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 $1.00 Exceeding Expectations Globally Q3 Active U.S.Starbucks® Rewards Membership Reaches 31.4 Million, Up 15% Over Prior Year
SEATTLE--(BUSINESS WIRE)-- Starbucks Corporation (Nasdaq: SBUX) today reported financial results for its 13-week fiscal third quarter ended July 2, 2023. GAAP results in fiscal 2023 and fiscal 2022 include items that are excluded from non-GAAP results. Please refer to the reconciliation of GAAP measures to non-GAAP measures at the end of this release for more information.
Q3 Fiscal 2023 Highlights
“Our strong third quarter results point to all-around momentum in the business, and reflect the significant progress we are making against our Reinvention Plan. Our results were also amplified by the distinctive competitive advantages that set us apart in the market,” commented Laxman Narasimhan, chief executive officer. “Starbucks is an iconic, durable brand and I am confident in the multiple paths available for the company to drive significant growth and margin improvement, which position us well to create outsized long-term shareholder value,” Narasimhan added.
“I am pleased with our third quarter performance, which beat our expectations, including our International segment. Our performance was bolstered by the progress we are making against our strategies, specifically our Reinvention Plan, and its unfolding into tangible financial results, as we delivered earnings growth of 19% well above our revenue growth of 12%,” commented Rachel Ruggeri, chief financial officer. “The momentum we have built and strength we are seeing globally, gives us the confidence and optimism to close our fiscal year strong,” Ruggeri added.
Q3 North America Segment Results |
|
|
|
|
|
| Quarter Ended |
| Change (%) | ||
($ 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
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:
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 Willisinvestorrelations@starbucks.com
Starbucks Contact, Media: Reggie Borgespress@starbucks.com
Source: Starbucks Corporation