Q2 Consolidated Net Revenues Down 2% to $8.6
Billion, Driven by a Complex Operating Environment
Q2 GAAP and Non-GAAP EPS of $0.68; Long-Term
Strategy Remains Intact
Q2 Active U.S. Starbucks® Rewards Membership
Totals 32.8 Million, Up 6% Over Prior Year
Starbucks Corporation (Nasdaq: SBUX) today reported financial
results for its 13-week fiscal second quarter ended March 31, 2024.
GAAP results in fiscal 2024 and fiscal 2023 include items that are
excluded from non-GAAP results. Please refer to the reconciliation
of GAAP measures to non-GAAP measures at the end of this release
for more information.
Q2 Fiscal 2024
Highlights
- Global comparable store sales declined 4%, driven by a 6%
decline in comparable transactions, partially offset by a 2%
increase in average ticket
- North America and U.S. comparable store sales declined 3%,
driven by a 7% decline in comparable transactions, partially offset
by a 4% increase in average ticket
- International comparable store sales declined 6%, driven by a
3% decline in both comparable transactions and average ticket;
China comparable store sales declined 11%, driven by an 8% decline
in average ticket and a 4% decline in comparable transactions
- The company opened 364 net new stores in Q2, ending the period
with 38,951 stores: 52% company-operated and 48% licensed
- At the end of Q2, stores in the U.S. and China comprised 61% of
the company’s global portfolio, with 16,600 and 7,093 stores in the
U.S. and China, respectively
- Consolidated net revenues declined 2%, to $8.6 billion, or a 1%
decline on a constant currency basis
- GAAP operating margin contracted 240 basis points
year-over-year to 12.8%, primarily driven by deleverage,
incremental investments in store partner wages and benefits,
increased promotional activities, lapping the gain on the sale of
Seattle's Best Coffee brand, as well as higher general and
administrative costs primarily in support of Reinvention. This
decline was partially offset by pricing and in-store operational
efficiencies.
- Non-GAAP operating margin contracted 150 basis points
year-over-year to 12.8%, or contracted 140 basis points on a
constant currency basis
- GAAP earnings per share of $0.68 declined 14% over prior year
- Non-GAAP earnings per share of $0.68 declined 8% over prior
year, or declined 7% on a constant currency basis
- Starbucks Rewards loyalty program 90-day active members in the
U.S. totaled 32.8 million, up 6% year-over-year
“In a highly challenged environment, this quarter's results do
not reflect the power of our brand, our capabilities or the
opportunities ahead,” commented Laxman Narasimhan, chief executive
officer. “It did not meet our expectations, but we understand the
specific challenges and opportunities immediately in front of us.
We have a clear plan to execute and the entire organization is
mobilized around it. We are very confident in our long-term and
know that our Triple Shot Reinvention with Two Pumps strategy will
deliver on the limitless potential of this brand,” Narasimhan
added.
“While it was a difficult quarter, we learned from our own
underperformance and sharpened our focus with a comprehensive
roadmap of well thought out actions making the path forward clear,”
commented Rachel Ruggeri, chief financial officer. “On this path,
we remain committed to our disciplined approach to capital
allocation as we navigate this complex and dynamic environment,”
Ruggeri added.
Q2 North America Segment
Results
Quarter Ended
($ in millions)
Mar 31, 2024
Apr 2, 2023
Change (%)
Change in Comparable Store Sales (1)
(3)%
12%
Change in Transactions
(7)%
6%
Change in Ticket
4%
5%
Store Count
18,065
17,482
3%
Revenues
$6,380.0
$6,380.6
0%
Operating Income
$1,148.3
$1,217.9
(6)%
Operating Margin
18.0%
19.1%
(110) bps
(1)
Includes only Starbucks® company-operated
stores open 13 months or longer. Comparable store sales exclude the
effects of fluctuations in foreign currency exchange rates and
Siren Retail stores. Stores that are temporarily closed or
operating at reduced hours remain in comparable store sales while
stores identified for permanent closure have been removed.
Net revenues for the North America segment of $6.4 billion in Q2
FY24 were flat to Q2 FY23, primarily driven by a 3% decline in
comparable store sales, driven by a 7% decline in comparable
transactions, partially offset by a 4% increase in average ticket.
This decline was offset by net new company-operated store growth of
5% over the past 12 months, as well as growth in our licensed store
business.
Operating income decreased to $1.1 billion in Q2 FY24 compared
to $1.2 billion in Q2 FY23. Operating margin of 18.0% contracted
from 19.1% in the prior year, primarily driven by deleverage,
incremental investments in store partner wages and benefits, and
increased promotional activity. This contraction was partially
offset by pricing and in-store operational efficiencies.
