Q3 Consolidated Net Revenues Up 78% to a Record
$7.5 Billion Q3 Comparable Store Sales Up 73% Globally; U.S. Up 83%
with 10% Two-Year Growth Q3 GAAP EPS $0.97; Record Non-GAAP EPS of
$1.01 Driven by Strong U.S. Performance China Surpasses 5,000
Stores, Pushing Global Store Count to Record 33,295 Active
Starbucks® Rewards Membership in the U.S. Up 48% Year-Over-Year to
24.2 Million Raising Full-Year Fiscal 2021 Margin and Earnings Per
Share Guidance
Starbucks Corporation (NASDAQ: SBUX) today reported financial
results for its 13-week fiscal third quarter ended June 27, 2021.
GAAP results in fiscal 2021 and fiscal 2020 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.
“Starbucks delivered record performance in the third quarter,
demonstrating powerful momentum beyond recovery. Our ability to
move with speed and agility and to be out in front of shifting
customer behaviors has helped further differentiate Starbucks,
positioning us well for this moment,” said Kevin Johnson, president
and ceo.
“As the Great Human Reconnection continues to unfold, our
partners are rising to the occasion, ready to meet our customers
wherever they need us to be – with the right store, in the right
place, at the right time. Given the strength of our diverse
portfolio and the elevated Starbucks Experience, as evidenced in
our Q3 record results, we are raising our full-year financial
outlook and are confident in our ability to continue to execute our
‘Growth at Scale’ agenda to unlock the full potential of the
Starbucks brand,” concluded Johnson.
Q3 Fiscal 2021
Highlights
- Global comparable store sales increased 73%, driven by a 75%
increase in comparable transactions, partially offset by a 1%
decrease in average ticket
- Americas comparable store sales increased 84%, driven by an 82%
increase in comparable transactions and a 1% increase in average
ticket; U.S. comparable store sales increased 83%, driven by an 80%
increase in comparable transactions and a 1% increase in average
ticket
- International comparable store sales increased 41%, driven by a
55% increase in comparable transactions, partially offset by a 9%
decline in average ticket; China comparable store sales increased
19%, driven by a 30% increase in transactions, partially offset by
a 9% decline in average ticket; International and China comparable
store sales include adverse impacts of approximately 5% and 6%,
respectively, from lapping prior-year value-added tax exemptions in
China
- The company opened 352 net new stores in the third quarter of
fiscal 2021, yielding 3% year-over-year unit growth, ending the
period with a record 33,295 stores globally, of which 51% and 49%
were company-operated and licensed, respectively
- Stores in the U.S. and China comprised 62% of the company’s
global portfolio at the end of the third quarter of fiscal 2021,
with 15,348 and 5,135 stores, respectively
- Consolidated net revenues of $7.5 billion grew 78% compared to
the prior year, mainly driven by a 73% increase in comparable store
sales primarily from lapping the unfavorable impact of business
disruption in the prior year due to the COVID-19 pandemic and
strength in U.S. company-operated sales in the current year
- GAAP operating margin of 19.9% increased from -16.7% in the
prior year primarily driven by sales leverage from business
recovery and the lapping of COVID-19 related costs in the prior
year, as well as pricing in the Americas, partially offset by
investments in wages and benefits for store partners; GAAP
operating margin also benefited from higher restructuring
activities in the prior year primarily associated with the Americas
Trade Area Transformation
- Non-GAAP operating margin of 20.5%, up from -12.6% in the prior
year
- GAAP earnings per share of $0.97, up from a loss of $0.58 in
the prior year
- Non-GAAP earnings per share of $1.01, up from a loss of $0.46
in the prior year
- Starbucks® Rewards loyalty program 90-day active members in the
U.S. increased to 24.2 million, up 48% year-over-year
Q3 Americas Segment
Results
Quarter Ended
Change (%)
($ in millions)
Jun 27, 2021
Jun 28, 2020
Change in Comparable Store Sales (1)
84%
(41)%
Change in Transactions
82%
(53)%
Change in Ticket
1%
27%
Store Count
18,175
18,235
nm
Revenues
$5,400.3
$2,805.5
92%
Operating Income/(Loss)
$1,315.7
($404.9)
nm
Operating Margin/(Loss)
24.4%
(14.4)%
3,880 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 due to the COVID-19 pandemic remain in
comparable store sales while stores identified for permanent
closure have been removed.
Net revenues for the Americas segment grew 92% over Q3 FY20 to
$5.4 billion in Q3 FY21, primarily driven by an 84% increase in
company-operated comparable store sales driven primarily from
lapping the unfavorable impact of business disruption in the prior
year due to the COVID-19 pandemic and strength in U.S.
company-operated sales in the current year.
Operating income increased to $1.3 billion in Q3 FY21, up from
an operating loss of $404.9 million in Q3 FY20. Operating margin of
24.4% expanded 3,880 basis points, primarily driven by sales
leverage from business recovery, the lapping of higher COVID-19
related costs in the prior year, pricing and benefits of the
Americas Trade Area Transformation, partially offset by investments
in wages and benefits for store partners coupled with increased
supply chain costs due to inflationary pressures. The
pandemic-related costs incurred in the prior year were largely
catastrophe and service pay for store partners, partially offset by
government subsidies. Operating margin also benefited from lower
restructuring expenses primarily associated with the Americas Trade
Area Transformation.
