[Operator instructions.] Ms. DeGrande, you may begin your conference call.

Thanks, operator. Good afternoon. This is JoAnn DeGrande, vice president of investor relations for Starbucks Coffee Company. Joining me on the call today from New York is Howard Schultz, chairman, president, and CEO, and with me here in Seattle are Jeff Hansberry, president of our channel development and emerging brands business and Troy Alstead, CFO. Also available for the Q&A session are Cliff Burrows, president of Americas here in Seattle with us, and joining us from London is Michelle Gass, president of EMEA; and from Tokyo, John Culver, president of China/Asia Pacific. This conference will include forward-looking statements, which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Any such statements should be considered in conjunction with cautionary statements in our earnings release and the risk factor discussions in our filings with the SEC, including our last annual report on Form 10-K. Starbucks assumes no obligation to update any of these forward-looking statements or information. This conference call is being webcast and an archive of the webcast will also be available on our website. Before I turn the call over to Howard, let me cover a few housekeeping matters. Today we filed an 8-K that outlined a few reporting changes, including the shift of certain G&A expenses from “other” to our four reporting segments. The results we’ve reported today reflect these changes. We have also recapped full year results for fiscal 2010 through 2012, and have posted the recapped financials on our website. They should be there shortly. Additionally, Starbucks’ 2013 annual meeting of shareholders will be held in Seattle at 10 am Pacific time on Wednesday, March 20. That meeting will be available via webcast as well. With that, let me turn the call over to Howard Schultz. Howard?

JoAnn, thank you, and good afternoon to everyone on today’s call. I am very pleased to report the record first quarter fiscal 2013 results Starbucks announced today: strong global comp store sales growth with comps of 7% in the U.S. and in the Americas, record quarterly revenues of $3.8 billion, and increase in our total company operating margin to 16.6% and a record earnings of $0.57 per share, the highest quarterly EPS in Starbucks history. Noteworthy is that Starbucks’ record Q1 results were delivered against a backdrop of weak consumer confidence and an overall weak global economy. With nearly 70 million customers visiting our more than 18,000 stores on seven continents in 61 countries each week, Starbucks’ Q1 results demonstrate the strength, unique resilience, and increasing relevance of our global business and brand. And the momentum we have built coming into Q2 ideally positions us to kick our growth plans into high gear and to deliver increased profits to our shareholders in 2013 and beyond, as we continue to execute against our blueprint for profitable growth and plans for adding thousands of net new stores over the next five years. Not evident from record operating results alone are the facts that in Q1 we also drove significant, relevant product and beverage innovation and provided an enhanced in-store experience to customers around the world and implemented strategic operating improvements throughout the organization to streamline the business and deliver increased operating efficiencies into the future, all while delivering the strongest holiday performance in Starbucks’ 42-year history. I’ll touch on a few of these developments and then turn the call over to Jeff Hansberry, President of Channel Development and Emerging Brands, and then on to Troy. As I’ve said many times over the years, core to Starbucks’ success are our store partners, our…

Thank you, Howard, and good afternoon everyone. I’m pleased to join you on the call today to discuss Q1 results for channel development in emerging brands, as well as give you some additional insight into what’s coming in the quarters and years ahead. Channel development revenue in our first fiscal quarter grew 13% to $380 million. It was the highest revenue quarter we’ve ever had, led by continued growth of K-cups, the first stages of launching our Verismo platform, and continued growth in roast and ground coffee. Our top to bottom line translation was also very good in Q1. We grew profit twice as fast as sales in the quarter, even after a significant investment in Verismo. Operating margin expanded by 230 basis points in Q1, up to 25.5%. Favorable coffee-related costs, along with continued strength in our North American coffee partnership, helped to fuel the growth. Our partnership with Pepsi is thriving, and we plan to grow Starbucks’ share of the massive ready-to-drink category with the expansion of Starbucks Refreshers beverages, the introduction of our new line of Starbucks iced coffee in a new, iconic single-serve glass bottle, which is rolling out as we speak in select U.S. markets. We will have national presence by April, just in time for the warmer months. But know that nearly 50% of iced coffee drinkers actually enjoy iced coffee year round. We will now be very well-positioned to serve the rapidly expanding demand for iced coffee in the U.S. In fact, now, one in five beverages sold in Starbucks retail stores is a cold coffee beverage. Turning our attention to other coffee formats, I want to discuss the premium single cup category and the recent milestones achieved across our product lines. VIA Ready Brew continues its solid performance, growing 16% in the…