Q2 International Segment
Results
Quarter Ended
($ in millions)
Mar 31, 2024
Apr 2, 2023
Change (%)
Change in Comparable Store Sales (1)
(6)%
7%
Change in Transactions
(3)%
7%
Change in Ticket
(3)%
0%
Store Count
20,886
19,152
9%
Revenues
$1,757.3
$1,854.8
(5)%
Operating Income
$233.8
$314.7
(26)%
Operating Margin
13.3%
17.0%
(370) bps
(1)
Includes only Starbucks® company-operated
stores open 13 months or longer. Comparable store sales exclude the
effects of fluctuations in foreign currency exchange rates and
Siren Retail stores. Stores that are temporarily closed or
operating at reduced hours remain in comparable store sales while
stores identified for permanent closure have been removed.
Net revenues for the International segment declined 5% over Q2
FY23 to $1.8 billion in Q2 FY24, primarily driven by an approximate
5% unfavorable impact from foreign currency translation and a 6%
decline in comparable store sales, driven by a 3% decline in both
comparable transactions and average ticket. Also contributing were
lower product and equipment sales to, and royalty revenues from,
our licensees. This decline was partially offset by net new
company-operated store growth of 12% over the past 12 months.
Operating income decreased to $233.8 million in Q2 FY24 compared
to $314.7 million in Q2 FY23. Operating margin of 13.3% contracted
from 17.0% in the prior year, primarily driven by promotional
activities, incremental investments in store partner wages and
benefits, as well as sales mix shift, partially offset by pricing
in certain markets.
Q2 Channel Development Segment
Results
Quarter Ended
($ in millions)
Mar 31, 2024
Apr 2, 2023
Change (%)
Revenues
$418.2
$480.7
(13)%
Operating Income
$216.3
$262.1
(17)%
Operating Margin
51.7%
54.5%
(280) bps
Net revenues for the Channel Development segment declined 13%
over Q2 FY23 to $418.2 million in Q2 FY24, primarily due to a
decline in revenue in the Global Coffee Alliance, following the
sale of Seattle's Best Coffee brand in the prior year and SKU
optimization.
Operating income decreased to $216.3 million in Q2 FY24 compared
to $262.1 million in Q2 FY23. Operating margin of 51.7% contracted
from 54.5% in the prior year, primarily due to lapping the gain on
the sale of Seattle's Best Coffee brand, partially offset by growth
in our North American Coffee Partnership joint venture income,
sales mix shift, and lapping impairment charges against certain
manufacturing assets.
Fiscal 2024 Financial
Targets
The company will discuss fiscal year 2024 financial targets
during its Q2 FY24 earnings conference call starting today at 2:00
p.m. Pacific Time. These items can be accessed on the company's
Investor Relations website during and after the call. The company
uses its website as a tool to disclose important information about
the company and comply with its disclosure obligations under
Regulation Fair Disclosure.
Company Update
- In February, the company executed a $2.0 billion bond issuance.
The company intends to use the net proceeds from the sale of the
securities for general corporate purposes, including repayment of
upcoming debt maturities.
- In February, the company launched a loyalty partnership with
Bank of America that offers its cardholders and Starbucks® Rewards
members in the U.S. the ability to earn additional benefits by
linking accounts, increasing the value offered to both Bank of
America and Starbucks Rewards members.
- In February, the company announced the creation of a more
accessible store experience across its U.S. store portfolio through
its new Inclusive Spaces Framework, with improved features such as
optimized acoustics and lighting. Simultaneously, the company
opened its first store using this new design framework in
Washington, D.C.
- In February, the company published its Fiscal 2023 Global
Impact Report, providing an overview of the company's environmental
and social impact strategies and progress for the 22nd consecutive
year.
- In February, the company announced an agreement between
Starbucks and Workers United to begin discussions on a foundational
framework designed to achieve collective bargaining agreements for
represented stores and partners (employees), including a fair
process for partners to organize, and the resolution of some
outstanding litigation.
- In March, the company virtually hosted its 32nd Annual Meeting
of Shareholders. Mellody Hobson, independent chair of the Starbucks
Board of Directors, and Laxman Narasimhan, chief executive officer,
highlighted the year in review, including early progress of the
company’s Triple Shot Reinvention with Two Pumps strategy, and
shared their optimism for the company's long-term success.
Following the meeting, the company shared that all Starbucks Board
of Directors nominees were elected.
- In March, the company announced its new geographic leadership
and global support structure, which included the appointments of
Michael Conway as chief executive officer, North America, and Brady
Brewer as chief executive officer, Starbucks International, as well
as other leadership changes to further strengthen the support of
long-term growth.
- In March, the company achieved a milestone towards its
environmental goal of certifying 10,000 Greener Stores globally by
2025, including over 6,000 certified Greener Stores in more than 40
markets globally.
- The Board of Directors declared a cash dividend of $0.57 per
share, payable on May 31, 2024, to shareholders of record on May
17, 2024. The company had 56 consecutive quarters of dividend
payouts with CAGR of approximately 20% over that time period,
demonstrating the company's commitment to consistent value creation
for shareholders.
- In April, the company in partnership with Delonorte S.A. and
Premium Restaurants of America announced plans to open its first
stores in Ecuador in July and Honduras before the end of the year,
respectively, entrance in these markets will mark the brand's 88th
market globally and 26th in the Latin America and Caribbean
region.