Q3 International Segment
Results
Quarter Ended
Change (%)
($ in millions)
Jun 27, 2021
Jun 28, 2020
Change in Comparable Store Sales (1)
41%
(37)%
Change in Transactions
55%
(44)%
Change in Ticket
(9)%
13%
Store Count
15,120
13,945
8%
Revenues
$1,658.4
$949.6
75%
Operating Income/(Loss)
$318.3
($86.0)
nm
Operating Margin/(Loss)
19.2%
(9.1)%
2,830 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 due to
the COVID-19 pandemic remain in comparable store sales while stores
identified for permanent closure have been removed. For the third
quarter of fiscal 2021, the International segment's comparable
store sales included a 5% adverse impact from lapping the
prior-year value-added tax benefit in China.
Net revenues for the International segment grew 75% over Q3 FY20
to $1.7 billion in Q3 FY21, driven by a 41% increase in comparable
store sales primarily due to lapping the impact of the COVID-19
pandemic in the prior year, higher product sales to and royalty
revenues from our licensees including the lapping of temporary
royalty relief granted in the prior year, 1,175 net new store
openings, or 8% store growth, over the past 12 months, and a 10%
favorable impact from foreign currency translation.
Operating income increased to $318.3 million in Q3 FY21 compared
to an operating loss of $86.0 million in Q3 FY20. Operating margin
of 19.2% increased from -9.1% in the prior year, primarily driven
by sales leverage due to lapping the severe impact of the COVID-19
pandemic, including temporary royalty relief to international
licensees and higher catastrophe wages in the prior year and, to a
lesser extent, labor efficiencies across company-operated markets
and favorability from higher temporary government subsidies.
Q3 Channel Development Segment
Results
Quarter Ended
($ in millions)
Jun 27, 2021
Jun 28, 2020
Change (%)
Revenues
$414.0
$447.3
(7)%
Operating Income
$216.0
$124.2
74%
Operating Margin
52.2%
27.8%
2,440 bps
Net revenues for the Channel Development segment of $414.0
million in Q3 FY21 were 7% lower relative to Q3 FY20. The decline
was primarily driven by a 20% unfavorable impact of Global Coffee
Alliance transition-related activities, including a structural
change in our single-serve business, partially offset by higher
product sales and royalties in the Global Coffee Alliance and
growth in our ready-to-drink business.
Operating income increased 74% to $216.0 million in Q3 FY21, up
from $124.2 million in Q3 FY20. Operating margin expanded 2,440
basis points to 52.2%, primarily due to Global Coffee Alliance
related activities, including the structural change in our
single-serve business and growth in our ready-to-drink
business.
Fiscal 2021 Guidance
Please note that Starbucks fiscal year 2021 is a 53-week year
instead of the usual 52 weeks. The impact of the 53rd week will be
reflected in our results for the fourth quarter of fiscal 2021. All
guidance for the metrics noted below is for fiscal year 2021 on a
53-week basis except comparable store sales growth metrics, which
are relative to fiscal year 2020 on a 52-week basis and Q4 fiscal
2020 on a 13-week basis.
Q4 Fiscal 2021 Guidance
The company introduces the
following Q4 fiscal 2021 guidance:
- Global comparable store sales growth of 18% to 21%
- Americas and U.S. comparable store sales growth of 22% to
25%
- International comparable store sales growth in the mid to high
single-digits
- China comparable store sales growth roughly flat
Full Year Fiscal 2021
Guidance
The company updates the following
fiscal year 2021 guidance:
- Global comparable store sales growth of 20% to 21%
- Americas and U.S. comparable store sales growth of 21% to 22%
- International comparable store sales growth of 15% to 17%
- China comparable store sales growth of 18% to 20%
- Americas approximately 800 new store openings and approximately
zero net new stores
- (previously approximately 850 new store openings and
approximately 50 net new stores)
- International approximately 1,350 new store openings and 1,100
net new stores
- (previously approximately 1,300 new store openings and 1,050
net new stores)
- Consolidated revenue of $29.1 billion to $29.3 billion,
inclusive of a $500 million impact attributable to the 53rd week
- (previously $28.5 billion to $29.3 billion, inclusive of a $500
million impact attributable to the 53rd week)
- Channel Development revenue of $1.5 billion to $1.6 billion
- (previously $1.4 billion to $1.6 billion)
- Consolidated GAAP operating margin of approximately 17%
- Consolidated non-GAAP operating margin of approximately 18%
- (previously 16.5% to 17.5%)
- GAAP and non-GAAP effective tax rates in the low 20%s
- (previously low to mid-20%s)
- Capital expenditures of approximately $1.7 billion
- (previously approximately $1.9 billion)
- GAAP EPS in the range of $2.97 to $3.02, inclusive of a $0.10
impact attributable to the 53rd week
- (previously $2.65 to $2.75, inclusive of a $0.10 impact
attributable to the 53rd week)
- Non-GAAP EPS in the range of $3.20 to $3.25 inclusive of a
$0.10 impact attributable to the 53rd week
- (previously $2.90 to $3.00, inclusive of a $0.10 impact
attributable to the 53rd week)
The company reiterates the
following fiscal year 2021 guidance:
- Approximately 2,150 new store openings and 1,100 net new
Starbucks stores globally
- Approximately 600 net new stores in China
- Interest expense of approximately $470 million to $480
million
Please note, the guidance provided above is dependent on our
current expectations, which may be impacted by evolving external
conditions, virus resurgences, local safety guidelines, shifts in
customer routines, preferences and mobility as well as tax policy
changes.