Thank you, Jeff. As Howard indicated in his opening remarks, this holiday season was Starbucks best-ever, and the proficiency with which our store partners delivered daily world-class experiences again drove record results in the Americas. First quarter Americas revenues totaled $2.8 billion, growing 10% over last year. The largest driver of our revenue growth continues to be strong comparable store sales, which reached 7% in Q1, with a 4% lift in transactions and a 2% increase in average ticket. In the U.S., comps mirrored those of the Americas region. Our U.S. productivity continues to climb, as we saw more transactions per labor hour this quarter than in any other quarter in our company’s history. That allowed us to [lift] [ph] daily transactions per store to over 700 for the first time, as we continue to expand capacity and grow transactions across all day parts. Also fueling our strong comp growth were our fall promotional beverages, headlined by pumpkin spice latte, combined with our always popular holiday beverage offerings. Combined, these added more than a percentage point of comp growth. A significant increase in food sales, and a favorable shift in food mix, as breakfast sandwiches and our improved lunch offerings continues to resonate with our customers, also added more than 1 percentage point of comp. Verismo contributed approximately a half point of comp in Q1, leveraging the successful demonstration and sampling efforts of our store partners. The first quarter in the U.S. started strong and ended strong, with comp growth in December mirroring the full-quarter result. As we exited the first quarter, the momentum in the business, combined with the record volume of Starbucks cards loaded during the holiday period, is fueling early Q2 sales trends. Comp growth in the first few weeks of January is trending consistent with the…

[Operator instructions.] Your first question comes from the line of John Ivankoe from JPMorgan. Your line is open. John Ivankoe – JPMorgan: First, if we could review what your remodel strategy is for fiscal ’13, how significant that could be and what you’ve been seeing in the control sample in terms of what the performance of those stores are versus the stores that you haven’t done. And secondly, and I think it’s short, when might you have an opportunity to put Evolution products or Teavana products as part of the hand-crafted beverage line within Starbucks? I think that might be a very big opportunity for innovation around your product line. If you could discuss when that could possibly be.

I’m going to ask Cliff Burrows to speak first, to the remodel strategy, and then he’ll start the discussion about Evolution and Teavana in Starbucks stores. And then Jeff Hansberry here will be part of that discussion as well. Cliff?

With regard to refurbishments this year, and I’ll talk specifically to the largest market of the U.S., we’ll do the same number of refurbishments plus or minus as we did last year, as I shared in December when we met in New York. Where we have done major refurbishments, we have seen significant improvement in the capacity we’ve built in that store, and the additional opportunities to introduce Clover, for example, have all seen significant lifts. And our strategy around minor refurbishments carries on as it always has been. That’s about putting the store back in a good state. So really no changes there, and if I hand it to Jeff around development of hand-crafted beverages…

Cliff, why don’t you be specific about how many stores we plan on touching in the balance of the fiscal year?

It will be about 1,400 stores that we will cover this year, and that will be a mixture, 60-40, of minor to major. That sort of magnitude. About 500 major refurbishments this year. Jeff?

Thank you. So in terms of Evolution Fresh and Teavana entering Starbucks stores, as we’ve talked before, this is a critical element to our blueprint for growth strategy. And so from an Evolution Fresh standpoint, we have already started moving the Evolution Fresh brand into Starbucks stores, and in fact now we’re in over 2,400 Starbucks stores, primarily in the western U.S. And as our new juicery comes online, that will give us additional capacity to begin to move east in this year. So we’ll continue to expand Evolution into Starbucks stores, and also into the natural and premium grocery segment as that brand continues to expand. We’ve had great results so far. With regard to Teavana, we’re less than four weeks into the integration, but we have said all along that Teavana beverages will play a role in Starbucks stores. We’ll come back with more details in the coming quarter, as we develop that plan. But Teavana will play in Starbucks over time. John Ivankoe – JPMorgan: And the question was really not just on ready to drink, but also the hand-crafted beverages potentially, that you could do with those sub-brands.