Conference Call
Starbucks will hold a conference call today at 2:00 p.m. Pacific
Time, which will be hosted by Laxman Narasimhan, ceo, and Rachel
Ruggeri, cfo. The call will be webcast and can be accessed at
http://investor.starbucks.com. A replay of the webcast will be
available until end of day Friday, June 14, 2024.
About Starbucks
Since 1971, Starbucks Coffee Company has been committed to
ethically sourcing and roasting high-quality arabica coffee. Today,
with more than 38,000 stores worldwide, the company is the premier
roaster and retailer of specialty coffee in the world. Through our
unwavering commitment to excellence and our guiding principles, we
bring the unique Starbucks Experience to life for every customer
through every cup. To share in the experience, please visit us in
our stores or online at stories.starbucks.com or
www.starbucks.com.
Forward-Looking
Statements
Certain statements contained herein and in our investor
conference call related to these results are “forward-looking”
statements within the meaning of applicable securities laws and
regulations. Generally, these statements can be identified by the
use of words such as “aim,” “anticipate,” “believe,” “continue,”
“could,” “estimate,” “expect,” “feel,” “forecast,” “intend,” “may,”
“outlook,” “plan,” “potential,” “predict,” “project,” “seek,”
“should,” “will,” “would,” and similar expressions intended to
identify forward-looking statements, although not all
forward-looking statements contain these identifying words. By
their nature, forward-looking statements involve risks,
uncertainties, and other factors (many beyond our control) that
could cause our actual results to differ materially from our
historical experience or from our current expectations or
projections. Our forward-looking statements, and the risks and
uncertainties related thereto, include, but are not limited to,
those described under the “Risk Factors” and “Management's
Discussion and Analysis of Financial Condition and Results of
Operations” sections of the company’s most recently filed periodic
reports on Form 10-K and Form 10-Q and in other filings with the
SEC, as well as:
- our ability to preserve, grow, and leverage our brands,
including the risk of negative responses by consumers (such as
boycotts or negative publicity campaigns) or governmental actors
(such as retaliatory legislative treatment) who object to certain
actions taken or not taken by the Company, which responses could
adversely affect our brand value;
- the acceptance of the company’s products and changes in
consumer preferences, consumption, or spending behavior and our
ability to anticipate or react to them; shifts in demographic or
health and wellness trends; or unfavorable consumer reaction to new
products, platforms, reformulations, or other innovations;
- our anticipated operating expenses, including our anticipated
total capital expenditures;
- the costs associated with, and the successful execution and
effects of, our existing and any future business opportunities,
expansions, initiatives, strategies, investments, and plans,
including our Triple Shot Reinvention with Two Pumps Plan;
- the impacts of partner investments and changes in the
availability and cost of labor including any union organizing
efforts and our responses to such efforts;
- the ability of our business partners, suppliers and third-party
providers to fulfill their responsibilities and commitments;
- higher costs, lower quality, or unavailability of coffee,
dairy, cocoa, energy, water, raw materials, or product
ingredients;
- the impact of significant increases in logistics costs;
- a worsening in the terms and conditions upon which we engage
with our manufacturers and source suppliers, whether resulting from
broader local or global conditions, or dynamics specific to our
relationships with such parties;
- unfavorable global or regional economic conditions and related
economic slowdowns or recessions, low consumer confidence, high
unemployment, weak credit or capital markets, budget deficits,
burdensome government debt, austerity measures, higher interest
rates, higher taxes, political instability, higher inflation, or
deflation;
- inherent risks of operating a global business including
geopolitical instability;
- failure to attract or retain key executive or partner talent or
successfully transition executives;
- the potential negative effects of incidents involving food or
beverage-borne illnesses, tampering, adulteration, contamination or
mislabeling;
- negative publicity related to our company, products, brands,
marketing, executive leadership, partners, board of directors,
founder, operations, business performance, expansions, initiatives,
strategies, investments, plans, or prospects;
- potential negative effects of a material breach, failure, or
corruption of our information technology systems or those of our
direct and indirect business partners, suppliers or third-party
providers, or failure to comply with data protection laws;
- our environmental, social and governance (“ESG”) efforts and
any reaction related thereto such as the rise in opposition to ESG
and inclusion and diversity efforts;
- risks associated with acquisitions, dispositions, business
partnerships, or investments – such as acquisition integration,
termination difficulties or costs, or impairment in recorded
value;
- the impact of foreign currency translation, particularly a
stronger U.S. dollar;
- the impact of substantial competition from new entrants,
consolidations by competitors, and other competitive activities,
such as pricing actions (including price reductions, promotions,
discounting, couponing, or free goods), marketing, category
expansion, product introductions, or entry or expansion in our
geographic markets;
- the impact of changes in U.S. tax law and related guidance and
regulations that may be implemented, including on tax rates;
- the impact of health epidemics, pandemics, or other public
health events on our business and financial results, and the risk
of negative economic impacts and related regulatory measures or
voluntary actions that may be put in place, including restrictions
on business operations or social distancing requirements, and the
duration and efficacy of such restrictions;
- failure to comply with anti-corruption laws, trade sanctions
and restrictions, or similar laws or regulations; and
- the impact of significant legal disputes and proceedings, or
government investigations.