Please refer to the reconciliation of GAAP measures to non-GAAP
measures at the end of this release.
The company will provide additional information regarding its
business outlook during its regularly scheduled quarterly earnings
conference call today; this information will also be available
following the call on the company’s website at
http://investor.starbucks.com which the company uses as a tool to
disclose important information about the company and complying with
its disclosure obligations under Regulation FD.
Company Updates
1.
In June, the company announced the
promotions of John Culver to group president, North America and
chief operating officer, Michael Conway to group president,
International and Channel Development, and Michelle Burns to
executive vice president, Global Coffee, Tea and Cocoa. These
changes were effective as of June 28, 2021.
2. Announced yesterday, the company has agreed to sell its 50%
ownership share of Starbucks Coffee Korea Co., Ltd. Joint venture
partner E-Mart Inc. (Shinsegae Group) ("E-Mart") will acquire an
additional 17.5% interest in Starbucks Coffee Korea Co., Ltd.,
giving E-Mart 67.5% ownership of Starbucks operations in South
Korea. In addition, the company has agreed to sell its remaining
ownership share of Starbucks Coffee Korea Co., Ltd. to Apfin
Investment Pte Ltd, an affiliate of GIC Private Limited, which is a
Singapore sovereign wealth fund. This will give GIC a 32.5%
ownership stake in Starbucks Coffee Korea Co., Ltd. As with all of
Starbucks licensed markets, the company will continue to maintain a
strong relationship with Starbucks Coffee Korea, leveraging
Starbucks key global success drivers to enhance the local Starbucks
Experience for customers and partners in Korea.
3.
In May, the company announced Starbucks
Coffee Japan would transition all 350 free-standing
company-operated stores, approximately 20% of its portfolio, to
100% renewable energy by the end of October 2021 as a part of
Starbucks global commitment to decrease carbon emissions by 50% by
2030. The energy powering these stores is locally sourced and
locally consumed, and ranges from solar, water, wind and geothermal
power sources depending on the natural resources of local
communities.
4.
In June, the company safely reintroduced
personal reusable cups across company-operated stores in the U.S.
Bringing back personal reusable cups is a key part of the company's
ongoing commitment to reduce single-use cup waste and goal to
reduce waste by 50% by 2030. To encourage customers to choose
reusable and reduce single-use cup waste, company-operated stores
will continue to offer customers a $0.10 discount when they provide
their own personal cup.
5.
The Board of Directors declared a cash
dividend of $0.45 per share, payable on August 27, 2021, to
shareholders of record as of August 12, 2021.
Conference Call
Starbucks will hold a conference call today at 2:00 p.m. Pacific
Time, which will be hosted by Kevin Johnson, president and 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, August 27, 2021.
About Starbucks
Since 1971, Starbucks Coffee Company has been committed to
ethically sourcing and roasting high-quality arabica coffee. Today,
with more than 33,000 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 the applicable securities laws and
regulations. Generally, these statements can be identified by the
use of words such as “anticipate,” “believe,” “continue,” “could,”
“estimate,” “expect,” “forecast,” “intend,” “may,” “outlook,”
“plan,” “potential,” “predict,” “project,” “remain,” “should,”
“will,” “would,” and similar expressions intended to identify
forward-looking statements, although not all forward-looking
statements contain these identifying words. These statements
include statements relating to: the estimated financial impact
related to the COVID-19 pandemic including the outlook, guidance
and projections for revenues, earnings per share, operating income,
operating margins, comparable store sales, net new stores, capital
expenditures, interest expense and fiscal 2021 guidance; the nature
and extent of the continuing impact of COVID-19 on our business,
operations and financial results; our sustainability goals and
initiatives; the recovery of our business; our ability to emerge
from this global crisis and drive long-term growth; and the
expected sale of our ownership share in and our future relationship
with Starbucks Coffee Korea Co. These forward-looking statements do
not represent historical data, are based on currently available
operating, financial and competitive information and are subject to
a number of significant risks and uncertainties. Actual future
results and trends may differ materially depending on a variety of
factors, including, but not limited to: further spread of COVID-19
and its variants; regulatory measures or voluntary actions that may
be put in place to limit the spread of COVID-19, including
restrictions on business operations or social distancing
requirements and the duration and efficacy of such restrictions and
the world-wide distribution and acceptance of vaccines; the
potential for a resurgence of COVID-19 infections in a given
geographic region after it has hit its “peak”; fluctuations in U.S.
and international economies and currencies; our ability to
preserve, grow and leverage our brands; the ability of our business
partners and third-party providers to fulfill their
responsibilities and commitments; potential negative effects of
incidents involving food or beverage-borne illnesses, tampering,
adulteration, contamination or mislabeling; potential negative
effects of material breaches of our information technology systems
to the extent we experience a material breach; material failures of
our information technology systems; costs associated with, and the
successful execution of, the company’s initiatives and plans,
including the successful expansion of our Global Coffee Alliance
with Nestlé; our ability to obtain financing on acceptable terms;
the acceptance of the company’s products by our customers, evolving
consumer preferences and tastes and the availability of consumer
financing; changes in the availability and cost of labor;
significant increased logistic costs, including but not limited to
inflationary pressures; the impact of competition; inherent risks
of operating a global business; the prices and availability of
coffee, dairy and other raw materials; the effect of legal
proceedings; and the effects of changes in tax laws and related
guidance and regulations that may be implemented and other risks
detailed in the company filings with the Securities and Exchange
Commission, including the “Risk Factors” sections of Starbucks
Annual Report on Form 10-K for the fiscal year ended September 27,
2020 and Quarterly Report on Form 10-Q for the fiscal quarter ended
March 28, 2021. The company assumes no obligation to update any of
these forward-looking statements.
