Consolidated Net Revenues Up 15% to a Q2 record
$7.6 Billion Q2 Comparable Store Sales Up 7% Globally; Up 12% in
the U.S. and Double Digits Internationally, ex-China Q2 GAAP EPS
$0.58; Non-GAAP EPS of $0.59, Despite Lockdowns in China and
Inflationary Headwinds Active Starbucks® Rewards Membership in Q2
Up 17% in the U.S. to 26.7 Million Members
Starbucks Corporation (NASDAQ: SBUX) today reported financial
results for its 13-week fiscal second quarter ended April 3, 2022.
GAAP results in fiscal 2022 and fiscal 2021 include items that are
excluded from non-GAAP results. Please refer to the reconciliation
of GAAP measures to non-GAAP measures at the end of this release
for more information.
Q2 Fiscal 2022
Highlights
- Global comparable store sales increased 7%, driven by a 4%
increase in average ticket and a 3% increase in comparable
transactions
- North America and U.S. comparable store sales increased 12%,
driven by a 7% increase in average ticket and a 5% increase in
comparable transactions
- International comparable store sales decreased 8%, driven by a
5% decline in average ticket and a 3% decline in comparable
transactions; China comparable store sales decreased 23%, driven by
a 20% decline in comparable transactions and a 4% decline in
average ticket
- International and China comparable store sales include the
unfavorable impact of approximately 3% and 4%, respectively, from
lapping prior-year value-added tax (“VAT”) exemptions in China
- The company opened 313 net new stores in Q2, ending the period
with 34,630 stores globally: 51% company-operated and 49% licensed
- At the end of Q2, stores in the U.S. and China comprised 61% of
the company’s global portfolio, with 15,544 stores in the U.S and
5,654 stores in China
- Consolidated net revenues up 15% to a Q2 record $7.6
billion
- GAAP operating margin of 12.4% decreased 240 basis points from
14.8% in the prior year, primarily driven by inflationary
pressures, mobility restrictions and lockdowns in China and
investments in retail store partner wages and benefits, partially
offset by pricing in North America and lapping restructuring costs
in the prior year
- Non-GAAP operating margin of 13.0% decreased from 16.0% in the
prior year
- GAAP earnings per share of $0.58 grew 4% over the prior year
- Non-GAAP earnings per share of $0.59, down from $0.61 in the
prior year
- Starbucks® Rewards loyalty program 90-day active members in the
U.S. increased to 26.7 million, up 17% year-over-year
“We are single-mindedly focused on enhancing our core U.S.
business through our partner, customer and store experiences. Given
record demand and changes in customer behavior we are accelerating
our store growth plans, primarily adding high-returning
drive-thrus, and accelerating renovation programs so we can better
meet demand and serve our customers where they are,” said Howard
Schultz, interim chief executive officer. “The investments we are
making in our people and the company will add the capacity we need
in our U.S. stores today and position us ahead of the coming growth
curve ahead,” Schultz added.
“We are confident that the investments in our partners, our
stores and our brand that we announced today will deliver returns
in excess of historic levels and accelerate our growth long into
the future,” commented Rachel Ruggeri, chief financial officer.
Q2 North America Segment Results
(1)
Quarter Ended
Change (%)
($ in millions)
Apr 3, 2022
Mar 28, 2021
Change in Comparable Store Sales (2)
12%
9%
Change in Transactions
5%
(10)%
Change in Ticket
7%
22%
Store Count
16,926
16,701
1%
Revenues
$5,445.7
$4,638.5
17%
Operating Income
$931.5
$896.4
4%
Operating Margin
17.1%
19.3%
(220) bps
(1)
North America store count,
revenues, operating income and operating margin for the quarter
ended March 28, 2021, have been restated to conform with current
period presentation.
(2)
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 17% over Q2 FY21
to $5.4 billion in Q2 FY22, primarily driven by a 12% increase in
company-operated comparable store sales, driven by a 7% increase in
average ticket and a 5% increase in transactions, performance of
new stores over the past 12 months and strength in our licensed
store sales.
