weather or other natural or man-made disasters affecting a large market or several closely located markets that may temporarily or for extended periods of time affect our retail business in such markets;

•inflationary pressures and changes in prevailing interest rates;

•changes in governmental rules and approaches to taxation;

•changes in climate, including changes to the frequency or severity of extreme weather events, that impact the price and availability or cost of goods and services, energy, and other materials throughout our supply ch…

Our financial condition and results of operations are subject to, and may be adversely affected by, a number of macroeconomic and other factors, many of which are largely outside our control.

Risks Related to Macroeconomic Conditions

Any material interruption in our supply chain (such as material disruption of roasted coffee supply), whether due to the casualty loss of any of our roasting plants, interruptions in service by our third-party logisti…

Interruption of our supply chain and our reliance on suppliers could affect our ability to produce or deliver our products and could negatively impact our business and profitability.

Even in the absence of acute disruptions or interruptions, our supply chain may be unable to fully meet current or future business needs.

Our supply chain may be unable to fully support current and future business needs.

We also purchase significant amounts of dairy products, particularly fluid milk, and to a lesser degree, plant-based dairy-free alternative products, such as oat milk and almond milk, to support the needs of our compa…

The supply and price of coffee we purchase can also be affected by multiple factors in the producing countries, such as weather, water supply quality and availability throughout the coffee production chain, natural di…

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

Increases in the cost of high-quality arabica coffee beans or other commodities or decreases in the availability of high-quality arabica coffee beans or other commodities could have an adverse impact on our business o…

The growth of our business relies on the ability of our licensee partners to implement our growth platforms and product innovations.

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

•import or other business licensing requirements.

•limitations on the repatriation of funds and foreign currency exchange restrictions due to current or new U.S.

•foreign currency exchange rate fluctuations or requirements to transact in specific currencies;

•the enforceability of intellectual property and contract rights;

•labor strikes or work stoppages resulting from geopolitical instability or social unrest affecting one or more of the markets in which we operate;

•local laws, policies, and conditions that make it more expensive and complex to negotiate with, retain, or terminate employees;

•interpretation and application of laws and regulations, including those relating to taxes, tariffs, labor, merchandise, anti-bribery, privacy, and environmental, social, and governance issues;

•in developing economies, the growth rate in the portion of the population achieving sufficient levels of disposable income may not meet our projections;

•economic or trade sanctions affecting our ability to source products or conduct business in one or more of the markets in which we operate;

•difficulty in staffing, developing, and managing foreign operations and supply chain logistics, including ensuring the consistency of product quality and service, due to governmental actions affecting supply chain lo…

•delays in store openings for reasons beyond our control, competition with locally relevant competitors, or a lack of desirable real estate locations available for lease at reasonable rates, any of which could keep us…

•restrictive actions of foreign or U.S.

•changes or uncertainties in economic, legal, regulatory, social, and political conditions in our markets, as well as negative effects on U.S.

Our international operations are also subject to additional inherent risks of conducting business abroad, such as: