Consolidated Net Revenues Up 9% to a quarterly
record $8.2 Billion
Q3 Comparable Store Sales Up 3% Globally; Up 9%
in the U.S. and Up Double Digits Internationally, ex-China
Q3 GAAP EPS $0.79; Non-GAAP EPS of $0.84,
Driven by U.S. Performance and Global Demand Outside of China
Active Starbucks® Rewards Membership Up 13% in
the U.S. in Q3 to 27.4 Million Members
Starbucks Corporation (NASDAQ: SBUX) today reported financial
results for its 13-week fiscal third quarter ended July 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.
Q3 Fiscal 2022
Highlights
- Global comparable store sales increased 3%, driven by a 6%
increase in average ticket, partially offset by a 3% decline in
comparable transactions
- North America comparable store sales increased 9%, driven by an
8% increase in average ticket and a 1% increase in comparable
transactions; U.S. comparable store sales increased 9%, primarily
driven by an 8% increase in average ticket
- International comparable store sales decreased 18%, driven by a
15% decline in comparable transactions and a 4% decline in average
ticket; China comparable store sales decreased 44%, driven by a 43%
decline in comparable transactions and a 1% decline in average
ticket
- The company opened 318 net new stores in Q3, ending the period
with 34,948 stores globally: 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 15,650 stores in the U.S and
5,761 stores in China
- Consolidated net revenues up 9% to a quarterly record $8.2
billion, including a 2% adverse impact from foreign currency
translation
- GAAP operating margin of 15.9% decreased 400 basis points from
19.9% in the prior year, primarily driven by inflationary
pressures, investments in labor including enhanced store partner
wages as well as sales deleverage related to COVID-19 restrictions
in China, partially offset by pricing in North America and leverage
across markets outside of China
- Non-GAAP operating margin of 16.9% decreased from 20.4% in the
prior year
- GAAP earnings per share of $0.79, down from $0.97 in the prior
year
- Non-GAAP earnings per share of $0.84, down from $0.99 in the
prior year
- Starbucks® Rewards loyalty program 90-day active members in the
U.S. increased to 27.4 million, up 13% year-over-year
“We have clear line-of-sight on what we need to do to reinvent
the company, elevate our partner and customer experiences and drive
accelerated, profitable growth all around the world,” said Howard
Schultz, interim chief executive officer. “The Q3 results we
announced today demonstrate the early progress we have made in just
four short months,” Schultz added.
“We delivered record-breaking revenue performance during the
quarter from continued strength in customer demand globally,
balanced with our ability to execute investments despite
macroeconomic and operational headwinds. Our commitment to deliver
shareholder value has not wavered, and we are making the right
decisions and investments today for the future of Starbucks,”
commented Rachel Ruggeri, chief financial officer.
Q3 North America
Segment Results (1)
Quarter Ended
Change (%)
($ in millions)
Jul 3, 2022
Jun 27, 2021
Change in Comparable Store Sales (2)
9%
84%
Change in Transactions
1%
82%
Change in Ticket
8%
1%
Store Count
17,050
16,752
2%
Revenues
$6,058.4
$5,370.7
13%
Operating Income
$1,330.1
$1,304.3
2%
Operating Margin
22.0%
24.3%
(230) bps
(1)
North America store count, revenues,
operating income and operating margin for the quarter ended June
27, 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 13% over Q3 FY21
to $6.1 billion in Q3 FY22, primarily driven by a 9% increase in
company-operated comparable store sales, driven by an 8% increase
in average ticket and a 1% increase in transactions, net new store
growth of 2% over the past 12 months and strength in our licensed
store sales.
Operating income increased to $1,330.1 million in Q3 FY22, up
from $1,304.3 million in Q3 FY21. Operating margin of 22.0%
contracted from 24.3% in the prior year, primarily driven by higher
commodity and supply chain costs due to inflationary pressures,
investments in labor including enhanced store partner wages as well
as increased spend on partner training support costs. This
contraction was partially offset by pricing.
Q3 International
Segment Results (1)
Quarter Ended
Change (%)
($ in millions)
Jul 3, 2022
Jun 27, 2021
Change in Comparable Store Sales (2)
(18)%
41%
Change in Transactions
(15)%
55%
Change in Ticket
(4)%
(9)%
Store Count
17,898
16,543
8%
Revenues
$1,584.7
$1,688.0
(6)%
Operating Income
$135.3
$327.3
(59)%
Operating Margin
8.5%
19.4%
(1,090) bps
(1)
International store count, revenues,
operating income and operating margin for the quarter ended June
27, 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 International segment declined 6% over Q3
FY21 to $1.6 billion in Q3 FY22, driven by an 18% decline in
comparable store sales, primarily attributable to COVID-19 related
restrictions in China, as well as a 9% adverse impact from foreign
currency translation. These decreases were partially offset by
growth in our licensed store revenue including higher product
sales, royalty revenues and the conversion of the Korea market from
a joint venture to a fully licensed market in Q4 FY21, as well as
1,355 net new store openings, or 8% store growth, over the past 12
months.