Non-GAAP Financial
Measures
Certain non-GAAP measures included in our press release and in
our investor conference call related to these results were not
reconciled to the comparable GAAP financial measures because the
GAAP measures are not accessible on a forward-looking basis. The
company is unable to reconcile these forward-looking non-GAAP
financial measures to the most directly comparable GAAP measures
without unreasonable efforts because the company is currently
unable to predict with a reasonable degree of certainty the type
and extent of certain items that would be expected to impact GAAP
measures for these periods but would not impact the non-GAAP
measures. Such items may include acquisitions, divestitures,
restructuring and other items. The unavailable information could
have a significant impact on the company’s GAAP financial
results.
Two-year Comparable Store
Sales
The two-year comparable store sales metric discussed in today's
investor conference call is calculated as ((1 + % change in
comparable store sales in FY20) * (1 + % change in comparable store
sales in FY21)) - 1. Refer to footnote 1 in the Segment Results and
Supplemental Information sections in this press release for
definitions of change in comparable store sales.
Key Metrics
Our financial results and long-term growth model will continue
to be driven by new store openings, comparable store sales and
operating margin management. These key operating metrics are
important indicators for 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
Jun 27,
Jun 28,
%
Jun 27,
Jun 28,
2021
2020
Change
2021
2020
As a % of total net
revenues
Net revenues:
Company-operated stores
$
6,363.1
$
3,444.4
84.7
%
84.9
%
81.6
%
Licensed stores
680.2
300.5
126.4
9.1
7.1
Other
453.2
477.2
(5.0)
6.0
11.3
Total net revenues
7,496.5
4,222.1
77.6
100.0
100.0
Product and distribution costs
2,206.0
1,484.0
48.7
29.4
35.1
Store operating expenses
2,966.9
2,537.8
16.9
39.6
60.1
Other operating expenses
71.4
133.6
(46.6)
1.0
3.2
Depreciation and amortization expenses
354.3
361.0
(1.9)
4.7
8.6
General and administrative expenses
494.9
399.9
23.8
6.6
9.5
Restructuring and impairments
19.8
78.1
(74.6)
0.3
1.8
Total operating expenses
6,113.3
4,994.4
22.4
81.5
118.3
Income from equity investees
105.5
68.4
54.2
1.4
1.6
Operating income/(loss)
1,488.7
(703.9)
nm
19.9
(16.7)
Interest income and other, net
36.0
12.7
183.5
0.5
0.3
Interest expense
(113.4)
(120.8)
(6.1)
(1.5)
(2.9)
Earnings/(loss) before income taxes
1,411.3
(812.0)
nm
18.8
(19.2)
Income tax expense/(benefit)
257.1
(133.9)
nm
3.4
(3.2)
Net earnings/(loss) including
noncontrolling interests
1,154.2
(678.1)
nm
15.4
(16.1)
Net earnings attributable to
noncontrolling interests
0.8
0.3
166.7
—
—
Net earnings/(loss) attributable to
Starbucks
$
1,153.4
$
(678.4)
nm
15.4
%
(16.1)
%
Net earnings/(loss) per common share -
diluted
$
0.97
$
(0.58)
nm
Weighted avg. shares outstanding -
diluted
1,186.2
1,168.5
Cash dividends declared per share
$
0.45
$
0.41
Supplemental Ratios:
Store operating expenses as a % of
company-operated store revenues
46.6
%
73.7
%
Effective tax rate including
noncontrolling interests
18.2
%
16.5
%
Three Quarters Ended
Three Quarters Ended
Jun 27, 2021
Jun 28, 2020
%
Change
Jun 27, 2021
Jun 28, 2020
As a % of total net
revenues
Net revenues:
Company-operated stores
$
17,742.8
$
13,991.0
26.8
%
84.8
%
80.8
%
Licensed stores
1,889.0
1,782.4
6.0
9.0
10.3
Other
1,282.1
1,541.5
(16.8
)
6.1
8.9
Total net revenues
20,913.9
17,314.9
20.8
100.0
100.0
Product and distribution costs
6,247.5
5,718.2
9.3
29.9
33.0
Store operating expenses
8,657.6
8,080.7
7.1
41.4
46.7
Other operating expenses
250.8
330.3
(24.1
)
1.2
1.9
Depreciation and amortization expenses
1,087.0
1,068.3
1.8
5.2
6.2
General and administrative expenses
1,431.4
1,240.6
15.4
6.8
7.2
Restructuring and impairments
115.0
83.7
37.4
0.5
0.5
Total operating expenses
17,789.3
16,521.8
7.7
85.1
95.4
Income from equity investees
265.3
210.3
26.2
1.3
1.2
Operating income
3,389.9
1,003.4
237.8
16.2
5.8
Interest income and other, net
68.6
30.7
123.5
0.3
0.2
Interest expense
(349.2
)
(312.1
)
11.9
(1.7
)
(1.8
)
Earnings before income taxes
3,109.3
722.0
330.7
14.9
4.2
Income tax expense
673.6
190.0
254.5
3.2
1.1
Net earnings including noncontrolling
interests
2,435.7
532.0
357.8
11.6
3.1
Net earnings/(loss) attributable to
noncontrolling interests
0.8
(3.7
)
nm
—
—
Net earnings attributable to
Starbucks
$
2,434.9