Operating income increased to $931.5 million in Q2 FY22, up from
$896.4 million in Q2 FY21. Operating margin of 17.1% contracted
from 19.3% in the prior year, primarily driven by higher supply
chain costs due to inflationary pressure, investments in labor
including enhanced store partner wages and higher spend on new
partner training, onboarding and support costs to address labor
market conditions, as well as lapping prior year government
subsidies. This contraction was partially offset by pricing, sales
leverage and lower restructuring expenses primarily associated with
the North America Trade Area Transformation.
Q2 International Segment Results
(1)
Quarter Ended
Change (%)
($ in millions)
Apr 3, 2022
Mar 28, 2021
Change in Comparable Store Sales (2)
(8)%
35%
Change in Transactions
(3)%
26%
Change in Ticket
(5)%
7%
Store Count
17,704
16,242
9%
Revenues
$1,702.4
$1,637.0
4%
Operating Income
$180.7
$258.1
(30)%
Operating Margin
10.6%
15.8%
(520) bps
(1)
International store count,
revenues, operating income and operating margin for the quarter
ended March 28, 2021, have been restated to conform with current
period presentation.
(2)
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 second quarter of
fiscal 2022, the International segment's comparable store sales
included a 3% adverse impact from lapping the prior-year
value-added tax benefit in China.
Net revenues for the International segment grew 4% over Q2 FY21
to $1.7 billion in Q2 FY22, driven by 1,462 net new store openings,
or 9% store growth, over the past 12 months, higher product sales
to and royalty revenues from our licensees and the conversion of
the Korea market from a joint venture to a fully licensed market in
Q4 FY21. These increases were partially offset by an 8% decline in
comparable store sales, primarily attributable to COVID-19 related
restrictions in China and lapping the prior-year VAT benefit in
China, as well as the impact of unfavorable foreign currency
translation.
Operating income decreased to $180.7 million in Q2 FY22 compared
to $258.1 million in Q2 FY21. Operating margin of 10.6% contracted
from 15.8% in the prior year, primarily driven by investments in
strategic initiatives and store partner wages, lower government
subsidies as well as higher product and distribution costs from a
sales mix shift and inflation. This contraction was partially
offset by lower amortization expenses.
Q2 Channel Development Segment
Results
Quarter Ended
Change (%)
($ in millions)
Apr 3, 2022
Mar 28, 2021
Revenues
$463.1
$369.9
25%
Operating Income
$197.9
$172.6
15%
Operating Margin
42.7%
46.7%
(400) bps
Net revenues for the Channel Development segment of $463.1
million in Q2 FY22 were 25% higher relative to Q2 FY21. The
increase was primarily driven by growth in the Global Coffee
Alliance and the International ready-to-drink businesses.
Operating income increased to $197.9 million in Q2 FY22, up from
$172.6 million in Q2 FY21. Operating margin of 42.7% decreased from
46.7% in the prior year, primarily due to business mix shift driven
by growth in the Global Coffee Alliance.
Fiscal 2022 Financial
Targets
The company will discuss fiscal year 2022 financial targets
during its Q2 FY22 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 February, the company executed a $1.5 billion bond issuance.
The company intends to use the net proceeds from the sale of the
securities for general corporate purposes, including repayment of
upcoming debt maturities.
- In February, the company announced expanded hometown efforts in
the greater Seattle area to support chronic homelessness, including
a nearly $500,000 commitment in programming and partnerships
throughout 2022.
- In March, the company hosted its 30th Annual Meeting of
Shareholders. During the virtual meeting, senior leadership and
partners from around the world recognized and celebrated the
resilience of green apron partners who have continued to serve
communities throughout the COVID-19 pandemic.
- As a part of the Annual Meeting of Shareholders, the company
highlighted new sustainability innovations including efforts to
reduce waste through innovative reusable cup programs, a new waste
and recycling app to help partners navigate complex and unique
store recycling guidelines and a pilot program with Volvo Cars to
electrify the driving route from the Colorado Rockies to
Seattle.
- In March, also as a part of the Annual Meeting of Shareholders,
the company announced that Kevin Johnson, former president and
chief executive officer, would retire from his position effective
April 4, 2022. The Board appointed founder Howard Schultz as
interim chief executive officer, effective April 4, 2022, with
Schultz rejoining the company’s Board of Directors. Johnson
continues to serve as a Starbucks partner and consultant to the
company and Board of Directors through the end of fiscal 2022.
- In April, the company published its 2021 Global Environmental
and Social Impact report for the 20th consecutive year.
- The Board of Directors declared a cash dividend of $0.49 per
share, payable on May 27, 2022, to shareholders of record as of May
13, 2022.
- In April, the company announced a suspension of its share
repurchase program. Prior to the announcement, 5.2 million shares
of common stock were repurchased in Q2 FY22; approximately 52.6
million shares remain available for purchase under the current
authorization.
Conference Call
Starbucks will hold a conference call today at 2:00 p.m. Pacific
Time, which will be hosted by Howard Schultz, interim ceo, and
other members of Starbucks executive leadership team. The call will
be webcast and can be accessed at http://investor.starbucks.com. A
replay of the webcast will be available until end of day Friday,
June 3, 2022.
About Starbucks
Since 1971, Starbucks Coffee Company has been committed to
ethically sourcing and roasting high-quality arabica coffee. Today,
with more than 34,000 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 “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. These
statements include statements relating to trends in or expectations
relating to the effects of our existing and any future initiatives,
strategies, investments and plans, as well as trends in or
expectations regarding our financial results and long-term growth
model and drivers; our operations in the U.S. and China; our
environmental, social and governance efforts; our partners;
economic and consumer trends, including the impact of inflationary
pressures; the conversion of several market operations to fully
licensed models; our plans for streamlining our operations,
including store openings, closures and changes in store formats and
models; expanding our licensing to Nestlé of our consumer packaged
goods and Foodservice businesses and its effects on our Channel
Development segment results; tax rates; business opportunities and
expansion; strategic acquisitions; our dividends programs;
commodity costs and our mitigation strategy; our liquidity, cash
flow from operations, investments, borrowing capacity and use of
proceeds; continuing compliance with our covenants under our credit
facilities and commercial paper program; repatriation of cash to
the U.S.; the likelihood of the issuance of additional debt and the
applicable interest rate; the continuing impact of the COVID-19
pandemic on our financial results and future availability of
governmental subsidies for COVID-19 or other public health events;
our ceo transition; our share repurchase program; our use of cash
and cash requirements; the expected effects of new accounting
pronouncements and the estimated impact of changes in U.S. tax law,
including on tax rates, investments funded by these changes and
potential outcomes; and effects of legal proceedings. Such
statements are based on currently available operating, financial
and competitive information and are subject to various 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 related disruptions to
our business; 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;
the resurgence of COVID-19 infections and the circulation of novel
variants of COVID-19; 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; new initiatives and plans or
revisions to existing initiatives or plans; our ability to obtain
financing on acceptable terms; the acceptance of the Company’s
products by our customers, evolving consumer preferences and tastes
and changes in consumer spending behavior; partner investments,
changes in the availability and cost of labor including any union
organizing efforts and our responses to such efforts; failure to
attract or retain key executive or employee talent; significant
increased logistics costs; inflationary pressures; the impact of
competition; inherent risks of operating a global business
including any potential negative effects stemming from the Russian
invasion of Ukraine; 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 in
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. The company assumes no obligation
to update any of these forward-looking statements.
