Q3 Consolidated Net Revenues Up 12% to a Record
$9.2 Billion Q3 Comparable Store Sales Up 10% Globally; Up 7% in
North America; Up 24% in International Q3 GAAP EPS $0.99; Non-GAAP
EPS $1.00 Exceeding Expectations Globally Q3 Active U.S. Starbucks®
Rewards Membership Reaches 31.4 Million, Up 15% Over Prior Year
Starbucks Corporation (Nasdaq: SBUX) today reported financial
results for its 13-week fiscal third quarter ended July 2, 2023.
GAAP results in fiscal 2023 and fiscal 2022 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.
Q3 Fiscal 2023
Highlights
- Global comparable store sales increased 10%, primarily driven
by a 5% increase in comparable transactions and a 4% increase in
average ticket
- North America and U.S. comparable store sales increased 7%,
driven by a 6% increase in average ticket and a 1% increase in
comparable transactions
- International comparable store sales increased 24%, driven by a
21% increase in comparable transactions and a 2% increase in
average ticket; China comparable store sales increased 46%, driven
by a 48% increase in comparable transactions and a 1% decline in
average ticket
- The company opened 588 net new stores in Q3, crossing the
37,000 store count threshold globally, ending the period with
37,222 stores: 51% company-operated and 49% licensed
- At the end of Q3, stores in the U.S. and China comprised 61% of
the company’s global portfolio, with 16,144 and 6,480 stores in the
U.S. and China, respectively
- Consolidated net revenues of $9.2 billion, up 12% from the
prior year, or 14%, inclusive of more than 1% unfavorable impact
from foreign currency translation
- GAAP operating margin of 17.3% increased from 15.9% in the
prior year, primarily driven by sales leverage, pricing and
productivity improvement. This expansion was partially offset by
previously committed investments in labor, including enhanced store
partner wages and benefits and higher general and administrative
costs related to our Reinvention Plan.
- Non-GAAP operating margin of 17.4% increased from 16.9% in the
prior year
- GAAP earnings per share of $0.99 grew 25% over prior year
- Non-GAAP earnings per share of $1.00 grew 19% over prior
year
- Starbucks Rewards loyalty program 90-day active members in the
U.S. increased to 31.4 million, up 15% year-over-year
“Our strong third quarter results point to all-around momentum
in the business, and reflect the significant progress we are making
against our Reinvention Plan. Our results were also amplified by
the distinctive competitive advantages that set us apart in the
market,” commented Laxman Narasimhan, chief executive officer.
“Starbucks is an iconic, durable brand and I am confident in the
multiple paths available for the company to drive significant
growth and margin improvement, which position us well to create
outsized long-term shareholder value,” Narasimhan added.
“I am pleased with our third quarter performance, which beat our
expectations, including our International segment. Our performance
was bolstered by the progress we are making against our strategies,
specifically our Reinvention Plan, and its unfolding into tangible
financial results, as we delivered earnings growth of 19% well
above our revenue growth of 12%,” commented Rachel Ruggeri, chief
financial officer. “The momentum we have built and strength we are
seeing globally, gives us the confidence and optimism to close our
fiscal year strong,” Ruggeri added.
Q3 North America
Segment Results
Quarter Ended
Change (%)
($ in millions)
Jul 2, 2023
Jul 3, 2022
Change in Comparable Store Sales (1)
7%
9%
Change in Transactions
1%
1%
Change in Ticket
6%
8%
Store Count
17,592
17,050
3%
Revenues
$6,737.8
$6,058.4
11%
Operating Income
$1,463.9
$1,330.1
10%
Operating Margin
21.7%
22.0%
(30) 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 North America segment grew 11% over Q3 FY22
to $6.7 billion in Q3 FY23, primarily driven by a 7% increase in
company-operated comparable store sales, driven by a 6% increase in
average ticket and a 1% increase in comparable transactions, net
new company-operated store growth of 4% over the past 12 months, as
well as strength in our licensed store sales.
Operating income increased to $1.5 billion in Q3 FY23 compared
to $1.3 billion in Q3 FY22. Operating margin of 21.7% contracted
from 22.0% in the prior year, primarily driven by previously
committed investments in labor, including enhanced store partner
wages and benefits as well as increased spend on partner training.
This contraction was partially offset by strategic pricing,
productivity improvement and sales leverage.