I would say yes, the potential is there. Our priority is to roll out the Evolution bottled juices across the U.S. and let Jeff do his work on the integration of Teavana. More to follow on that. Nothing to show at this time.

I think the one last thing I’d add, John, is the key theme here is that these acquisitions and both product platforms absolutely offer us opportunity to raise drink across multiple channels and hand-crafted, and is something that in the right sequence of brand development and integration and roll out of these products, you will see us pursue those opportunities, and it’s part of what gives us confidence in our ability over multiple quarters and multiple years to continue to drive strong same-store sales growth for our system.

Your next question comes from the line of David Palmer from UBS. Your line is open. David Palmer – UBS: First question on China. It seems like your same-store sales is remarkably stable. How would you characterize the consumer environment there? And secondly, with regard to the Starbucks card loads, Howard mentioned a statistic there. I didn’t quite catch that. How much do the dollar loads grow year over year in that quarter?

John, are you on the line from Japan? Can you answer the question about China?

Sure. First off, we’re extremely pleased with the continued momentum of our business in China, both in terms of the performance of the existing stores as well as the new store growth that we’re seeing. And as I said, more and more of our growth is coming from the new store base, and less so from comp sales. Our comp sales have remained strong, and when you look at it on a two-year basis, comps are in the mid-30s. And on a three-year basis, comp sales are up into the 60s. So we feel very good about what’s happening with the consumer as it relates to the Starbucks brand. There’s no doubt that you’ve seen some shift with other businesses and other companies in China. But for us, our traffic in our stores remains very strong, our transaction growth continues to grow. The card, in terms of the adaptation of the Starbucks card, we’re now at 1.4 million customers. And that continues to accelerate, and that’s just over a year old. And we continue to be very encouraged about the innovation that we’re bringing into our stores, the way that the customers are reacting to that, and how they’re embracing the Starbucks experience.

And Dave, to your question about the Starbucks card, there was a 25% increase in Starbucks card value loaded in the first quarter over the prior year. What’s critical about that is that clearly is a very strong level by itself, significantly outpaces the growth in the overall business, and is exactly a harbinger for that future growth as those values loaded not only introduce new customers onto the platform but deepen the loyalty, create that frequency opportunity as we move through the balance of this year and into the future.

I would just add that I believe that we are in the nascent stage of being able to leverage and integrate social, digital, mobile, our investment with Square, and the loyalty program into a very significant and robust opportunity going forward. And the question that was asked about Teavana in terms of products, you know, at some point there’s a natural opportunity as part of the integration to take those assets, drive incremental traffic into Teavana, benefitting from the ubiquity of Starbucks and the trust and loyalty in that program.

[Operator instructions.] Your next question comes from the line of Sharon Zackfia from William Blair. Your line is open.

I had a follow up question on China. It looks like the rate of investment in the stores continues to accelerate beyond the revenue growth in the company on units. I was just wondering, what are you doing in the stores that’s obviously facilitating great same-store sales. But if you can give us some sort of insight into the investment you’re putting in those four walls, as that store operating expense continues to ramp.

John, would you speak to the investment trend?

Sure. Sharon, I think it’s important that the investments that we’re making are going to set the foundation for the future in terms of the success of the stores, and of the market overall. So when you look at the investments we’re making it’s obviously in the stores themselves, but more so from a people standpoint, in terms of ramping up the people, capability, that we’re going to need to staff the new stores. And so with that, we’re bringing on people, we’re bringing them into existing stores, and we’re training them to take over and run the new stores that we’re opening. In addition, the investments that you’re also seeing in the stores have to do with the investments we’re making around the design and how they are adapting into the local architecture, and making sure that we’re differentiating ourselves in the marketplace in terms of the third place environment that we’re creating for our customers. So when you look at this, we are making the investments that we need to sustain the growth for the long term. I think what we’re seeing is that the investments we’re making in our people is paying off in terms of the experience that we’re able to provide our customers, the speed that we’re able to put them through the stores, and just the connection that we’re able to build with them. And then the investment that we’re making from a physical store perspective is creating that third place environment that our customers want to come to, be a part of, and to experience overall.