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
Apr 3, 2022
Mar 28, 2021
% Change
Apr 3, 2022
Mar 28, 2021
As a % of total net
revenues
Net revenues:
Company-operated stores
$
6,276.7
$
5,653.1
11.0
%
82.2
%
84.8
%
Licensed stores
849.5
595.0
42.8
11.1
8.9
Other
509.4
419.9
21.3
6.7
6.3
Total net revenues
7,635.6
6,668.0
14.5
100.0
100.0
Product and distribution costs
2,465.8
1,992.4
23.8
32.3
29.9
Store operating expenses
3,314.7
2,823.3
17.4
43.4
42.3
Other operating expenses
101.7
87.7
16.0
1.3
1.3
Depreciation and amortization expenses
367.7
366.7
0.3
4.8
5.5
General and administrative expenses
481.5
464.4
3.7
6.3
7.0
Restructuring and impairments
4.4
23.0
(80.9
)
0.1
0.3
Total operating expenses
6,735.8
5,757.5
17.0
88.2
86.3
Income from equity investees
49.1
77.1
(36.3
)
0.6
1.2
Operating income
948.9
987.6
(3.9
)
12.4
14.8
Interest income and other, net
46.3
17.3
167.6
0.6
0.3
Interest expense
(119.1
)
(115.0
)
3.6
(1.6
)
(1.7
)
Earnings before income taxes
876.1
889.9
(1.6
)
11.5
13.3
Income tax expense
201.1
230.5
(12.8
)
2.6
3.5
Net earnings including noncontrolling
interests
675.0
659.4
2.4
8.8
9.9
Net earnings attributable to
noncontrolling interests
0.5
—
nm
—
—
Net earnings attributable to
Starbucks
$
674.5
$
659.4
2.3
8.8
%
9.9
%
Net earnings per common share -
diluted
$
0.58
$
0.56
3.6
%
Weighted avg. shares outstanding -
diluted
1,153.9
1,184.8
Cash dividends declared per share
$
0.49
$
0.45
Supplemental Ratios:
Store operating expenses as a % of
company-operated store revenues
52.8
%
49.9
%
Effective tax rate including
noncontrolling interests
23.0
%
25.9
%
Two Quarters Ended
Two Quarters Ended
Apr 3, 2022
Mar 28, 2021
%
Change
Apr 3, 2022
Mar 28, 2021
As a % of total net
revenues
Net revenues:
Company-operated stores
$
12,999.1
$
11,379.6
14.2
%
82.9
%
84.8
%
Licensed stores
1,700.3
1,208.8
40.7
10.8
9.0
Other
986.6
829.1
19.0
6.3
6.2
Total net revenues
15,686.0
13,417.5
16.9
100.0
100.0
Product and distribution costs
4,992.7
4,041.5
23.5
31.8
30.1
Store operating expenses
6,714.6
5,690.7
18.0
42.8
42.4
Other operating expenses
203.4
179.5
13.3
1.3
1.3
Depreciation and amortization expenses
733.8
732.6
0.2
4.7
5.5
General and administrative expenses
1,007.3
936.5
7.6
6.4
7.0
Restructuring and impairments
(3.1
)
95.2
(103.3
)
—
0.7
Total operating expenses
13,648.7
11,676.0
16.9
87.0
87.0
Income from equity investees
89.4
159.7
(44.0
)
0.6
1.2
Operating income
2,126.7
1,901.2
11.9
13.6
14.2
Interest income and other, net
46.2
32.7
41.3
0.3
0.2
Interest expense
(234.4
)
(235.8
)
(0.6
)
(1.5
)
(1.8
)
Earnings before income taxes
1,938.5
1,698.1
14.2
12.4
12.7
Income tax expense
447.4
416.5
7.4
2.9
3.1
Net earnings including noncontrolling
interests
1,491.1
1,281.6
16.3
9.5
9.6
Net earnings attributable to
noncontrolling interests
0.7
—
nm
—
—
Net earnings attributable to
Starbucks
$
1,490.4
$
1,281.6
16.3
9.5
%
9.6
%
Net earnings per common share -
diluted
$
1.28
$
1.08
18.5
%
Weighted avg. shares outstanding -
diluted
1,165.2
1,183.9
Cash dividends declared per share
$
0.98
$
1.35
Supplemental Ratios:
Store operating expenses as a % of
company-operated store revenues
51.7
%
50.0
%
Effective tax rate including
noncontrolling interests
23.1
%
24.5
%
Segment Results (in
millions)
North America (1)
Apr 3, 2022
Mar 28, 2021
% Change
Apr 3, 2022
Mar 28, 2021
Quarter
Ended
As a % of North
America
total net revenues
Net revenues:
Company-operated stores
$
4,936.3
$
4,268.4
15.6
%
90.6
%
92.0
%
Licensed stores
507.0
368.1
37.7
9.3
7.9
Other
2.4
2.0
20.0
—
—
Total net revenues
5,445.7
4,638.5