In addition, many of the foregoing risks and uncertainties are,
or could be, exacerbated by any worsening of the global business
and economic environment. A forward-looking statement is neither a
prediction nor a guarantee of future events or circumstances, and
those future events or circumstances may not occur. You should not
place undue reliance on the forward-looking statements, which speak
only as of the date of this report. We are under no obligation to
update or alter any forward-looking statements, whether as a result
of new information, future events, or otherwise.
Key Metrics
The company's financial results and long-term growth model will
continue to be driven by new store openings, comparable store sales
growth and operating margin management. We believe these key
operating metrics are useful to investors because management uses
these metrics to assess the growth of our business and the
effectiveness of our marketing and operational strategies.
STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF
EARNINGS
(unaudited, in millions, except
per share data)
Quarter Ended
Quarter Ended
Mar 31,
Apr 2,
%
Mar 31,
Apr 2,
2024
2023
Change
2024
2023
As a % of total net
revenues
Net revenues:
Company-operated stores
$
7,052.6
$
7,142.3
(1.3
)%
82.4
%
81.9
%
Licensed stores
1,054.5
1,069.5
(1.4
)
12.3
12.3
Other
455.9
508.0
(10.3
)
5.3
5.8
Total net revenues
8,563.0
8,719.8
(1.8
)
100.0
100.0
Product and distribution costs
2,648.7
2,801.7
(5.5
)
30.9
32.1
Store operating expenses
3,724.1
3,636.0
2.4
43.5
41.7
Other operating expenses
132.8
126.2
5.2
1.6
1.4
Depreciation and amortization expenses
371.9
341.9
8.8
4.3
3.9
General and administrative expenses
654.6
620.4
5.5
7.6
7.1
Restructuring and impairments
—
8.8
nm
—
0.1
Total operating expenses
7,532.1
7,535.0
—
88.0
86.4
Income from equity investees
68.0
51.4
32.3
0.8
0.6
Gain from sale of assets
—
91.3
nm
—
1.0
Operating income
1,098.9
1,327.5
(17.2
)
12.8
15.2
Interest income and other, net
34.1
18.4
85.3
0.4
0.2
Interest expense
(140.6
)
(136.3
)
3.2
(1.6
)
(1.6
)
Earnings before income taxes
992.4
1,209.6
(18.0
)
11.6
13.9
Income tax expense
219.9
301.3
(27.0
)
2.6
3.5
Net earnings including noncontrolling
interests
772.5
908.3
(15.0
)
9.0
10.4
Net earnings attributable to
noncontrolling interests
0.1
0.0
nm
0.0
0.0
Net earnings attributable to
Starbucks
$
772.4
$
908.3
(15.0
)
9.0
%
10.4
%
Net earnings per common share -
diluted
$
0.68
$
0.79
(13.9
)%
Weighted avg. shares outstanding -
diluted
1,135.4
1,152.7
Cash dividends declared per share
$
0.57
$
0.53
Supplemental Ratios:
Store operating expenses as a % of
company-operated store revenues
52.8
%
50.9
%
Effective tax rate including
noncontrolling interests
22.2
%
24.9
%
Two Quarters Ended
Two Quarters Ended
Mar 31,
Apr 2,
%
Mar 31,
Apr 2,
2024
2023
Change
2024
2023
As a % of total net
revenues
Net revenues:
Company-operated stores
$
14,807.9
$
14,225.7
4.1
%
82.3
%
81.6
%
Licensed stores
2,246.6
2,189.0
2.6
12.5
12.6
Other
933.8
1,019.1
(8.4
)
5.2
5.8
Total net revenues
17,988.3
17,433.8
3.2
100.0
100.0
Product and distribution costs
5,629.2
5,611.9
0.3
31.3
32.2
Store operating expenses
7,575.6
7,301.3
3.8
42.1
41.9
Other operating expenses
283.2
255.4
10.9
1.6
1.5
Depreciation and amortization expenses
737.2
669.0
10.2
4.1
3.8
General and administrative expenses
1,302.6
1,201.3
8.4
7.2
6.9
Restructuring and impairments
—
14.7
nm
—
0.1
Total operating expenses
15,527.8
15,053.6
3.2
86.3
86.3
Income from equity investees
123.8
109.2
13.4
0.7
0.6
Gain from sale of assets
—
91.3
nm
—
0.5
Operating income
2,584.3
2,580.7
0.1
14.4
14.8
Interest income and other, net
67.9
30.0
126.3
0.4
0.2
Interest expense
(280.7
)
(266.0
)
5.5
(1.6
)
(1.5
)
Earnings before income taxes
2,371.5
2,344.7
1.1
13.2
13.4
Income tax expense
574.6
581.1
(1.1
)
3.2
3.3
Net earnings including noncontrolling
interests
1,796.9
1,763.6
1.9
10.0
10.1
Net earnings attributable to
noncontrolling interests
0.1
0.0
nm
0.0
0.0
Net earnings attributable to
Starbucks
$
1,796.8
$
1,763.6
1.9
10.0
%
10.1
%
Net earnings per common share -
diluted
$
1.58
$
1.53
3.3
%
Weighted avg. shares outstanding -