Your next question comes from the line of Joe Buckley from Bank of America. Your line is open.

Can you comment on coffee costs year over year? Just what that cost looked like year over year this quarter, and what it might look like in coming quarters? And also could you fill out a little more on the 13% growth in the channel’s development category? Food service obviously less, CPG more. And just talk about the components of that growth, and whether the lower coffee costs play a role in maybe restraining that revenue growth a bit.

Sure. I’ll speak to coffee costs and then I’ll hand it to Jeff to talk about channel development growth. First, with regard to coffee, as we expected, we had approximately a net $0.02 per share benefit from commodities this quarter. That includes favorability in coffee, and then moderate unfavorability in dairy and a couple of other smaller commodities in our portfolio. So about $0.02 a share. Again, that’s expected. That is 50 basis points to the total operating margin improvement in the first quarter. And I expect about that same $0.02 per share benefit from net commodity each quarter over the balance of the year. And again, that’s all consistent with our previous targets. As we have discussed in the last few months, that amounts to about a net $100 million benefit to this fiscal year and given what we have lost in terms of pricing in fiscal ’14 and also what we see in the coffee markets right now, we expect a similar level of $100 million benefit as we approach fiscal ’14. So at least a couple of years of commodity tailwinds ahead of us. Jeff, can you speak to channel development growth?

With regard to channel development, as you noted, we grew at 13% in the first quarter. We continue to see positive growth ahead of retail average in channel development. Our packaged coffee business overall, when you look at premium single cup, as well as roast and ground, we’re seeing significant growth in the quarter from an IRI standpoint. From a food service standpoint, less so. We’re still growing faster than the food service segment, which is a material piece of our business. But that segment continues to grow more slowly than the balance of the category.

And Jeff, do all the coffee costs play into that revenue growth in one way or another?

Well, we’re continuing to see a lot of competition in the marketplace, but we think we are well-positioned to continue to grow our share and our business.

Your next question comes from the line of David Tarantino from Robert W. Baird. Your line is open.

Troy, I have a question on the guidance for 2013, with respect to the margins. Up 100 basis points. Relative to what you reported in Q1, which was up 40, but you had quite a bit of unusual cost items in there. So I guess why wouldn’t the 100 basis points be on the conservative side as you look at not having some of those unusual cost items in the coming quarters, or are there some potential offsets that maybe I’m not thinking about?

David, I appreciate your confidence in our ability to drive profit as we go forward. I would say that 40 basis points of improvement in the first quarter, and yes, that was net of some unusual pressures in this quarter. We believe that the guidance we have, which that 100 basis point improvement for the full year corresponds to the 15-20% earnings growth that we’ve targeted, and that I believe we’re right on track for. So I think with the investments we’re making to drive the business, continued investments across our new growth platforms of La Boulange, of Verismo, of Evolution Fresh, while we are delivering quarterly earnings just as we did in Q1, we continue to lay that foundation for growth next year and the year after. And it’s been that equation that this works so well for us and that we intend to navigate as we go through the rest of the year. So I think the guidance we have is remarkable in this environment and feel very confident in our ability to deliver against it as we approach Q2 and onward.

Your next question comes from the line of Keith Siegner from Credit Suisse. Your line is open. Keith Siegner – Credit Suisse: Troy, could you possibly remind us about the planned marketing spend, maybe as a percentage of sales for the year, how that compares year over year? And then maybe the quarterly cadence? Was 1Q with the Verismo launch above the annual spend, and Q2 with Blonde is that above 1Q and above the full year? Any details on that would be very helpful. Thanks.