Q3 International
Segment Results
Quarter Ended
Change (%)
($ in millions)
Jul 2, 2023
Jul 3, 2022
Change in Comparable Store Sales (1)
24%
(18)%
Change in Transactions
21%
(15)%
Change in Ticket
2%
(4)%
Store Count
19,630
17,898
10%
Revenues
$1,972.9
$1,584.7
24%
Operating Income
$374.5
$135.3
177%
Operating Margin
19.0%
8.5%
1,050 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 International segment grew 24% over Q3 FY22
to $2.0 billion in Q3 FY23, primarily driven by a 24% increase in
comparable store sales, net new company-operated store growth of
11% over the past 12 months, as well as growth in our licensed
store revenue including higher product sales and royalty revenues.
These increases were partially offset by approximately 5%
unfavorable impact from foreign currency translation.
Operating income increased to $374.5 million in Q3 FY23 compared
to $135.3 million in Q3 FY22. Operating margin of 19.0% expanded
from 8.5% in the prior year, primarily driven by sales leverage
including lapping mobility restrictions in China and prior year
amortization expenses. This expansion was offset by digital
investments and inflationary pressures.
Q3 Channel
Development Segment Results
Quarter Ended
Change (%)
($ in millions)
Jul 2, 2023
Jul 3, 2022
Revenues
$448.8
$479.7
(6)%
Operating Income
$208.0
$191.7
9%
Operating Margin
46.3%
40.0%
630 bps
Net revenues for the Channel Development segment decreased 6%
over Q3 FY22 to $448.8 million in Q3 FY23, driven by a decline in
revenue in the Global Coffee Alliance.
Operating income increased to $208.0 million in Q3 FY23 compared
to $191.7 million in Q3 FY22. Operating margin of 46.3% expanded
from 40.0% in the prior year, primarily driven by growth in our
North American Coffee Partnership joint venture income and mix
shift.
Fiscal 2023 Financial
Targets
The company will discuss fiscal year 2023 financial targets
during its Q3 FY23 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 Updates
- In May, the company opened the first store in Paraguay,
entering the 24th market in Latin America and the Caribbean and
86th market globally, underscoring the company's commitment to the
Latin America & Caribbean region and the opportunity for growth
globally.
- In May, the company celebrated over 10,000 partners (employees)
that graduated through the Starbucks College Achievement Plan to
date, offering eligible partners 100 percent upfront tuition
coverage for a first-time bachelor's degree through Arizona State
University's online degree program.
- In May, the company introduced Starbucks® Green Apron Blend, a
new coffee blend created by Starbucks retail partners. As part of
an ongoing commitment to partners, Starbucks is designating $5 for
each one-pound whole bean bag of Starbucks Green Apron Blend sold
from participating stores to the Starbucks Caring Unites Partners
Fund, a Starbucks program for eligible partners in times of
need.
- In May, the company opened its first store in Rome, which
overlooks Piazza Montecitorio, in partnership with Percassi, our
Italian licensee partner.
- In June, the company announced plans to expand their farm
capability beyond coffee to include a new sustainability learning
and innovation lab at Hacienda Alsacia in Costa Rica, the global
agronomy headquarters for research and development. The lab will
serve as a learning hub for Starbucks partners and industry leaders
to innovate and scale sustainable solutions to some of the world's
most challenging issues, helping to ensure the future of coffee for
all.
- In June, the company launched Frozen Lemonade Starbucks®
Refreshers beverages to their permanent menu. The launch included
three different beverage flavors, all based on their signature
Starbucks Refreshers beverages line-up.
- In Q3 FY23, the company repurchased 2.0 million shares of
common stock valued at $204.0 million, bringing total shares
repurchased this fiscal year to $699.3 million; approximately 45.7
million shares remain available for purchase under the current
authorization.
- In July, the company announced Arthur Valdez as executive vice
president and global supply and customer solutions officer.
- The board of directors declared a cash dividend of $0.53 per
share, payable on August 25, 2023, to shareholders of record on
August 11, 2023. The company had 53 consecutive quarters of
dividend payouts with CAGR greater than 20%.
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, September 1, 2023.
About Starbucks
Since 1971, Starbucks Coffee Company has been committed to
ethically sourcing and roasting high-quality arabica coffee. Today,
with more than 37,000 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 subsequent filings with the
SEC, as well as:
- our ability to preserve, grow and leverage our brands;
- 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;
- 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 Reinvention 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, energy, water, raw materials, or product ingredients;
- the impact of significant increases in logistics costs;
- 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 considerations related to our business in China and
any potential negative effects stemming from the Russian invasion
of Ukraine;
- 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, 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 personal 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 and the
Inflation Reduction Act of 2022;
- 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.