$
535.7
354.5
11.6
%
3.1
%
Net earnings per common share -
diluted
$
2.06
$
0.45
357.8
%
Weighted avg. shares outstanding -
diluted
1,184.7
1,182.7
Cash dividends declared per share
$
1.80
$
1.23
Supplemental Ratios:
Store operating expenses as a % of
company-operated store revenues
48.8
%
57.8
%
Effective tax rate including
noncontrolling interests
21.7
%
26.3
%
Segment Results (in
millions)
Americas
Jun 27, 2021
Jun 28, 2020
%
Change
Jun 27, 2021
Jun 28, 2020
Quarter
Ended
As a % of Americas
total net revenues
Net revenues:
Company-operated stores
$
4,929.8
$
2,568.9
91.9
%
91.3
%
91.6
%
Licensed stores
468.5
235.5
98.9
8.7
8.4
Other
2.0
1.1
81.8
—
—
Total net revenues
5,400.3
2,805.5
92.5
100.0
100.0
Product and distribution costs
1,416.2
805.6
75.8
26.2
28.7
Store operating expenses
2,346.8
2,054.4
14.2
43.5
73.2
Other operating expenses
39.7
40.7
(2.5
)
0.7
1.5
Depreciation and amortization expenses
188.9
191.3
(1.3
)
3.5
6.8
General and administrative expenses
73.2
62.2
17.7
1.4
2.2
Restructuring and impairments
19.8
56.2
(64.8
)
0.4
2.0
Total operating expenses
4,084.6
3,210.4
27.2
75.6
114.4
Operating income/(loss)
$
1,315.7
$
(404.9
)
nm
24.4
%
(14.4
)%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
47.6
%
80.0
%
Three Quarters
Ended
Net revenues:
Company-operated stores
$
13,483.1
$
10,903.5
23.7
%
91.3
%
89.8
%
Licensed stores
1,278.8
1,237.0
3.4
8.7
10.2
Other
6.2
5.8
6.9
—
0.1
Total net revenues
14,768.1
12,146.3
21.6
100.0
100.0
Product and distribution costs
3,920.0
3,442.2
13.9
26.5
28.3
Store operating expenses
6,788.7
6,427.3
5.6
46.0
52.9
Other operating expenses
124.4
125.1
(0.6
)
0.8
1.0
Depreciation and amortization expenses
563.9
571.9
(1.4
)
3.8
4.7
General and administrative expenses
221.7
202.8
9.3
1.5
1.7
Restructuring and impairments
115.0
61.9
85.8
0.8
0.5
Total operating expenses
11,733.7
10,831.2
8.3
79.5
89.2
Operating income
$
3,034.4
$
1,315.1
130.7
%
20.5
%
10.8
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
50.3
%
58.9
%
International
Jun 27, 2021
Jun 28, 2020
%
Change
Jun 27, 2021
Jun 28, 2020
Quarter
Ended
As a % of
International
total net revenues
Net revenues:
Company-operated stores
$
1,433.3
$
875.5
63.7
%
86.4
%
92.2
%
Licensed stores
211.7
65.0
225.7
12.8
6.8
Other
13.4
9.1
47.3
0.8
1.0
Total net revenues
1,658.4
949.6
74.6
100.0
100.0
Product and distribution costs
501.7
337.7
48.6
30.3
35.6
Store operating expenses
620.1
483.4
28.3
37.4
50.9
Other operating expenses
38.3
37.5
2.1
2.3
3.9
Depreciation and amortization expenses
129.7
128.5
0.9
7.8
13.5
General and administrative expenses
92.3
66.1
39.6
5.6
7.0
Restructuring and impairments
—
(0.2
)
nm
—
—
Total operating expenses
1,382.1
1,053.0
31.3
83.3
110.9
Income from equity investees
42.0
17.4
141.4
2.5
1.8
Operating income/(loss)
$
318.3
$
(86.0
)
nm
19.2
%
(9.1
)%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
43.3
%
55.2
%
Three Quarters
Ended
Net revenues:
Company-operated stores
$
4,259.7
$
3,087.5
38.0
%
86.5
%
84.5
%
Licensed stores
610.2
545.4
11.9
12.4
14.9
Other
53.8
22.4
140.2
1.1
0.6
Total net revenues
4,923.7
3,655.3
34.7
100.0
100.0
Product and distribution costs
1,535.6
1,213.9
26.5
31.2
33.2
Store operating expenses
1,868.9
1,653.4
13.0
38.0
45.2
Other operating expenses
101.8
105.1
(3.1
)
2.1
2.9
Depreciation and amortization expenses
413.1
385.2
7.2
8.4
10.5
General and administrative expenses
254.7
196.9
29.4
5.2
5.4
Restructuring and impairments
—
(0.6
)
nm
—
—
Total operating expenses
4,174.1
3,553.9
17.5
84.8
97.2
Income from equity investees
95.0
73.1
30.0
1.9
2.0
Operating income
$
844.6
$
174.5
384.0
%
17.2
%
4.8
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
43.9
%
53.6
%
Channel Development
Jun 27, 2021
Jun 28, 2020
%
Change
Jun 27, 2021
Jun 28, 2020
Quarter
Ended
As a % of
Channel Development
total net revenues
Net revenues
$
414.0
$
447.3
(7.4
)%
Product and distribution costs
268.3
319.9
(16.1
)
64.8
%
71.5
%
Other operating expenses
(9.9
)
51.4
nm
(2.4
)
11.5
Depreciation and amortization expenses
0.2
0.3
(33.3
)
—
0.1
General and administrative expenses
2.9
2.5
16.0
0.7
0.6
Total operating expenses
261.5
374.1
(30.1
)
63.2
83.6
Income from equity investees
63.5
51.0
24.5
15.3
11.4
Operating income
$
216.0
$
124.2
73.9
%
52.2
%
27.8
%
Three Quarters
Ended
Net revenues
$
1,155.3
$
1,461.0
(20.9
)%
Product and distribution costs
733.8
1,010.3
(27.4
)
63.5
%
69.2
%
Other operating expenses
14.2
89.7