diluted
1,138.0
1,152.8
Cash dividends declared per share
$
1.14
$
1.06
Supplemental Ratios:
Store operating expenses as a % of
company-operated store revenues
51.2
%
51.3
%
Effective tax rate including
noncontrolling interests
24.2
%
24.8
%
Segment Results (in
millions)
North America
Mar 31,
Apr 2,
%
Mar 31,
Apr 2,
2024
2023
Change
2024
2023
Quarter
Ended
As a % of North America total
net revenues
Net revenues:
Company-operated stores
$
5,724.5
$
5,742.7
(0.3
)%
89.7
%
90.0
%
Licensed stores
654.8
637.4
2.7
10.3
10.0
Other
0.7
0.5
40.0
0.0
0.0
Total net revenues
6,380.0
6,380.6
0.0
100.0
100.0
Product and distribution costs
1,767.7
1,821.7
(3.0
)
27.7
28.6
Store operating expenses
3,037.4
2,951.6
2.9
47.6
46.3
Other operating expenses
67.1
63.4
5.8
1.1
1.0
Depreciation and amortization expenses
257.1
226.3
13.6
4.0
3.5
General and administrative expenses
102.4
91.2
12.3
1.6
1.4
Restructuring and impairments
—
8.5
nm
—
0.1
Total operating expenses
5,231.7
5,162.7
1.3
82.0
80.9
Operating income
$
1,148.3
$
1,217.9
(5.7
)%
18.0
%
19.1
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
53.1
%
51.4
%
Two Quarters
Ended
Net revenues:
Company-operated stores
$
12,105.7
$
11,613.2
4.2
%
89.7
%
89.8
%
Licensed stores
1,392.7
1,317.4
5.7
10.3
10.2
Other
2.3
1.2
91.7
0.0
0.0
Total net revenues
13,500.7
12,931.8
4.4
100.0
100.0
Product and distribution costs
3,791.6
3,739.3
1.4
28.1
28.9
Store operating expenses
6,185.1
5,983.0
3.4
45.8
46.3
Other operating expenses
144.5
128.9
12.1
1.1
1.0
Depreciation and amortization expenses
507.5
443.1
14.5
3.8
3.4
General and administrative expenses
202.9
193.5
4.9
1.5
1.5
Restructuring and impairments
—
13.6
nm
—
0.1
Total operating expenses
10,831.6
10,501.4
3.1
80.2
81.2
Operating income
$
2,669.1
$
2,430.4
9.8
%
19.8
%
18.8
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
51.1
%
51.5
%
International
Mar 31,
Apr 2,
%
Mar 31,
Apr 2,
2024
2023
Change
2024
2023
Quarter
Ended
As a % of International total
net revenues
Net revenues:
Company-operated stores
$
1,328.1
$
1,399.6
(5.1
)%
75.6
%
75.5
%
Licensed stores
399.7
432.1
(7.5
)
22.7
23.3
Other
29.5
23.1
27.7
1.7
1.2
Total net revenues
1,757.3
1,854.8
(5.3
)
100.0
100.0
Product and distribution costs
619.8
632.9
(2.1
)
35.3
34.1
Store operating expenses
686.7
684.4
0.3
39.1
36.9
Other operating expenses
50.0
49.9
0.2
2.8
2.7
Depreciation and amortization expenses
84.3
86.3
(2.3
)
4.8
4.7
General and administrative expenses
82.9
87.4
(5.1
)
4.7
4.7
Total operating expenses
1,523.7
1,540.9
(1.1
)
86.7
83.1
Income from equity investees
0.2
0.8
(75.0
)
0.0
0.0
Operating income
$
233.8
$
314.7
(25.7
)%
13.3
%
17.0
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
51.7
%
48.9
%
Two Quarters
Ended
Net revenues:
Company-operated stores
$
2,702.2
$
2,612.5
3.4
%
75.0
%
73.9
%
Licensed stores
853.9
871.6
(2.0
)
23.7
24.7
Other
47.5
50.8
(6.5
)
1.3
1.4
Total net revenues
3,603.6
3,534.9
1.9
100.0
100.0
Product and distribution costs
1,286.4
1,226.5
4.9
35.7
34.7
Store operating expenses
1,390.5
1,318.3
5.5
38.6
37.3
Other operating expenses
110.1
100.6
9.4
3.1
2.8
Depreciation and amortization expenses
168.3
167.7
0.4
4.7
4.7
General and administrative expenses
173.3
167.9
3.2
4.8
4.7
Total operating expenses
3,128.6
2,981.0
5.0
86.8
84.3
Income from equity investees
0.3
1.2
(75.0
)
0.0
0.0
Operating income
$
475.3
$
555.1
(14.4
)%
13.2
%
15.7
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
51.5
%
50.5
%
Channel Development
Mar 31,
Apr 2,
%
Mar 31,
Apr 2,
2024
2023
Change
2024
2023
Quarter
Ended
As a % of Channel Development
total net revenues
Net revenues
$
418.2
$
480.7
(13.0
)%
Product and distribution costs
252.6
345.6
(26.9
)
60.4
%
71.9
%
Other operating expenses
15.2
12.8
18.8
3.6
2.7
Depreciation and amortization expenses
—
0.0
nm
—
0.0
General and administrative expenses
1.9
2.1
(9.5
)
0.5
0.4
Total operating expenses
269.7
360.5
(25.2
)
64.5
75.0
Income from equity investees
67.8
50.6
34.0
16.2
10.5
Gain from sale of assets
—
91.3
nm
—
19.0
Operating income
$
216.3
$
262.1
(17.5
)%
51.7
%
54.5
%
Two Quarters
Ended
Net revenues
$
866.2
$
958.9