Operating income decreased to $135.3 million in Q3 FY22 compared
to $327.3 million in Q3 FY21. Operating margin of 8.5% contracted
from 19.4% in the prior year, primarily driven by sales deleverage
related to COVID-19 restrictions in China, higher commodity and
supply chain costs due to inflationary pressures, lower government
subsidies and investments in store partner wages, partially offset
by sales leverage across markets outside of China.
Q3 Channel
Development Segment Results
Quarter Ended
Change (%)
($ in millions)
Jul 3, 2022
Jun 27, 2021
Revenues
$479.7
$414.0
16%
Operating Income
$191.7
$216.0
(11)%
Operating Margin
40.0%
52.2%
(1,220) bps
Net revenues for the Channel Development segment grew 16% over
Q3 FY21 to $479.7 million in Q3 FY22, driven by growth in the
Global Coffee Alliance and ready-to-drink business.
Operating income decreased to $191.7 million in Q3 FY22 compared
to $216.0 million in Q3 FY21. Operating margin of 40.0% contracted
from 52.2% in the prior year, primarily due to lapping Global
Coffee Alliance transition related activities and a decline in our
North American Coffee Partnership joint venture income, largely due
to inflationary pressures as well as business mix shift.
Fiscal 2022 Financial
Targets
The company's guidance remains suspended for the balance of this
fiscal year. Its Q3 FY22 earnings conference call will start 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
- Since its announcement in May, the company has worked with its
licensed operator to exit its business and brand in Russia and to
support the nearly 2,000 green apron partners in Russia, including
pay for six months and assistance for partners to transition to new
opportunities outside of Starbucks.
- In May, the company announced entry into a definitive agreement
for Bolthouse Farms to acquire the brand and business of Evolution
Fresh. The acquisition closed on August 1, 2022. Participating U.S.
Starbucks stores continue to sell Evolution Fresh products.
- In June, the company expanded U.S. healthcare benefits to
ensure partners (employees) have access to quality healthcare. The
benefit will reimburse partners enrolled in a Starbucks healthcare
plan for eligible travel expenses to access an abortion or
gender-affirming procedures when those services are not available
within 100 miles of a partner's home.
- In June, the company announced the creation of the Heritage
Market, connecting three of the company's most iconic and visited
stores and partners who lead them. Partners at these stores will be
uniquely trained in the company’s heritage and hometown to offer
regular tours and immersions for customers. Together, the three
stores in Starbucks hometown of Seattle represent the company’s
historic past, present and reimagined future.
- In June, the company announced that indoor dining services had
resumed at most Starbucks locations across Shanghai, marking
another milestone in the company’s COVID journey.
- In July, the company reaffirmed its commitment to create a
safe, welcoming and kind third place environment through select
additional measures, including robust safety trainings, clarifying
procedures, modifying operations and closing stores where needed.
This important work will directly shape the company's policies,
programs and benefits to ensure partners feel supported and
empowered.
- In July, the company shared a set of principles and a new
partnership for the reinvention of the next chapter of the company.
The reinvention plan will include five strategic shifts: reunite
the company to bring its mission to life, renew the well-being of
retail partners by improving their experience, reimagine the store
experience for greater connection, reconnect with customers by
delivering memorable and personalized moments and redesign
partnership by creating new ways to thrive together.
- The Board of Directors declared a cash dividend of $0.49 per
share, payable on August 26, 2022, to shareholders of record as of
August 12, 2022.
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,
September 2, 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 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, including our reinvention plan,
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; impact of foreign currency
translation; pricing actions; the conversion of certain 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 strategies; 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: the continuing impact of COVID-19 on 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 or successfully transition executives; 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 our 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.