17.4
100.0
100.0
Product and distribution costs
1,564.0
1,213.1
28.9
28.7
26.2
Store operating expenses
2,625.4
2,203.1
19.2
48.2
47.5
Other operating expenses
47.1
39.2
20.2
0.9
0.8
Depreciation and amortization expenses
202.0
186.0
8.6
3.7
4.0
General and administrative expenses
71.3
77.7
(8.2
)
1.3
1.7
Restructuring and impairments
4.4
23.0
(80.9
)
0.1
0.5
Total operating expenses
4,514.2
3,742.1
20.6
82.9
80.7
Operating income
$
931.5
$
896.4
3.9
%
17.1
%
19.3
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
53.2
%
51.6
%
Two Quarters
Ended
Net revenues:
Company-operated stores
$
10,150.4
$
8,553.2
18.7
%
90.8
%
91.8
%
Licensed stores
1,022.9
756.6
35.2
9.2
8.1
Other
4.7
4.4
6.8
—
—
Total net revenues
11,178.0
9,314.2
20.0
100.0
100.0
Product and distribution costs
3,193.4
2,473.5
29.1
28.6
26.6
Store operating expenses
5,327.7
4,442.1
19.9
47.7
47.7
Other operating expenses
95.3
80.7
18.1
0.9
0.9
Depreciation and amortization expenses
402.1
374.9
7.3
3.6
4.0
General and administrative expenses
148.0
148.5
(0.3
)
1.3
1.6
Restructuring and impairments
(3.1
)
95.2
(103.3
)
—
1.0
Total operating expenses
9,163.4
7,614.9
20.3
82.0
81.8
Operating income
$
2,014.6
$
1,699.3
18.6
%
18.0
%
18.2
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
52.5
%
51.9
%
(1)
North America licensed store revenues,
total net revenues, product and distribution costs, other operating
expenses, total operating expenses and operating income for the
quarter ended March 28, 2021, have been restated to conform with
current period presentation.
International (1)
Apr 3, 2022
Mar 28, 2021
% Change
Apr 3, 2022
Mar 28, 2021
Quarter
Ended
As a % of
International
total net revenues
Net revenues:
Company-operated stores
$
1,340.4
$
1,384.7
(3.2
) %
78.7
%
84.6
%
Licensed stores
342.5
226.9
50.9
20.1
13.9
Other
19.5
25.4
(23.2
)
1.1
1.6
Total net revenues
1,702.4
1,637.0
4.0
100.0
100.0
Product and distribution costs
580.5
528.0
9.9
34.1
32.3
Store operating expenses
689.3
620.2
11.1
40.5
37.9
Other operating expenses
39.5
32.0
23.4
2.3
2.0
Depreciation and amortization expenses
133.4
143.4
(7.0
)
7.8
8.8
General and administrative expenses
79.6
82.1
(3.0
)
4.7
5.0
Total operating expenses
1,522.3
1,405.7
8.3
89.4
85.9
Income from equity investees
0.6
26.8
(97.8
)
—
1.6
Operating income
$
180.7
$
258.1
(30.0
) %
10.6
%
15.8
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
51.4
%
44.8
%
Two Quarters
Ended
Net revenues:
Company-operated stores
$
2,848.7
$
2,826.4
0.8
%
79.6
%
85.2
%
Licensed stores
677.4
452.2
49.8
18.9
13.6
Other
52.3
40.4
29.5
1.5
1.2
Total net revenues
3,578.4
3,319.0
7.8
100.0
100.0
Product and distribution costs
1,196.4
1,064.2
12.4
33.4
32.1
Store operating expenses
1,386.9
1,248.6
11.1
38.8
37.6
Other operating expenses
78.7
67.6
16.4
2.2
2.0
Depreciation and amortization expenses
266.5
283.4
(6.0
)
7.4
8.5
General and administrative expenses
170.9
167.2
2.2
4.8
5.0
Total operating expenses
3,099.4
2,831.0
9.5
86.6
85.3
Income from equity investees
1.3
53.0
(97.5
)
—
1.6
Operating income
$
480.3
$
541.0
(11.2
) %
13.4
%
16.3
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
48.7
%
44.2
%
(1)
International licensed store revenues,
total net revenues, product and distribution costs, other operating
expenses, general and administrative expenses, total operating
expenses and operating income for the quarter ended March 28, 2021,
have been restated to conform with current period presentation
Channel Development
Apr 3, 2022
Mar 28, 2021
% Change
Apr 3, 2022
Mar 28, 2021
Quarter
Ended
As a % of
Channel Development