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
Jul 2, 2023
Jul 3, 2022
% Change
Jul 2, 2023
Jul 3, 2022
As a % of total net
revenues
Net revenues:
Company-operated stores
$
7,556.7
$
6,675.5
13.2
%
82.4
%
81.9
%
Licensed stores
1,136.2
956.8
18.8
12.4
11.7
Other
475.4
517.8
(8.2
)
5.2
6.4
Total net revenues
9,168.3
8,150.1
12.5
100.0
100.0
Product and distribution costs
2,864.2
2,613.6
9.6
31.2
32.1
Store operating expenses
3,697.6
3,302.5
12.0
40.3
40.5
Other operating expenses
138.7
135.1
2.7
1.5
1.7
Depreciation and amortization expenses
342.2
356.8
(4.1
)
3.7
4.4
General and administrative expenses
604.3
486.7
24.2
6.6
6.0
Restructuring and impairments
7.1
14.0
(49.3
)
0.1
0.2
Total operating expenses
7,654.1
6,908.7
10.8
83.5
84.8
Income from equity investees
69.7
54.1
28.8
0.8
0.7
Operating income
1,583.9
1,295.5
22.3
17.3
15.9
Interest income and other, net
21.3
19.8
7.6
0.2
0.2
Interest expense
(140.9
)
(123.1
)
14.5
(1.5
)
(1.5
)
Earnings before income taxes
1,464.3
1,192.2
22.8
16.0
14.6
Income tax expense
322.4
278.5
15.8
3.5
3.4
Net earnings including noncontrolling
interests
1,141.9
913.7
25.0
12.5
11.2
Net earnings attributable to
noncontrolling interests
0.2
0.8
(75.0
)
0.0
0.0
Net earnings attributable to
Starbucks
$
1,141.7
$
912.9
25.1
12.5
%
11.2
%
Net earnings per common share -
diluted
$
0.99
$
0.79
25.3
%
Weighted avg. shares outstanding -
diluted
1,150.5
1,151.0
Cash dividends declared per share
$
0.53
$
0.49
Supplemental Ratios:
Store operating expenses as a % of
company-operated store revenues
48.9
%
49.5
%
Effective tax rate including
noncontrolling interests
22.0
%
23.4
%
Three Quarters Ended
Three Quarters Ended
Jul 2, 2023
Jul 3, 2022
% Change
Jul 2, 2023
Jul 3, 2022
As a % of total net
revenues
Net revenues:
Company-operated stores
$
21,782.4
$
19,674.7
10.7
%
81.9
%
82.5
%
Licensed stores
3,325.2
2,657.0
25.1
12.5
11.1
Other
1,494.4
1,504.4
(0.7
)
5.6
6.3
Total net revenues
26,602.0
23,836.1
11.6
100.0
100.0
Product and distribution costs
8,476.1
7,606.4
11.4
31.9
31.9
Store operating expenses
10,998.9
10,017.1
9.8
41.3
42.0
Other operating expenses
394.1
338.4
16.5
1.5
1.4
Depreciation and amortization expenses
1,011.2
1,090.5
(7.3
)
3.8
4.6
General and administrative expenses
1,805.6
1,494.0
20.9
6.8
6.3
Restructuring and impairments
21.8
10.9
100.0
0.1
0.0
Total operating expenses
22,707.7
20,557.3
10.5
85.4
86.2
Income from equity investees
179.0
143.5
24.7
0.7
0.6
Gain from sale of assets
91.3
—
nm
0.3
—
Operating income
4,164.6
3,422.3
21.7
15.7
14.4
Interest income and other, net
51.1
66.0
(22.6
)
0.2
0.3
Interest expense
(406.9
)
(357.6
)
13.8
(1.5
)
(1.5
)
Earnings before income taxes
3,808.8
3,130.7
21.7
14.3
13.1
Income tax expense
903.4
725.9
24.5
3.4
3.0
Net earnings including noncontrolling
interests
2,905.4
2,404.8
20.8
10.9
10.1
Net earnings attributable to