Sure. The marketing spend in this first quarter was a little higher than 4% of sales, which for Starbucks and our history is extremely high, perhaps among the highest we’ve ever recorded in any one particular quarter. And as we talked about, I think, dating all the way back to July when we first [announced] our initial guidance, that’s really primarily driven in this quarter by the launch of the Verismo platform and our investment against that, knowing that’s a multiyear platform and proposition for us, and we wanted to set it off on the right foot. As we progress through the balance of the year, I don’t expect marketing spend as a percentage in any quarters to be at that same level as higher than 4%. So I expect it will be in the 3.5% to 4% range as we progress through the second quarter, third quarter, fourth quarter. Fairly consistent throughout the year as we approach introducing the customer and providing those messages to first Blonde and then other product platforms as we go throughout the year.

Your next question comes from the line of John Glass from Morgan Stanley. Your line is open. John Glass – Morgan Stanley: First, if I could just clarify, is channel development, the 13% growth we’re seeing this quarter, is that representative roughly of the growth we should expect throughout the balance of the year? Or is there something you think materially changes that trajectory? I just wanted to clarify that from a previous question. And in EMEA, you talked about the average check declining. What reverses that? I think you explained it has something to do with trade-down. Is this the first quarter you’ve actually seen declines in average check there? Or has that been going on subtly, and it’s just more exaggerated this quarter?

Thanks, John. This will be a good opportunity for us to ask Michelle Gass, our president of EMEA, to jump in. She’s calling in from London. Michelle, can you speak to average ticket in the region?

Absolutely. You know, I would say first off that we were really pleased and proud with our results for the quarter, seeing the kind of both revenue growth, especially in our licensed channel, which is our key focus and strategy going forward. Importantly, the margin expansion that Troy spoke to, despite the significant headwinds that continue to face the European customer. And then further, actually seeing transactions plus customer count growth of 2% for the quarter, and seeing that across our market. So again, given the headwinds, we’re very, very pleased with that result. We did see a deeper erosion of ticket than we have been experiencing, so your question is relevant. And we saw it especially with everything happening on the retail high street, the downturn there, particularly acute pressure with consumers in our European markets. We’re not, by the way, seeing that same pressure play out outside of Europe. It really is focused on the U.K. and Europe. And we have continued focus, both in keeping our customers coming through loyalty programs, through relevant value, and then also working on increasing our food attach through food innovation programs and of course that beverage trade-down, focusing customers on our great assortment of beverages. We saw great response, as Troy mentioned, on pumpkin spice. Right now we’re experiencing great customer demand on our innovation vanilla spice. And those initiatives will help us prop up our ticket. So it is a focus, but job number one is to keep our loyal customers, and keep that customer count growing. Thank you.

I think Jeff can speak to the follow up on CPG growth?

With regard to channel development growth of 13% in Q1, while we don’t offer specific guidance on individual businesses, we expect that channel development will continue to grow at a rate faster than our average retail growth. Importantly, we have a number of initiatives that we’re working against, and building. Everything from Evolution Fresh to our continued expansion of K-cups, to new flavors and SKUs in the VIA lineup. And importantly, we will continue to invest and grow and build over time the business that’s in its very nascent stage that is Verismo.

Your next question comes from the line of Jeffrey Bernstein from Barclays. Your line is open. Jeffrey Bernstein – Barclays: Just two quick questions, the first one just on the Verismo, I guess as a follow up. And you talk about the launch in the holidays going well. I think you said 150,000. Just wondering if you can talk a little bit about how that tracked versus your expectation. Obviously it was a heavy investment quarter for it. But do you think there’s obviously some time for this to build with the replacement cycle around Keurig? I’m just wondering kind of the early feedback on Verismo and your outlook for growth over the next number of quarters. And then separately, Troy, if you could just comment, I think the share repurchase I think you mentioned was 8 million shares, which would be roughly $400 million for the quarter. I’m just wondering if you could frame that in terms of your thoughts on cash usage for fiscal ’13, whether it be between [repo] and maintaining the dividend, versus capex, and whether we should assume that first quarter share purchase was an anomaly, or that type of run rate would be sustained.