total net revenues
Net revenues
$
463.1
$
369.9
25.2
%
Product and distribution costs
300.5
231.9
29.6
64.9
%
62.7
%
Other operating expenses
10.7
13.1
(18.3
)
2.3
3.5
Depreciation and amortization expenses
—
0.3
(100.0
)
—
0.1
General and administrative expenses
2.5
2.3
8.7
0.5
0.6
Total operating expenses
313.7
247.6
26.7
67.7
66.9
Income from equity investees
48.5
50.3
(3.6
)
10.5
13.6
Operating income
$
197.9
$
172.6
14.7
%
42.7
%
46.7
%
Two Quarters
Ended
Net revenues
$
880.1
$
741.2
18.7
%
Product and distribution costs
559.3
465.4
20.2
63.5
%
62.8
%
Other operating expenses
22.0
24.1
(8.7
)
2.5
3.3
Depreciation and amortization expenses
—
0.6
(100.0
)
—
0.1
General and administrative expenses
5.8
4.5
28.9
0.7
0.6
Total operating expenses
587.1
494.6
18.7
66.7
66.7
Income from equity investees
88.1
106.7
(17.4
)
10.0
14.4
Operating income
$
381.1
$
353.3
7.9
%
43.3
%
47.7
%
Corporate and Other (1)
Apr 3, 2022
Mar 28, 2021
%
Change
Quarter
Ended
Net revenues
$
24.4
$
22.6
8.0
%
Product and distribution costs
20.8
19.4
7.2
Other operating expenses
4.4
3.4
29.4
Depreciation and amortization expenses
32.3
37.0
(12.7
)
General and administrative expenses
328.1
302.3
8.5
Total operating expenses
385.6
362.1
6.5
Operating loss
$
(361.2
)
$
(339.5
)
6.4
%
Two Quarters
Ended
Net revenues
$
49.5
$
43.1
14.8
%
Product and distribution costs
43.6
38.4
13.5
Other operating expenses
7.4
7.1
4.2
Depreciation and amortization expenses
65.2
73.7
(11.5
)
General and administrative expenses
682.6
616.3
10.8
Total operating expenses
798.8
735.5
8.6
Operating loss
$
(749.3
)
$
(692.4
)
8.2
%
(1)
Corporate and other general and
administrative expenses, total operating expenses and operating
loss for the quarter ended March 28, 2021, have been restated to
conform with current period presentation.
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)
Apr 3, 2022
Oct 3, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
3,913.4
$
6,455.7
Short-term investments
82.1
162.2
Accounts receivable, net
1,001.9
940.0
Inventories
1,920.0
1,603.9
Prepaid expenses and other current
assets
623.7
594.6
Total current assets
7,541.1
9,756.4
Long-term investments
285.6
281.7
Equity investments
270.8
268.5
Property, plant and equipment, net
6,460.8
6,369.5
Operating lease, right-of-use asset
8,170.2
8,236.0
Deferred income taxes, net
1,809.4
1,874.8
Other long-term assets
582.8
578.5
Other intangible assets
254.7
349.9
Goodwill
3,646.1
3,677.3
TOTAL ASSETS
$
29,021.5
$
31,392.6
LIABILITIES AND SHAREHOLDERS'
EQUITY/(DEFICIT)
Current liabilities:
Accounts payable
$
1,329.5
$
1,211.6
Accrued liabilities
2,092.4
2,321.2
Accrued payroll and benefits
665.9
772.3
Current portion of operating lease
liability
1,236.3
1,251.3
Stored value card liability and current
portion of deferred revenue
1,781.6
1,596.1
Current portion of long-term debt
1,998.6
998.9
Total current liabilities
9,104.3
8,151.4
Long-term debt
14,014.4
13,616.9
Operating lease liability
7,668.5
7,738.0
Deferred revenue
6,381.9
6,463.0
Other long-term liabilities
613.6
737.8
Total liabilities
37,782.7
36,707.1
Shareholders' deficit:
Common stock ($0.001 par value) —
authorized, 2,400.0 shares; issued and outstanding, 1,146.9 and
1,180.0 shares, respectively
1.1
1.2
Additional paid-in capital
41.1
846.1
Retained deficit
(9,070.5
)
(6,315.7
)
Accumulated other comprehensive income
260.3
147.2
Total shareholders’ deficit
(8,768.0
)
(5,321.2
)
Noncontrolling interests
6.8
6.7
Total deficit
(8,761.2
)
(5,314.5
)
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY/(DEFICIT)
$