noncontrolling interests
0.2
1.5
(86.7
)
0.0
0.0
Net earnings attributable to
Starbucks
$
2,905.2
$
2,403.3
20.9
10.9
%
10.1
%
Net earnings per common share -
diluted
$
2.52
$
2.07
21.7
%
Weighted avg. shares outstanding -
diluted
1,152.0
1,160.5
Cash dividends declared per share
$
1.59
$
1.47
Supplemental Ratios:
Store operating expenses as a % of
company-operated store revenues
50.5
%
50.9
%
Effective tax rate including
noncontrolling interests
23.7
%
23.2
%
Segment Results
(in millions)
North America
Jul 2, 2023
Jul 3, 2022
%
Change
Jul 2, 2023
Jul 3, 2022
Quarter
Ended
As a % of North
America
total net revenues
Net revenues:
Company-operated stores
$
6,080.6
$
5,513.2
10.3
%
90.2
%
91.0
%
Licensed stores
655.8
544.2
20.5
9.7
9.0
Other
1.4
1.0
40.0
0.0
0.0
Total net revenues
6,737.8
6,058.4
11.2
100.0
100.0
Product and distribution costs
1,885.4
1,713.2
10.1
28.0
28.3
Store operating expenses
2,990.1
2,670.0
12.0
44.4
44.1
Other operating expenses
67.8
55.4
22.4
1.0
0.9
Depreciation and amortization expenses
230.4
201.2
14.5
3.4
3.3
General and administrative expenses
93.1
76.5
21.7
1.4
1.3
Restructuring and impairments
7.1
12.0
(40.8
)
0.1
0.2
Total operating expenses
5,273.9
4,728.3
11.5
78.3
78.0
Operating income
$
1,463.9
$
1,330.1
10.1
%
21.7
%
22.0
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
49.2
%
48.4
%
Three Quarters
Ended
Net revenues:
Company-operated stores
$
17,693.9
$
15,663.6
13.0
%
90.0
%
90.9
%
Licensed stores
1,973.2
1,567.1
25.9
10.0
9.1
Other
2.6
5.7
(54.4
)
0.0
0.0
Total net revenues
19,669.7
17,236.4
14.1
100.0
100.0
Product and distribution costs
5,624.7
4,906.5
14.6
28.6
28.5
Store operating expenses
8,973.2
7,997.8
12.2
45.6
46.4
Other operating expenses
196.7
150.7
30.5
1.0
0.9
Depreciation and amortization expenses
673.5
603.2
11.7
3.4
3.5
General and administrative expenses
286.6
224.5
27.7
1.5
1.3
Restructuring and impairments
20.7
8.9
132.6
0.1
0.1
Total operating expenses
15,775.4
13,891.6
13.6
80.2
80.6
Operating income
$
3,894.3
$
3,344.8
16.4
%
19.8
%
19.4
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
50.7
%
51.1
%
International
Jul 2, 2023
Jul 3, 2022
%
Change
Jul 2, 2023
Jul 3, 2022
Quarter
Ended
As a % of
International
total net revenues
Net revenues:
Company-operated stores
$
1,476.1
$
1,162.3
27.0
%
74.8
%
73.3
%
Licensed stores
480.4
412.6
16.4
24.3
26.0
Other
16.4
9.8
67.3
0.8
0.6
Total net revenues
1,972.9
1,584.7
24.5
100.0
100.0
Product and distribution costs
677.3
550.3
23.1
34.3
34.7
Store operating expenses
707.5
632.5
11.9
35.9
39.9
Other operating expenses
54.3
60.2
(9.8
)
2.8
3.8
Depreciation and amortization expenses
83.1
125.0
(33.5
)
4.2
7.9
General and administrative expenses
77.0
81.8
(5.9
)
3.9
5.2
Total operating expenses
1,599.2
1,449.8
10.3
81.1
91.5
Income from equity investees
0.8
0.4
100.0
0.0
0.0
Operating income
$
374.5
$