Can I just start with an overall strategy about single-serve and Verismo, and Jeff, you can take it from there if it’s okay with you. I think it’s very important that you all understand that we are deeply, deeply committed to becoming the leader in this space domestically and internationally. We have plotted out a multiyear strategy about Verismo and an overall single-serve platform that will include multiple layers of innovation in the years to come. We feel very strongly that what Verismo demonstrated this holiday season was a great success for us. It met our expectations. We learned a great deal. We also saw a fair amount of discounting from our competitors in the market as a result of our entry, and the fact that we disrupted the market in the middle of the holiday season. The leverage and the asset that we have in our stores to both demonstrate, inform, and ultimately sell single-serve platform machines is an asset that is proprietary and nobody has, and we will continue to utilize that to our advantage. The other thing that I think is worth saying is that we already are seeing customers come back with the opportunity to merchandise and sell them pods as a result of Verismo being in 150,000 households. So we’re already seeing an opportunity for incrementality there and we’ll be adding more SKUs that are proprietary to Starbucks coffee. And so our commitment, our interest, our motivation to build on single-serve and build on Verismo is 100% and we are going to maintain a high level of commitment and investment in this, where we are going to be the global leader. Jeff?

Exactly. In that first, our sales during our very first holiday, with a brand new to the world platform, were well in line with our expectations. And importantly, we started with a very curated small set of stores. So a select set of specialty retailers and a select set of Starbucks retail stores. And for us, we are not only encouraged by the customer response, but also the trade traction that has been created by a number of retailers who want to play on the platform, which we have not made available to them as yet. So there are really three things that are going to be growth drivers for Verismo as we step forward. First, and importantly, the innovation itself. It’s the first and only machine that does brewed coffee, espresso, and lattes. And that message got through to customers during the holiday. And secondly, as we add innovation to the system, whether it’s through additional coffees, additional espressos, additional Starbucks latte and seasonal favorite beverages, as well as tea, that will add to increase the interest in the platform. And then finally, from a machine standpoint, we have a pipeline, to Howard’s point, multi years of machine innovation, that adds new features, new styles, new functionality, to a whole series of machines that we will be introducing. So again, and importantly, this is just the very first step in what will be a multiyear growth driver, significant growth driver, in the channel business and for Starbucks overall.

To your question about share repurchases, we’re fortunate that the very strong cash flow of our business enables us to have the dividend, and we’ve accelerated that dividend, as you know, each year since we’ve initiated it. And also, share repurchases. We repurchased 8 million shares in the quarter. Our repurchase program is very valuation and conservatively valuation based. So our repurchases in any particular quarter are very opportunistic, based both on, again, what we see in the market and the valuation. And also, from time to time, where and when we as a company might be blacked out of the market, and that is frequent given various activities going on. So in any particular quarter, our share repurchase activity will be somewhat lumpy, again just based on those factors. I would say our priority spend of cash for the balance of the year, and really every year, continues to be first and foremost investing back into the business. That’s in our partners, in capital expenditures, in new stores and remodels. Of course, funding the dividend over time. And then based on those metrics and principles I outlined, share repurchases. So I don’t have a prediction for you of whether that Q1 8 million shares is something that we’d repeat each quarter or not. That, again, will tend to vary quarter to quarter.

Your next question comes from the line of Sara Senatore from Sanford Bernstein. Your line is open. Sara Senatore – Sanford Bernstein: I have a two-part question on the Americas. The first is just in terms of comps, I know you highlighted a couple of things that were drivers, some of which were new, so Verismo, some of which have been around for a while, so food and some of your holiday beverages which are always very popular. So I was just wondering if you could talk a little bit about to what extent the loyalty, or the Starbucks card, may have added to comps. If you can measure that. And then the other piece of this, was there anything about your mix or about any of the promotions you did that might have affected your margins? I ask only because you had some nice margin expansion on the cost of sales line, but maybe not quite as much as I would have expected given 50 basis points of commodities plus such healthy comps on which you would have seen occupancy leverage.