29,021.5
$
31,392.6
STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited and in millions)
Two Quarters Ended
Apr 3, 2022
Mar 28, 2021
OPERATING ACTIVITIES:
Net earnings including noncontrolling
interests
$
1,491.1
$
1,281.6
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
777.7
772.9
Deferred income taxes, net
28.4
(25.2
)
Income earned from equity method
investees
(118.7
)
(131.3
)
Distributions received from equity method
investees
100.8
130.2
Stock-based compensation
149.2
175.3
Non-cash lease costs
670.7
617.9
Loss on retirement and impairment of
assets
77.3
175.4
Other
(17.9
)
(15.4
)
Cash provided by/(used in) changes in
operating assets and liabilities:
Accounts receivable
(62.1
)
12.8
Inventories
(324.9
)
51.3
Prepaid expenses and other current
assets
(120.7
)
139.7
Accounts payable
133.0
21.3
Deferred revenue
110.2
89.8
Operating lease liability
(766.3
)
(676.3
)
Other operating assets and liabilities
(95.0
)
99.5
Net cash provided by operating
activities
2,032.8
2,719.5
INVESTING ACTIVITIES:
Purchases of investments
(67.5
)
(321.7
)
Sales of investments
72.6
121.7
Maturities and calls of investments
55.7
289.0
Additions to property, plant and
equipment
(871.9
)
(647.9
)
Other
(69.8
)
(20.1
)
Net cash used in investing activities
(880.9
)
(579.0
)
FINANCING ACTIVITIES:
Net proceeds/(payments) from issuance of
commercial paper
—
(296.5
)
Net proceeds from issuance of short-term
debt
17.4
203.3
Repayments of short-term debt
(12.6
)
(320.5
)
Proceeds from issuance of long-term
debt
1,498.1
—
Repayments of long-term debt
—
(1,250.0
)
Proceeds from issuance of common stock
56.3
134.4
Cash dividends paid
(1,139.2
)
(1,058.0
)
Repurchase of common stock
(3,997.5
)
—
Minimum tax withholdings on share-based
awards
(122.1
)
(90.1
)
Other
(9.2
)
—
Net cash used in financing activities
(3,708.8
)
(2,677.4
)
Effect of exchange rate changes on cash
and cash equivalents
14.6
66.7
Net increase/(decrease) in cash and cash
equivalents
(2,542.3
)
(470.2
)
CASH AND CASH EQUIVALENTS:
Beginning of period
6,455.7
4,350.9
End of period
$
3,913.4
$
3,880.7
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest, net of capitalized interest
$
236.0
$
250.8
Income taxes
$
783.2
$
236.2
Supplemental
Information
The following supplemental information is provided for
historical and comparative purposes.
U.S. Supplemental Data
Quarter Ended
Change (%)
($ in millions)
Apr 3, 2022
Mar 28, 2021
Revenues
$5,060.9
$4,302.9
18%
Change in Comparable Store Sales (1)
12%
9%
Change in Transactions
5%
(10)%
Change in Ticket
7%
21%
Store Count
15,544
15,288
2%
(1)
Includes only Starbucks® company-operated
stores open 13 months or longer. Comparable store sales exclude
Siren Retail stores. Stores that are temporarily closed or
operating at reduced hours due to the COVID-19 pandemic remain in
comparable store sales while stores identified for permanent
closure have been removed.
China Supplemental Data
Quarter Ended
Change (%)
($ in millions)
Apr 3, 2022
Mar 28, 2021
Revenues
$743.7
$860.6
(14)%
Change in Comparable Store Sales (1)
(23)%
91%
Change in Transactions
(20)%
93%
Change in Ticket
(4)%
(1)%
Store Count
5,654
4,973
14%
(1)
Includes only Starbucks® company-operated
stores open 13 months or longer. Comparable store sales exclude the
effects of fluctuations in foreign currency exchange rates, stores
identified for permanent closure 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. Comparable
store sales for the second quarter of fiscal 2022 included a 4%
adverse impact from lapping the prior-year value-added tax
benefit.