135.3
176.8
%
19.0
%
8.5
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
47.9
%
54.4
%
Three Quarters
Ended
Net revenues:
Company-operated stores
$
4,088.5
$
4,011.1
1.9
%
74.2
%
77.7
%
Licensed stores
1,352.0
1,089.9
24.0
24.5
21.1
Other
67.3
62.1
8.4
1.2
1.2
Total net revenues
5,507.8
5,163.1
6.7
100.0
100.0
Product and distribution costs
1,903.8
1,746.8
9.0
34.6
33.8
Store operating expenses
2,025.7
2,019.3
0.3
36.8
39.1
Other operating expenses
155.0
138.8
11.7
2.8
2.7
Depreciation and amortization expenses
250.8
391.4
(35.9
)
4.6
7.6
General and administrative expenses
244.9
252.7
(3.1
)
4.4
4.9
Total operating expenses
4,580.2
4,549.0
0.7
83.2
88.1
Income from equity investees
2.0
1.6
25.0
0.0
0.0
Operating income
$
929.6
$
615.7
51.0
%
16.9
%
11.9
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
49.5
%
50.3
%
Channel Development
Jul 2, 2023
Jul 3, 2022
%
Change
Jul 2, 2023
Jul 3, 2022
Quarter
Ended
As a % of
Channel Development
total net revenues
Net revenues
$
448.8
$
479.7
(6.4
)%
Product and distribution costs
293.0
325.8
(10.1
)
65.3
%
67.9
%
Other operating expenses
14.8
13.6
8.8
3.3
2.8
Depreciation and amortization expenses
0.0
0.0
nm
0.0
0.0
General and administrative expenses
1.9
2.3
(17.4
)
0.4
0.5
Total operating expenses
309.7
341.7
(9.4
)
69.0
71.2
Income from equity investees
68.9
53.7
28.3
15.4
11.2
Operating income
$
208.0
$
191.7
8.5
%
46.3
%
40.0
%
Three Quarters
Ended
Net revenues
$
1,407.7
$
1,359.9
3.5
%
Product and distribution costs
932.7
885.2
5.4
66.3
%
65.1
%
Other operating expenses
40.6
35.7
13.7
2.9
2.6
Depreciation and amortization expenses
0.1
0.1
nm
0.0
0.0
General and administrative expenses
6.2
8.1
(23.5
)
0.4
0.6
Total operating expenses
979.6
929.1
5.4
69.6
68.3
Income from equity investees
177.0
141.9
24.7
12.6
10.4
Gain from sale of assets
91.3
—
nm
6.5
—
Operating income
$
696.4
$
572.7
21.6
%
49.5
%
42.1
%
Corporate and Other
Jul 2, 2023
Jul 3, 2022
%
Change
Quarter
Ended
Net revenues
$
8.8
$
27.3
(67.8
)%
Product and distribution costs
8.5
24.3
(65.0
)
Other operating expenses
1.8
5.9
(69.5
)
Depreciation and amortization expenses
28.7
30.6
(6.2
)
General and administrative expenses
432.3
326.1
32.6
Restructuring and impairments
—
2.0
nm
Total operating expenses
471.3
388.9
21.2
Operating loss
$
(462.5
)
$
(361.6
)
27.9
%
Three Quarters
Ended
Net revenues
$
16.8
$
76.7
(78.1
)%
Product and distribution costs
14.9
67.9
(78.1
)
Other operating expenses
1.8
13.2
(86.4
)
Depreciation and amortization expenses
86.8
95.8
(9.4
)
General and administrative expenses
1,267.9
1,008.7
25.7
Restructuring and impairments
1.1
2.0
(45.0
)
Total operating expenses
1,372.5
1,187.6
15.6
Operating loss
$
(1,355.7
)
$
(1,110.9
)
22.0
%
Corporate and Other primarily consists of our unallocated
corporate operating expenses and Evolution Fresh prior to its sale
in Q4 FY22.