Let me hand it over to Cliff to speak about the comp drivers, and I think he’ll also be able to speak to cost of goods and leverage a bit. In advance of that, I would just make the one comment that the large majority of those unusual expenses that I spoke about in the quarter, the leadership conference which we are known about, and then a couple of events that we had not know about until we got into the quarter, things like Superstorm Sandy and some of the unusual litigation expenses I mentioned, were predominantly focused in the Americas P&L. Absent those anomalies and those unusual cost pressures in the quarter, we would have been on more of our common pace of very significant and meaningful margin expansion in the quarter. Sara Senatore – Sanford Bernstein: Understood. I was just talking about the cost of sales line in particular.

The quarter, we really saw a very healthy mix of our core beverages as well as our seasonal beverages. Very, very encouraged throughout the quarter how they performed. Our food continues to go from strength to strength, and I’m really excited about what lies ahead of us with La Boulange. The holiday season, and that is both core coffee, with our Christmas Blend, and also our gifts this year, performed exceptionally well. If I look at day parts, we have seen growth in all day parts. The early morning growing fastest, in terms of percentage, but we continue to add more transactions at our peak time, which again is a really healthy situation to be in. And this is a mixture. It’s coming from a mixture not only on product, but we continue to work on the operational effectiveness in stores and work we’ve shared with you before around [Lean] [ph]. So building that capacity at peak remains a priority for us. And bringing that all together, I have to say it’s been the focus and dedication from our partners in the stores, who across the whole of the U.S. and the Americas have done an amazing job in this quarter dealing with our busiest holiday season ever. And the card, I wouldn’t call out what percentage that’s contributing to it, but it is certainly with more people joining My Starbucks Rewards, by an increasing tender, there is definitely a much richer dialog coming along. There is a much greater recognition between the customer and our barista, and we’re adding, as you know, this quarter, we’re adding to the customer experience through introducing names on aprons, which will be in stores by the end of January, and then phasing in names on cups in the coming months. So all of it focused on the relationship between the customer and our barista, and making it a great personal Starbucks experience.

And then Sarah, back to, specifically, your question about cost of goods, the largest impact of commodity favorability as you know comes in our channel development business. So within the Americas segment, that commodity benefit in the quarter was about 30 basis points or so to OI, perhaps a little bit higher. And so just roughly 30 basis points of benefit from commodities, total cost of goods and I can see leverage improve by about 50 basis points. I hope that gives you some context. We actually did see exactly the kind of leverage we would expect, both from commodity benefits on that cost of goods line, and then also leverage on the fixed costs from growing sales.

And we will have time for one last question. And I apologize to those of you left in the queue. We will try and get back to you as soon as we can this afternoon.

Your last question comes from the line of Nicole Miller Regan from Piper Jaffray. You may ask your question.

I think you had mentioned at the analyst day something about the future of a brand-agnostic loyalty card. Can you give us an update on that? And given that you are talking about the different ways, shapes, and forms that a customer can access Starbucks today, would this require them to get a new card?

I don’t think I understood the question. Can you repeat that please?

Sure. I think there was talk at the analyst day about a channel agnostic loyalty card, so that it doesn’t matter if I get a cup of coffee this morning at a retail store or buy a pound of coffee at the grocery store is the way I originally understood the intent. That idea incentifies as a loyal, frequent Starbucks user. When you do roll that out down the road, do I have to consolidate the other cards that I might have? And I’m just wondering, since you are talking so much about gift cards and different forms of Starbucks cards and the way of processing payments and gifts and all of that, is this all going to eventually roll into one?

Well, I think you’ve asked us a question that, with respect, we don’t want to get into too deeply today. But let me try and answer without being coy in any way. Over the next few months or so, we’ll be coming back to you and sharing with you the plans that we have to take advantage of Starbucks products within CPG, and specifically grocery, and leveraging the technology and the advancement of providing value to our customers that are buying Starbucks products in grocery, and leveraging the card. I don’t want to get into too much specificity today, only to tell you that we strongly believe that this will provide an incentive for our customers to not only buy Starbucks coffee, but integrate them even further in the Starbucks ecosystem with the card loyalty and mobile. And we are very excited about this, and we will be sharing this with you in the months and quarters ahead. This is something we believe in, and something that we are deeply committed to.

That concludes our Q1 fiscal 2013 earnings conference call. We thank you all for joining us today. Have a good evening.