(9.7
)%
Product and distribution costs
531.5
639.8
(16.9
)
61.4
%
66.7
%
Other operating expenses
28.0
25.8
8.5
3.2
2.7
Depreciation and amortization expenses
—
0.1
nm
—
0.0
General and administrative expenses
4.2
4.1
2.4
0.5
0.4
Total operating expenses
563.7
669.8
(15.8
)
65.1
69.9
Income from equity investees
123.5
108.0
14.4
14.3
11.3
Gain from sale of assets
—
91.3
nm
—
9.5
Operating income
$
426.0
$
488.4
(12.8
)%
49.2
%
50.9
%
Corporate and Other
Mar 31,
Apr 2,
%
2024
2023
Change
Quarter
Ended
Net revenues
$
7.5
$
3.7
102.7
%
Product and distribution costs
8.6
1.5
473.3
Other operating expenses
0.5
0.1
400.0
Depreciation and amortization expenses
30.5
29.3
4.1
General and administrative expenses
467.4
439.7
6.3
Restructuring and impairments
—
0.3
nm
Total operating expenses
507.0
470.9
7.7
Operating loss
$
(499.5
)
$
(467.2
)
6.9
%
Two Quarters
Ended
Net revenues
$
17.8
$
8.2
117.1
%
Product and distribution costs
19.7
6.3
212.7
Other operating expenses
0.6
0.1
500.0
Depreciation and amortization expenses
61.4
58.1
5.7
General and administrative expenses
922.2
835.8
10.3
Restructuring and impairments
—
1.1
nm
Total operating expenses
1,003.9
901.4
11.4
Operating loss
$
(986.1
)
$
(893.2
)
10.4
%
STARBUCKS CORPORATION
CONSOLIDATED BALANCE
SHEETS
(unaudited, in millions, except
per share data)
Mar 31, 2024
Oct 1, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
2,764.1
$
3,551.5
Short-term investments
362.5
401.5
Accounts receivable, net
1,110.3
1,184.1
Inventories
1,744.0
1,806.4
Prepaid expenses and other current
assets
484.1
359.9
Total current assets
6,465.0
7,303.4
Long-term investments
280.4
247.4
Equity investments
440.2
439.9
Property, plant and equipment, net
7,817.4
7,387.1
Operating lease, right-of-use asset
8,686.5
8,412.6
Deferred income taxes, net
1,746.5
1,769.8
Other long-term assets
587.2
546.5
Other intangible assets
110.7
120.5
Goodwill
3,229.3
3,218.3
TOTAL ASSETS
$
29,363.2
$
29,445.5
LIABILITIES AND SHAREHOLDERS'
EQUITY/(DEFICIT)
Current liabilities:
Accounts payable
$
1,487.4
$
1,544.3
Accrued liabilities
2,016.0
2,145.1
Accrued payroll and benefits
704.8
828.3
Current portion of operating lease
liability
1,406.6
1,275.3
Stored value card liability and current
portion of deferred revenue
1,872.0
1,700.2
Short-term debt
42.1
33.5
Current portion of long-term debt
—
1,818.6
Total current liabilities
7,528.9
9,345.3
Long-term debt
15,547.5
13,547.6
Operating lease liability
8,180.3
7,924.8
Deferred revenue
6,058.4
6,101.8
Other long-term liabilities
490.3
513.8
Total liabilities
37,805.4
37,433.3
Shareholders’ deficit:
Common stock ($0.001 par value) —
authorized, 2,400.0 shares; issued and outstanding, 1,132.7 and
1,142.6 shares, respectively
1.1
1.1
Additional paid-in capital
141.7
38.1
Retained deficit
(7,970.7
)
(7,255.8
)
Accumulated other comprehensive
income/(loss)
(621.5
)
(778.2
)
Total shareholders’ deficit
(8,449.4
)
(7,994.8
)
Noncontrolling interests
7.2
7.0
Total deficit
(8,442.2
)
(7,987.8
)
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY/(DEFICIT)
$
29,363.2
$
29,445.5
STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited, in millions)
Two Quarters Ended
Mar 31, 2024
Apr 2, 2023
OPERATING ACTIVITIES:
Net earnings including noncontrolling
interests
$
1,796.9
$
1,763.6
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
783.6
709.3
Deferred income taxes, net
4.0
2.6
Income earned from equity method
investees
(132.3
)
(109.9
)
Distributions received from equity method
investees
154.5
88.0
Gain on sale of assets
—
(91.3
)
Stock-based compensation
173.0
159.3
Non-cash lease costs
689.5
584.7
Loss on retirement and impairment of
assets
42.5
75.6
Other
16.3
22.6
Cash provided by/(used in) changes in
operating assets and liabilities:
Accounts receivable
86.4
26.2
Inventories
64.5
194.6
Income taxes payable
(84.9
)
15.8
Accounts payable
(51.6
)
(51.2
)
Deferred revenue
128.9
54.0
Operating lease liability
(635.1
)
(621.8
)
Other operating assets and liabilities
(146.3
)
(461.3
)
Net cash provided by operating
activities
2,889.9
2,360.8
INVESTING ACTIVITIES:
Purchases of investments
(472.0
)
(247.7
)