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 release. 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 3, 2022
Jun 27, 2021
% Change
Jul 3, 2022
Jun 27, 2021
As a % of total net
revenues
Net revenues:
Company-operated stores
$
6,675.5
$
6,363.1
4.9
%
81.9
%
84.9
%
Licensed stores
956.8
680.2
40.7
11.7
9.1
Other
517.8
453.2
14.3
6.4
6.0
Total net revenues
8,150.1
7,496.5
8.7
100.0
100.0
Product and distribution costs
2,613.6
2,206.0
18.5
32.1
29.4
Store operating expenses
3,302.5
2,966.9
11.3
40.5
39.6
Other operating expenses
135.1
71.4
89.2
1.7
1.0
Depreciation and amortization expenses
356.8
354.3
0.7
4.4
4.7
General and administrative expenses
486.7
494.9
(1.7
)
6.0
6.6
Restructuring and impairments
14.0
19.8
(29.3
)
0.2
0.3
Total operating expenses
6,908.7
6,113.3
13.0
84.8
81.5
Income from equity investees
54.1
105.5
(48.7
)
0.7
1.4
Operating income
1,295.5
1,488.7
(13.0
)
15.9
19.9
Interest income and other, net
19.8
36.0
(45.0
)
0.2
0.5
Interest expense
(123.1
)
(113.4
)
8.6
(1.5
)
(1.5
)
Earnings before income taxes
1,192.2
1,411.3
(15.5
)
14.6
18.8
Income tax expense
278.5
257.1
8.3
3.4
3.4
Net earnings including noncontrolling
interests
913.7
1,154.2
(20.8
)
11.2
15.4
Net earnings attributable to
noncontrolling interests
0.8
0.8
0.0
0.0
0.0
Net earnings attributable to
Starbucks
$
912.9
$
1,153.4
(20.9
)
11.2
%
15.4
%
Net earnings per common share -
diluted
$
0.79
$
0.97
(18.6
)%
Weighted avg. shares outstanding -
diluted
1,151.0
1,186.2
Cash dividends declared per share
$
0.49
$
0.45
Supplemental Ratios:
Store operating expenses as a % of
company-operated store revenues
49.5
%
46.6
%
Effective tax rate including
noncontrolling interests
23.4
%
18.2
%
Three Quarters Ended
Three Quarters Ended
Jul 3, 2022
Jun 27, 2021
% Change
Jul 3, 2022
Jun 27, 2021
As a % of total net
revenues
Net revenues:
Company-operated stores
$
19,674.7
$
17,742.8
10.9
%
82.5
%
84.8
%
Licensed stores
2,657.0
1,889.0
40.7
11.1
9.0
Other
1,504.4
1,282.1
17.3
6.3
6.1
Total net revenues
23,836.1
20,913.9
14.0
100.0
100.0
Product and distribution costs
7,606.4
6,247.5
21.8
31.9
29.9
Store operating expenses
10,017.1
8,657.6
15.7
42.0
41.4
Other operating expenses
338.4
250.8
34.9
1.4
1.2
Depreciation and amortization expenses
1,090.5
1,087.0
0.3
4.6
5.2
General and administrative expenses
1,494.0
1,431.4
4.4
6.3
6.8
Restructuring and impairments
10.9
115.0
(90.5
)
0.0
0.5
Total operating expenses
20,557.3
17,789.3
15.6
86.2
85.1
Income from equity investees
143.5
265.3
(45.9
)
0.6
1.3
Operating income
3,422.3
3,389.9
1.0
14.4
16.2
Interest income and other, net
66.0
68.6
(3.8
)
0.3
0.3
Interest expense
(357.6
)
(349.2
)
2.4
(1.5
)
(1.7
)
Earnings before income taxes
3,130.7
3,109.3
0.7
13.1
14.9
Income tax expense
725.9
673.6
7.8
3.0
3.2
Net earnings including noncontrolling
interests
2,404.8
2,435.7
(1.3
)
10.1
11.6
Net earnings attributable to
noncontrolling interests
1.5
0.8
87.5
0.0
0.0
Net earnings attributable to
Starbucks
$
2,403.3
$
2,434.9
(1.3
)
10.1
%
11.6
%
Net earnings per common share -
diluted
$
2.07
$
2.06
0.5
%
Weighted avg. shares outstanding -
diluted
1,160.5
1,184.7
Cash dividends declared per share
$
1.47
$
1.80
Supplemental Ratios:
Store operating expenses as a % of
company-operated store revenues
50.9
%
48.8
%
Effective tax rate including
noncontrolling interests
23.2
%
21.7
%
Segment Results (in
millions)
North America (1)
Jul 3, 2022
Jun 27, 2021
% Change
Jul 3, 2022
Jun 27, 2021
Quarter Ended
As a % of North America total
net revenues
Net revenues:
Company-operated stores
$
5,513.2
$
4,929.8
11.8
%
91.0
%
91.8
%
Licensed stores
544.2
439.0
24.0
9.0
8.2
Other
1.0
1.9
(47.4
)
0.0
0.0
Total net revenues
6,058.4
5,370.7
12.8
100.0
100.0