STARBUCKS CORPORATION
CONSOLIDATED BALANCE
SHEETS
(unaudited, in millions, except
per share data)
Jul 2, 2023
Oct 2, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
3,357.0
$
2,818.4
Short-term investments
263.0
364.5
Accounts receivable, net
1,140.2
1,175.5
Inventories
1,987.0
2,176.6
Prepaid expenses and other current
assets
423.5
483.7
Total current assets
7,170.7
7,018.7
Long-term investments
238.6
279.1
Equity investments
384.4
311.2
Property, plant and equipment, net
7,053.5
6,560.5
Operating lease, right-of-use asset
8,178.5
8,015.6
Deferred income taxes, net
1,790.3
1,799.7
Other long-term assets
541.7
554.2
Other intangible assets
124.4
155.9
Goodwill
3,250.9
3,283.5
TOTAL ASSETS
$
28,733.0
$
27,978.4
LIABILITIES AND SHAREHOLDERS'
EQUITY/(DEFICIT)
Current liabilities:
Accounts payable
$
1,503.5
$
1,441.4
Accrued liabilities
2,060.5
2,137.1
Accrued payroll and benefits
755.4
761.7
Current portion of operating lease
liability
1,265.2
1,245.7
Stored value card liability and current
portion of deferred revenue
1,759.6
1,641.9
Short-term debt
34.5
175.0
Current portion of long-term debt
1,835.9
1,749.0
Total current liabilities
9,214.6
9,151.8
Long-term debt
13,544.4
13,119.9
Operating lease liability
7,691.2
7,515.2
Deferred revenue
6,152.5
6,279.7
Other long-term liabilities
471.9
610.5
Total liabilities
37,074.6
36,677.1
Shareholders' deficit:
Common stock ($0.001 par value) —
authorized, 2,400.0 shares; issued and outstanding, 1,145.4 and
1,147.9 shares, respectively
1.1
1.1
Additional paid-in capital
38.3
205.3
Retained deficit
(7,610.5
)
(8,449.8
)
Accumulated other comprehensive
income/(loss)
(777.5
)
(463.2
)
Total shareholders’ deficit
(8,348.6
)
(8,706.6
)
Noncontrolling interests
7.0
7.9
Total deficit
(8,341.6
)
(8,698.7
)
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY/(DEFICIT)
$
28,733.0
$
27,978.4
STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited and in millions)
Three Quarters Ended
Jul 2, 2023
Jul 3, 2022
OPERATING ACTIVITIES:
Net earnings including noncontrolling
interests
$
2,905.4
$
2,404.8
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
1,073.8
1,169.0
Deferred income taxes, net
(30.2
)
35.0
Income earned from equity method
investees
(182.7
)
(175.0
)
Distributions received from equity method
investees
146.6
145.9
Gain on sale of assets
(91.3
)
—
Stock-based compensation
228.5
206.6
Non-cash lease costs
998.4
1,090.4
Loss on retirement and impairment of
assets
79.1
89.6
Other
22.8
(44.7
)
Cash provided by/(used in) changes in
operating assets and liabilities:
Accounts receivable
44.3
(245.5
)
Inventories
194.5
(557.3
)
Accounts payable
47.3
341.7
Deferred revenue
(8.2
)
32.7
Operating lease liability
(1,056.1
)
(1,201.4
)
Other operating assets and liabilities
(308.5
)
5.8
Net cash provided by operating
activities
4,063.7
3,297.6
INVESTING ACTIVITIES:
Purchases of investments
(357.1
)
(117.3
)
Sales of investments
2.0
72.6
Maturities and calls of investments
515.0
59.5
Additions to property, plant and
equipment
(1,634.1
)
(1,295.4
)
Proceeds from sale of assets
110.0
—
Other
(42.0
)
(95.7
)
Net cash used in investing activities
(1,406.2
)
(1,376.3
)
FINANCING ACTIVITIES:
Net (payments)/proceeds from issuance of
commercial paper
(175.0
)
200.0
Net proceeds from issuance of short-term
debt
83.7
38.9
Repayments of short-term debt
(46.7
)
(38.9
)
Net proceeds from issuance of long-term
debt
1,497.8
1,498.1
Repayments of long-term debt
(1,000.0
)
(1,000.0
)
Proceeds from issuance of common stock
149.4
75.5
Cash dividends paid
(1,824.8
)
(1,701.1
)
Repurchase of common stock
(699.3
)
(4,013.0
)
Minimum tax withholdings on share-based
awards
(87.0
)
(123.5
)
Other
(11.0
)
(9.2
)
Net cash used in financing activities
(2,112.9
)
(5,073.2
)
Effect of exchange rate changes on cash
and cash equivalents
(6.0
)
(126.3
)
Net increase/(decrease) in cash and cash
equivalents
538.6
(3,278.2
)
CASH AND CASH EQUIVALENTS:
Beginning of period
2,818.4
6,455.7
End of period
$
3,357.0
$
3,177.5
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest, net of capitalized interest
$
369.6
$
344.9
Income taxes
$
939.8
$
911.2
Supplemental
Information
The following supplemental information is provided for
historical and comparative purposes.