Sales of investments
0.5
1.9
Maturities and calls of investments
498.7
270.0
Additions to property, plant and
equipment
(1,255.0
)
(1,002.0
)
Proceeds from sale of assets
—
110.0
Other
(36.2
)
(39.2
)
Net cash used in investing activities
(1,264.0
)
(907.0
)
FINANCING ACTIVITIES:
Net (payments)/proceeds from issuance of
commercial paper
—
(175.0
)
Net proceeds from issuance of short-term
debt
93.2
52.8
Repayments of short-term debt
(80.5
)
—
Net proceeds from issuance of long-term
debt
1,995.3
1,497.8
Repayments of long-term debt
(1,825.1
)
(1,000.0
)
Proceeds from issuance of common stock
58.4
129.8
Cash dividends paid
(1,293.5
)
(1,217.4
)
Repurchase of common stock
(1,266.7
)
(479.3
)
Minimum tax withholdings on share-based
awards
(94.1
)
(81.4
)
Other
(10.6
)
(10.7
)
Net cash used in financing activities
(2,423.6
)
(1,283.4
)
Effect of exchange rate changes on cash
and cash equivalents
10.4
83.0
Net increase/(decrease) in cash and cash
equivalents
(787.3
)
253.4
CASH AND CASH EQUIVALENTS:
Beginning of period
3,551.5
2,818.4
End of period
$
2,764.1
$
3,071.8
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest, net of capitalized interest
$
275.6
$
250.4
Income taxes
$
850.9
$
636.8
Supplemental
Information
The following supplemental information is provided for
historical and comparative purposes.
U.S. Supplemental Data
Quarter Ended
($ in millions)
Mar 31, 2024
Apr 2, 2023
Change (%)
Revenues
$5,956.4
$5,955.8
0%
Change in Comparable Store Sales (1)
(3)%
12%
Change in Transactions
(7)%
6%
Change in Ticket
4%
6%
Store Count
16,600
16,044
3%
(1)
Includes only Starbucks® company-operated
stores open 13 months or longer. Comparable store sales exclude
Siren Retail stores. Stores that are temporarily closed or
operating at reduced hours remain in comparable store sales while
stores identified for permanent closure have been removed.
China Supplemental Data
Quarter Ended
($ in millions)
Mar 31, 2024
Apr 2, 2023
Change (%)
Revenues
$705.8
$763.8
(8)%
Change in Comparable Store Sales (1)
(11)%
3%
Change in Transactions
(4)%
4%
Change in Ticket
(8)%
(1)%
Store Count
7,093
6,243
14%
(1)
Includes only Starbucks® company-operated
stores open 13 months or longer. Comparable store sales exclude the
effects of fluctuations in foreign currency exchange rates and
Siren Retail stores. Stores that are temporarily closed or
operating at reduced hours remain in comparable store sales while
stores identified for permanent closure have been removed.
Store Data
Net stores opened/(closed) and
transferred during the period
Quarter Ended
Two Quarters Ended
Stores open as of
Mar 31, 2024
Apr 2, 2023
Mar 31, 2024
Apr 2, 2023
Mar 31, 2024
Apr 2, 2023
North America:
Company-operated stores
112
91
199
131
10,827
10,347
Licensed stores
22
10
56
56
7,238
7,135
Total North America
134
101
255
187
18,065
17,482
International:
Company-operated stores
132
174
318
271
9,282
8,308
Licensed stores
98
189
340
465
11,604
10,844
Total International
230
363
658
736
20,886
19,152
Total Company
364
464
913
923
38,951
36,634
Non-GAAP Disclosure
In addition to the GAAP results provided in this release, the
company provides certain non-GAAP financial measures that are not
in accordance with, or alternatives for, generally accepted
accounting principles in the United States (GAAP). When provided,
our non-GAAP financial measures of non-GAAP general and
administrative expenses (G&A), non-GAAP operating income,
non-GAAP operating income growth (loss), non-GAAP operating margin,
non-GAAP effective tax rate and non-GAAP earnings per share exclude
the below-listed items and their related tax impacts, as they do
not contribute to a meaningful evaluation of the company’s future
operating performance or comparisons to the company's past
operating performance. The GAAP measures most directly comparable
to non-GAAP G&A, non-GAAP operating income, non-GAAP operating
income growth (loss), non-GAAP operating margin, non-GAAP effective
tax rate and non-GAAP earnings per share are G&A, operating
income, operating income growth (loss), operating margin, effective
tax rate and diluted net earnings per share, respectively.