(84.2
)
1.2
6.1
Depreciation and amortization expenses
0.9
0.9
—
0.1
0.1
General and administrative expenses
7.4
8.0
(7.5
)
0.6
0.5
Total operating expenses
756.3
1,108.9
(31.8
)
65.5
75.9
Income from equity investees
170.3
137.2
24.1
14.7
9.4
Operating income
$
569.3
$
489.3
16.3
%
49.3
%
33.5
%
Corporate and Other
Jun 27, 2021
Jun 28, 2020
%
Change
Quarter
Ended
Net revenues
$
23.8
$
19.7
20.8
%
Product and distribution costs
19.8
20.8
(4.8
)
Other operating expenses
3.3
4.0
(17.5
)
Depreciation and amortization expenses
35.5
40.9
(13.2
)
General and administrative expenses
326.5
269.1
21.3
Restructuring and impairments
—
22.1
nm
Total operating expenses
385.1
356.9
7.9
Operating loss
$
(361.3
)
$
(337.2
)
7.1
%
Three Quarters
Ended
Net revenues
$
66.8
$
52.3
27.7
%
Product and distribution costs
58.1
51.8
12.2
Other operating expenses
10.4
10.4
—
Depreciation and amortization expenses
109.1
110.3
(1.1
)
General and administrative expenses
947.6
832.9
13.8
Restructuring and impairments
—
22.4
nm
Total operating expenses
1,125.2
1,027.8
9.5
Operating loss
$
(1,058.4
)
$
(975.5
)
8.5
%
Corporate and Other primarily consists of our unallocated
corporate operating expenses and Evolution Fresh.
STARBUCKS CORPORATION
CONSOLIDATED BALANCE
SHEETS
(unaudited, in millions, except
per share data)
Jun 27, 2021
Sep 27, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
4,753.1
$
4,350.9
Short-term investments
153.6
281.2
Accounts receivable, net
911.2
883.4
Inventories
1,548.2
1,551.4
Prepaid expenses and other current
assets
565.6
739.5
Total current assets
7,931.7
7,806.4
Long-term investments
285.9
206.1
Equity investments
535.3
478.7
Property, plant and equipment, net
6,151.4
6,241.4
Operating lease, right-of-use asset
8,065.2
8,134.1
Deferred income taxes, net
1,851.0
1,789.9
Other long-term assets
586.3
568.6
Other intangible assets
398.0
552.1
Goodwill
3,672.0
3,597.2
TOTAL ASSETS
$
29,476.8
$
29,374.5
LIABILITIES AND SHAREHOLDERS'
EQUITY/(DEFICIT)
Current liabilities:
Accounts payable
$
1,127.0
$
997.9
Accrued liabilities
1,791.4
1,160.7
Accrued payroll and benefits
741.0
696.0
Income taxes payable
204.8
98.2
Current portion of operating lease
liability
1,308.4
1,248.8
Stored value card liability and current
portion of deferred revenue
1,628.3
1,456.5
Short-term debt
—
438.8
Current portion of long-term debt
998.9
1,249.9
Total current liabilities
7,799.8
7,346.8
Long-term debt
13,619.2
14,659.6
Operating lease liability
7,597.8
7,661.7
Deferred revenue
6,491.4
6,598.5
Other long-term liabilities
762.9
907.3
Total liabilities
36,271.1
37,173.9
Shareholders' deficit:
Common stock ($0.001 par value) —
authorized, 2,400.0 shares; issued and outstanding, 1,179.0 and
1,173.3 shares, respectively
1.2
1.2
Additional paid-in capital
729.3
373.9
Retained deficit
(7,501.6
)
(7,815.6
)
Accumulated other comprehensive loss
(29.7
)
(364.6
)
Total shareholders’ deficit
(6,800.8
)
(7,805.1
)
Noncontrolling interests
6.5
5.7
Total deficit
(6,794.3
)
(7,799.4
)
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY/(DEFICIT)
$
29,476.8
$
29,374.5
STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited and in millions)
Three Quarters Ended
Jun 27, 2021
Jun 28, 2020
OPERATING ACTIVITIES:
Net earnings including noncontrolling
interests
$
2,435.7
$
532.0
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
1,146.2
1,124.0
Deferred income taxes, net
(113.2
)
20.0
Income earned from equity method
investees
(238.3
)
(182.3
)
Distributions received from equity method
investees
226.7
165.6
Stock-based compensation
255.3
188.0
Non-cash lease costs
931.7
902.4
Loss on retirement and impairment of
assets
204.7
124.6
Other
(6.8
)
63.7
Cash provided by/(used in) changes in
operating assets and liabilities:
Accounts receivable
(13.1
)
13.4
Inventories
8.4
(51.7
)
Prepaid expenses and other current
assets
216.8
(492.1
)
Income taxes payable
128.9
(1,224.5
)
Accounts payable
108.2
(320.3
)
Deferred revenue
52.4
92.0
Operating lease liability
(1,029.8
)
(918.2
)
Other operating assets and liabilities
154.6
70.5
Net cash provided by operating
activities
4,468.4
107.1
INVESTING ACTIVITIES:
Purchases of investments
(367.3
)
(297.4
)
Sales of investments
130.4
133.5
Maturities and calls of investments
298.7
10.0
Additions to property, plant and
equipment
(985.7
)
(1,138.4
)
Other
(62.3
)
(39.4
)
Net cash used in investing activities
(986.2
)
(1,331.7
)
FINANCING ACTIVITIES:
Repayments of commercial paper