U.S. Supplemental Data
Quarter Ended
Change (%)
($ in millions)
Jul 2, 2023
Jul 3, 2022
Revenues
$6,272.3
$5,622.9
12%
Change in Comparable Store Sales (1)
7%
9%
Change in Transactions
1%
0%
Change in Ticket
6%
8%
Store Count
16,144
15,650
3%
(1)
Includes only Starbucks® company-operated
stores open 13 months or longer. Comparable store sales exclude
Siren Retail stores. Stores that are temporarily closed or
operating at reduced hours due to the COVID-19 pandemic remain in
comparable store sales while stores identified for permanent
closure have been removed.
China Supplemental Data
Quarter Ended
Change (%)
($ in millions)
Jul 2, 2023
Jul 3, 2022
Revenues
$821.9
$544.5
51%
Change in Comparable Store Sales (1)
46%
(44)%
Change in Transactions
48%
(43)%
Change in Ticket
(1)%
(1)%
Store Count
6,480
5,761
12%
(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.
Store Data
Net stores opened/(closed) and
transferred during the period
Quarter Ended
Three Quarters Ended
Stores open as of
Jul 2, 2023
Jul 3, 2022
Jul 2, 2023
Jul 3, 2022
Jul 2, 2023
Jul 3, 2022
North America:
Company-operated stores
105
96
236
189
10,452
10,050
Licensed stores
5
28
61
35
7,140
7,000
Total North America
110
124
297
224
17,592
17,050
International:
Company-operated stores
272
130
543
445
8,580
7,717
Licensed stores
206
64
671
446
11,050
10,181
Total International
478
194
1,214
891
19,630
17,898
Total Company
588
318
1,511
1,115
37,222
34,948
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 general and administrative expenses (G&A),
non-GAAP operating income, non-GAAP operating income growth,
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, non-GAAP operating margin,
non-GAAP effective tax rate and non-GAAP earnings per share are
general and administrative expenses, operating income, operating
income growth, 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, primarily 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.
Non-GAAP G&A, non-GAAP operating income, non-GAAP operating
income growth, non-GAAP operating margin, non-GAAP effective tax
rate and non-GAAP earnings 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.
STARBUCKS CORPORATION
RECONCILIATION OF SELECTED
GAAP MEASURES TO NON-GAAP MEASURES
(unaudited, in millions except
per share data)
Quarter Ended (1)
Consolidated
Jul 2, 2023
Jul 3, 2022
Change
Operating income, as reported (GAAP)
$
1,583.9
$
1,295.5
22.3%
Restructuring and impairment costs (2)
7.1
14.0
Transaction and integration-related costs
(3)
—
63.5
Non-GAAP operating income
$
1,591.0
$
1,373.0
15.9%
Operating margin, as reported (GAAP)
17.3
%
15.9
%
140 bps
Restructuring and impairment costs (2)
0.1
0.2
Transaction and integration-related costs
(3)
—
0.8
Non-GAAP operating margin
17.4
%
16.9
%
50 bps
Diluted net earnings per share, as
reported (GAAP)
$
0.99
$
0.79
25.3%
Restructuring and impairment costs (2)
0.01
0.01
Transaction and integration-related costs
(3)
—
0.06
Income tax effect on Non-GAAP adjustments
(4)
0.00
(0.02
)
Non-GAAP EPS
$
1.00
$
0.84
19.0%
(1)
Certain numbers may not foot due to
rounding convention.
(2)
Represents costs associated with our
restructuring efforts.
(3)
The third quarter of fiscal 2022 includes
amortization expense of acquired intangible assets associated with
the acquisition of East China and other expenses associated with
our Russia market exit.
(4)
Adjustments were determined based on the
nature of the underlying items and their relevant jurisdictional
tax rates.
Q3 QTD FY23 NON-GAAP
DISCLOSURE DETAILS
(in millions and before income
taxes)
Q3 QTD FY23
North America
International
Channel Development
Corporate and Other
Consolidated
Statement of Earnings Line Item
Restructuring and Impairment
Costs
Transaction and
Integration-Related Costs
Transaction and
Integration-Related Costs
Transaction and
Integration-Related Costs
Restructuring and Impairment
Costs
Total Non-GAAP
Adjustment
Restructuring and impairments
$
7.1
$
—
$
—
$
—
$
—
$
7.1
Total impact to operating income
$
(7.1
)
$
—
$
—
$
—
$
—
$
(7.1
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230801903492/en/
Starbucks Contact, Investor Relations: Tiffany Willis
investorrelations@starbucks.com
Starbucks Contact, Media: Reggie Borges
press@starbucks.com
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