Store Data
Net stores opened/(closed) and
transferred during the period
Quarter Ended
Two Quarters Ended
Stores open as of
Apr 3, 2022
Mar 28, 2021
Apr 3, 2022
Mar 28, 2021
Apr 3, 2022
Mar 28, 2021
North America:
Company-operated stores
54
(209
)
93
(289
)
9,954
9,820
Licensed stores
(16
)
20
7
50
6,972
6,881
Total North America (1)
38
(189
)
100
(239
)
16,926
16,701
International:
Company-operated stores
102
123
315
308
7,587
6,836
Licensed stores
173
71
382
214
10,117
9,406
Total International (1)
275
194
697
522
17,704
16,242
Total Company
313
5
797
283
34,630
32,943
(1)
North America and International licensed
and total stores as of March 28, 2021, have been recast as a result
of our fiscal 2021 operating segment reporting structure
realignment.
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
Sale of certain joint venture
operations
Management excludes the gain and
subsequent adjustments, if any, related to the sale of joint
venture operations as this activity was specific to the sale and
for reasons discussed above.
Restructuring and impairment costs
Management excludes restructuring and
impairment costs relating to the write-down of certain
company-operated store and corporate 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 amortization of the
acquired intangible assets for reasons discussed above.
Additionally, these acquired intangible assets will be amortized
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.
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 except
per share data)
Quarter Ended (1)
Consolidated
Apr 3, 2022
Mar 28,
2021 (2)
Change
Operating income, as reported (GAAP)
$
948.9
$
987.6
(3.9
)%
Restructuring and impairment costs (3)
4.4
23.0
Integration costs (4)
43.1
54.3
Non-GAAP operating income
$
996.4
$
1,064.9
(6.4
)%
Operating margin, as reported (GAAP)
12.4
%
14.8
%
(240) bps
Restructuring and impairment costs (3)
0.1
0.3
Integration costs (4)
0.6
0.8
Non-GAAP operating margin
13.0
%
16.0
%
(300) bps
Diluted net earnings per share, as
reported (GAAP)
$
0.58
$
0.56
3.6
%
Restructuring and impairment costs (3)
0.00
0.02
Integration costs (4)
0.04
0.04
Gain resulting from divestiture of certain
joint venture operations
(0.01
)
—
Correction of prior year estimated tax
expense (5)
(0.02
)
—
Income tax effect on Non-GAAP adjustments
(6)
(0.01
)
(0.01
)
Non-GAAP EPS
$
0.59
$
0.61
(3.3
)%
(1)
Certain numbers may not foot due to
rounding convention.
(2)
In the first quarter of fiscal 2022, the
company changed its treatment of removing certain integration costs
related to the acquisitions of Starbucks Japan and East China for
its non-GAAP financial measures. Integration costs, primarily
related to information technology investments and
compensation-related programs, are deemed to be representative of
ongoing operations. These integration costs will remain in our
non-GAAP measures, and non-GAAP measures for the quarter ended
March 28, 2021 have been recast to reflect this change.
(3)
Represents costs associated with our
restructuring efforts.
(4)
Includes amortization expense of acquired
intangible assets associated with the acquisition of East China.
Fiscal 2021 also includes amortization expense of acquired
intangible assets associated with the acquisition of Starbucks
Japan.
(5)
Represents a beneficial
return-to-provision adjustment related to the prior year
divestiture of certain joint venture operations that also received
non-GAAP treatment.
(6)
Adjustments were determined based on the
nature of the underlying items and their relevant jurisdictional
tax rates.
Q2 QTD FY22 NON-GAAP
DISCLOSURE DETAILS
(in millions and before income
taxes)
Q2 QTD FY22
North America
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
Restructuring and Impairment
Costs
Total Non-GAAP
Adjustment
Depreciation and amortization expenses
$
—
$
43.1
$
—
$
—
$
—
$
43.1
Restructuring and impairments
4.4
4.4
Total impact to operating income
$
(4.4
)
$
(43.1
)
$
—
$
—
$
—
$
(47.5
)
Non-Operating gain
Interest income and other, net
$
7.9
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220503005201/en/
Starbucks Contact, Investor Relations: Tiffany Willis
investorrelations@starbucks.com
Starbucks Contact, Media: Maggie Jantzen
press@starbucks.com 206-318-7100
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