(296.5
)
—
Net proceeds from issuance of short-term
debt
215.6
1,157.2
Repayments of short-term debt
(346.2
)
(220.7
)
Proceeds from issuance of long-term
debt
—
4,727.6
Repayments of long-term debt
(1,250.0
)
—
Proceeds from issuance of common stock
191.6
98.9
Cash dividends paid
(1,588.2
)
(1,444.2
)
Repurchase of common stock
—
(1,698.9
)
Minimum tax withholdings on share-based
awards
(94.2
)
(89.1
)
Other
—
(37.8
)
Net cash provided by/(used in) financing
activities
(3,167.9
)
2,493.0
Effect of exchange rate changes on cash
and cash equivalents
87.9
10.9
Net increase in cash and cash
equivalents
402.2
1,279.3
CASH AND CASH EQUIVALENTS:
Beginning of period
4,350.9
2,686.6
End of period
$
4,753.1
$
3,965.9
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest, net of capitalized interest
$
373.6
$
274.3
Income taxes
$
407.9
$
1,691.1
Supplemental
Information
The following supplemental information is provided for
historical and comparative purposes.
U.S. Supplemental Data
Quarter Ended
($ in millions)
Jun 27, 2021
Jun 28, 2020
Change (%)
Revenues
$4,984.6
$2,621.1
90%
Change in Comparable Store Sales (1)
83%
(40)%
Change in Transactions
80%
(52)%
Change in Ticket
1%
25%
Store Count
15,348
15,243
1%
(1)
Includes only Starbucks® company-operated
stores open 13 months or longer. The results from Siren Retail
operations are not reflected in comparable store sales. Comparable
store sales include stores that were temporarily closed as a result
of the COVID-19 pandemic and exclude stores identified for
permanent closure.
China Supplemental Data
Quarter Ended
($ in millions)
Jun 27, 2021
Jun 28, 2020
Change (%)
Revenues
$905.2
$624.4
45%
Change in Comparable Store Sales (1)
19%
(19)%
Change in Transactions
30%
(27)%
Change in Ticket
(9)%
10%
Store Count
5,135
4,447
15%
(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, stores
identified for permanent closure and Siren Retail stores.
Comparable store sales include stores that were temporarily closed
as a result of the COVID-19 pandemic, and for the third quarter of
fiscal 2021, included a 6% adverse impact from lapping the
prior-year value-added tax benefit.
Store Data
Net stores opened/(closed) and
transferred during the period
Quarter Ended
Three Quarters Ended
Stores open as of
Jun 27, 2021
Jun 28, 2020
Jun 27, 2021
Jun 28, 2020
Jun 27, 2021
Jun 28, 2020
Americas:
Company-operated stores
40
(34
)
(249
)
43
9,860
10,017
Licensed stores
15
(2
)
70
125
8,315
8,218
Total Americas
55
(36
)
(179
)
168
18,175
18,235
International:
Company-operated stores
177
117
485
394
7,013
6,254
Licensed stores
120
49
329
362
8,107
7,691
Total International
297
166
814
756
15,120
13,945
Total Company
352
130
635
924
33,295
32,180
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. Our non-GAAP financial
measures of non-GAAP G&A, non-GAAP operating income/(loss),
non-GAAP operating income/(loss) growth, non-GAAP operating margin,
non-GAAP effective tax rate and non-GAAP earnings/(loss) 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/(loss), non-GAAP
operating income/(loss) growth, non-GAAP operating margin, non-GAAP
effective tax rate and non-GAAP earnings/(loss) per share are
general and administrative expenses, operating income/(loss),
operating income/(loss) growth, operating margin, effective tax
rate and diluted net earnings/(loss) per share, respectively.
Non-GAAP Exclusion
Rationale
Restructuring and impairment costs
Management excludes restructuring and
impairment costs relating to the write-down of certain
company-operated store and intangible assets. Management excludes
these items for reasons discussed above. These expenses are
anticipated to be completed within a finite period of time.
Integration costs
Management excludes integration costs and
amortization of the acquired intangible assets for reasons
discussed above. Additionally, the majority of these costs will be
recognized over a finite period of time.
Nestlé transaction and integration-related
costs
Management excludes the transaction and
integration-related costs related to the Global Coffee Alliance
with Nestlé (inclusive of incremental costs to grow and develop the
alliance) for reasons discussed above.
Non-GAAP G&A, non-GAAP operating income/(loss), non-GAAP
operating income/(loss) growth, non-GAAP operating margin, non-GAAP
effective tax rate and non-GAAP earnings/(loss) per share 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.