Non-GAAP
Exclusion
Rationale
Restructuring and impairment costs
Management excludes restructuring and
impairment costs for reasons discussed above. These expenses are
anticipated to be completed within a finite period of time.
Transaction and integration-related
costs
Management excludes transaction and
integration costs for reasons discussed above. Additionally, we
incur certain costs associated with certain divestiture activities.
The majority of these costs will be recognized over a finite period
of time.
Gain on sale of assets
Management excludes the gain related to
the sale of assets to Nestlé, primarily consisting of intellectual
properties associated with the Seattle's Best Coffee brand, as
these items do not reflect future gains or tax impacts for reasons
discussed above.
The Company also presents constant currency information to
provide a framework for assessing how our underlying businesses
performed excluding the effect of foreign currency rate
fluctuations. To present the constant currency information, current
period results for entities reporting in currencies other than
United States dollars are converted into United States dollars
using the average monthly exchange rates from the comparative
period rather than the actual exchange rates in effect during the
respective periods, excluding related hedging activities. We
believe the presentation of results on a constant currency basis in
addition to GAAP results helps users better understand our
performance, because it excludes the effects of foreign currency
volatility that are not indicative of our underlying operating
results.
Non-GAAP G&A, non-GAAP operating income, non-GAAP operating
income growth (loss), non-GAAP operating margin, non-GAAP effective
tax rate, non-GAAP earnings per share and constant currency may
have limitations as analytical tools. These measures should not be
considered in isolation or as a substitute for analysis of the
company’s results as reported under GAAP. Other companies may
calculate these non-GAAP financial measures differently than the
company does, limiting the usefulness of those measures for
comparative purposes.
STARBUCKS CORPORATION
NET REVENUE CONSTANT CURRENCY
RECONCILIATION
(unaudited, in millions)
Quarter Ended
Consolidated
Revenue for the quarter ended Apr 2, 2023
as reported (GAAP)
$
8,719.8
Revenue for the quarter ended Mar 31, 2024
as reported (GAAP)
$
8,563.0
Change (%)
(1.8
)%
Constant Currency Impact (%)
1.2
%
Change in Constant Currency (%)
(0.6
)%
STARBUCKS CORPORATION
RECONCILIATION OF SELECTED
GAAP MEASURES TO NON-GAAP MEASURES
(unaudited, in millions, except
per share data)
Quarter Ended
Consolidated
Mar 31, 2024
Apr 2, 2023
Change
Constant Currency
Impact
Change in Constant
Currency
Operating income, as reported (GAAP)
$
1,098.9
$
1,327.5
(17.2)%
Restructuring and impairment costs (1)
—
8.8
Transaction and integration-related costs
(2)
—
0.1
Gain from sale of assets
—
(91.3
)
Non-GAAP operating income
$
1,098.9
$
1,245.1
(11.7)%
1.5%
(10.2)%
Operating margin, as reported (GAAP)
12.8
%
15.2
%
(240) bps
Restructuring and impairment costs (1)
—
0.1
Transaction and integration-related costs
(2)
—
0.0
Gain from sale of assets
—
(1.0
)
Non-GAAP operating margin
12.8
%
14.3
%
(150) bps
10 bps
(140) bps
Diluted net earnings per share, as
reported (GAAP)
$
0.68
$
0.79
(13.9)%
Restructuring and impairment costs (1)
—
0.01
Transaction and integration-related costs
(2)
—
0.00
Gain from sale of assets
—
(0.08
)
Income tax effect on Non-GAAP adjustments
(3)
—
0.02
Non-GAAP EPS
$
0.68
$
0.74
(8.1)%
1.3%
(6.8)%
(1)
Represents costs associated with our
restructuring efforts.
(2)
The second quarter of fiscal 2023 includes
transaction-related expenses related to the sale of our Seattle's
Best Coffee brand.
(3)
Adjustments were determined based on the
nature of the underlying items and their relevant jurisdictional
tax rates.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240430499222/en/
Starbucks Contact, Investor Relations: Tiffany Willis
investorrelations@starbucks.com
Starbucks Contact, Media: Emily Albright
press@starbucks.com
Starbucks (NASDAQ:SBUX)
Historical Stock Chart
From Apr 2024 to May 2024
Starbucks (NASDAQ:SBUX)
Historical Stock Chart
From May 2023 to May 2024