Certain non-GAAP measures included in this report were not
reconciled to the comparable GAAP financial measures because the
GAAP measures are not accessible on a forward-looking basis. The
company is unable to reconcile these forward-looking non-GAAP
financial measures to the most directly comparable GAAP measures
without unreasonable efforts because the company is currently
unable to predict with a reasonable degree of certainty the type
and extent of certain items that would be expected to impact GAAP
measures for these periods but would not impact the non-GAAP
measures. Such items may include acquisitions, divestitures,
restructuring and other items. The unavailable information could
have a significant impact on the company’s GAAP financial
results.
STARBUCKS CORPORATION
RECONCILIATION OF SELECTED
GAAP MEASURES TO NON-GAAP MEASURES
(unaudited)
($ in millions)
Quarter Ended
Consolidated
Jun 27, 2021
Jun 28, 2020
Change
General and administrative expenses, as
reported (GAAP)
$
494.9
$
399.9
23.8%
Restructuring and impairment costs (1)
—
(0.1
)
Integration costs (2)
(4.9
)
(3.3
)
Non-GAAP G&A
$
490.0
$
396.5
23.6%
Non-GAAP G&A as a % of total net
revenues (4)
6.5
%
9.4
%
Operating income/(loss), as reported
(GAAP)
$
1,488.7
$
(703.9
)
nm
Restructuring and impairment costs (1)
19.8
78.2
Integration costs (2)
54.7
60.5
Nestlé transaction and integration-related
costs (3)
(22.8
)
35.0
Non-GAAP operating income/(loss)
$
1,540.4
$
(530.2
)
nm
Operating margin, as reported (GAAP)
19.9
%
(16.7
)%
3,660 bps
Restructuring and impairment costs (1)
0.3
1.9
Integration costs (2)
0.6
1.4
Nestlé transaction and integration-related
costs (3)
(0.3
)
0.8
Non-GAAP operating margin
20.5
%
(12.6
)%
3,310 bps
Diluted net earnings/(loss) per share, as
reported (GAAP)
$
0.97
$
(0.58
)
nm
Restructuring and impairment costs (1)
0.02
0.07
Integration costs (2)
0.05
0.05
Nestlé transaction and integration-related
costs (3)
(0.02
)
0.03
Income tax effect on Non-GAAP adjustments
(5)
(0.01
)
(0.03
)
Non-GAAP earnings/(loss) per share
$
1.01
$
(0.46
)
nm
(1)
Represents costs associated with our
restructuring efforts, primarily asset impairments, accelerated
amortization of right-of-use lease assets and severance related to
certain company-operated store closures and impairment of an
intangible asset.
(2)
Includes amortization expense of acquired
intangible assets associated with the acquisition of East China and
Starbucks Japan and the related post-acquisition integration costs,
such as incremental information technology and compensation-related
costs.
(3)
Represents costs associated with the
Global Coffee Alliance with Nestlé and a change in estimate
relating to a transaction cost accrual.
(4)
Non-GAAP G&A as a percentage of total
net revenues for the third quarter of fiscal 2021 was 6.5%.
Non-GAAP G&A as a percentage of total net revenues for fiscal
years 2020 and 2019 was 7.1% and 6.5%, respectively. Refer to the
Starbucks Investor Relations website for additional information
regarding historical non-GAAP information.
(5)
Adjustments were determined based on the
nature of the underlying items and their relevant jurisdictional
tax rates.
Q3 QTD FY21 NON-GAAP DISCLOSURE
DETAILS
(Pretax $ in millions and USD)
Q3 QTD FY21
Americas
International
Channel Development
Corporate and Other
Consolidated
Statement of Earnings Line Item
Restructuring and Impairment
Costs
Integration Costs
Nestlé Transaction and
Integration-Related Costs
Integration Costs
Total Non-GAAP
Adjustment
Net revenue
Production and distribution costs
—
Store operating expenses
5.0
5.0
Other operating expenses
(22.8
)
(22.8
)
Depreciation and amortization expenses
44.8
44.8
General and administrative expenses
4.8
0.1
4.9
Restructuring and impairments
19.8
19.8
Income from equity investees
—
Total impact to operating income
(19.8
)
(54.6
)
22.8
(0.1
)
(51.7
)
STARBUCKS CORPORATION
RECONCILIATION OF SELECTED
GAAP MEASURES TO NON-GAAP MEASURES
(unaudited)
Year Ended
Consolidated
Oct 3, 2021
(Projected
53-weeks)
Operating Margin (GAAP)
17.0
%
Integration costs (1)
0.7
%
Restructuring costs (2)
0.4
%
Nestlé transaction and integration-related
costs (3)
(0.1
)%
Non-GAAP Operating Margin
18.0
%
Diluted net earnings per share (GAAP)
$2.97 - $3.02
Integration costs (1)
0.20
Restructuring costs (2)
0.11
Nestlé transaction and integration-related
costs (3)
(0.02
)
Income tax effect on Non-GAAP adjustments
(4)
(0.06
)
Non-GAAP earnings per share
$3.20 - $3.25
(1)
Includes amortization expense of acquired
intangible assets associated with the acquisition of East China and
Starbucks Japan and the related post-acquisition integration costs,
such as incremental information technology and compensation-related
costs.
(2)
Represents costs associated with our
restructuring efforts in the U.S. and Canada company-operated
businesses.
(3)
Represents costs associated with the
Global Coffee Alliance with Nestlé.
(4)
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/20210727006044/en/
Starbucks Contact, Investor Relations: Greg Smith
206-318-7118 investorrelations@starbucks.com
Starbucks Contact, Media: Maggie Jantzen 206-318-7100
press@starbucks.com
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