Product and distribution costs
1,713.2
1,399.9
22.4
28.3
26.1
Store operating expenses
2,670.0
2,346.8
13.8
44.1
43.7
Other operating expenses
55.4
38.0
45.8
0.9
0.7
Depreciation and amortization expenses
201.2
188.9
6.5
3.3
3.5
General and administrative expenses
76.5
73.0
4.8
1.3
1.4
Restructuring and impairments
12.0
19.8
(39.4
)
0.2
0.4
Total operating expenses
4,728.3
4,066.4
16.3
78.0
75.7
Operating income
$
1,330.1
$
1,304.3
2.0
%
22.0
%
24.3
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
48.4
%
47.6
%
Three Quarters
Ended
Net revenues:
Company-operated stores
$
15,663.6
$
13,483.1
16.2
%
90.9
%
91.8
%
Licensed stores
1,567.1
1,195.6
31.1
9.1
8.1
Other
5.7
6.2
(8.1
)
0.0
0.0
Total net revenues
17,236.4
14,684.9
17.4
100.0
100.0
Product and distribution costs
4,906.5
3,873.4
26.7
28.5
26.4
Store operating expenses
7,997.8
6,788.8
17.8
46.4
46.2
Other operating expenses
150.7
118.7
27.0
0.9
0.8
Depreciation and amortization expenses
603.2
563.9
7.0
3.5
3.8
General and administrative expenses
224.5
221.6
1.3
1.3
1.5
Restructuring and impairments
8.9
115.0
(92.3
)
0.1
0.8
Total operating expenses
13,891.6
11,681.4
18.9
80.6
79.5
Operating income
$
3,344.8
$
3,003.5
11.4
%
19.4
%
20.5
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
51.1
%
50.4
%
(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 and three
quarters ended June 27, 2021, have been restated to conform with
current period presentation.
International (1)
Jul 3, 2022
Jun 27, 2021
% Change
Jul 3, 2022
Jun 27, 2021
Quarter
Ended
As a % of International
total net revenues
Net revenues:
Company-operated stores
$
1,162.3
$
1,433.3
(18.9
)%
73.3
%
84.9
%
Licensed stores
412.6
241.2
71.1
26.0
14.3
Other
9.8
13.5
(27.4
)
0.6
0.8
Total net revenues
1,584.7
1,688.0
(6.1
)
100.0
100.0
Product and distribution costs
550.3
518.0
6.2
34.7
30.7
Store operating expenses
632.5
620.1
2.0
39.9
36.7
Other operating expenses
60.2
40.0
50.5
3.8
2.4
Depreciation and amortization expenses
125.0
129.7
(3.6
)
7.9
7.7
General and administrative expenses
81.8
94.9
(13.8
)
5.2
5.6
Total operating expenses
1,449.8
1,402.7
3.4
91.5
83.1
Income from equity investees
0.4
42.0
(99.0
)
0.0
2.5
Operating income
$
135.3
$
327.3
(58.7
)%
8.5
%
19.4
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
54.4
%
43.3
%
Three Quarters
Ended
Net revenues:
Company-operated stores
$
4,011.1
$
4,259.7
(5.8
)%
77.7
%
85.1
%
Licensed stores
1,089.9
693.4
57.2
21.1
13.8
Other
62.1
53.8
15.4
1.2
1.1
Total net revenues
5,163.1
5,006.9
3.1
100.0
100.0
Product and distribution costs
1,746.8
1,582.2
10.4
33.8
31.6
Store operating expenses
2,019.3
1,868.8
8.1
39.1
37.3
Other operating expenses
138.8
107.5
29.1
2.7
2.1
Depreciation and amortization expenses
391.4
413.1
(5.3
)
7.6
8.3
General and administrative expenses
252.7
262.0
(3.5
)
4.9
5.2
Total operating expenses
4,549.0
4,233.6
7.4
88.1
84.6
Income from equity investees
1.6
95.0
(98.3
)
0.0
1.9
Operating income
$
615.7
$
868.3
(29.1
)%
11.9
%
17.3
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
50.3
%
43.9
%
(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 and three quarters ended June 27, 2021, have
been restated to conform with current period presentation.
Channel Development
Jul 3, 2022
Jun 27, 2021
% Change
Jul 3, 2022
Jun 27, 2021
Quarter
Ended
As a % of Channel
Development total net revenues
Net revenues
$
479.7
$
414.0
15.9
%
Product and distribution costs
325.8
268.3
21.4
67.9
%
64.8
%
Other operating expenses
13.6
(9.9
)
nm
2.8
(2.4
)
Depreciation and amortization expenses
—
0.2
(100.0
)
—
0.0
General and administrative expenses
2.3
2.9
(20.7
)
0.5
0.7
Total operating expenses
341.7
261.5
30.7
71.2
63.2
Income from equity investees
53.7
63.5
(15.4
)
11.2
15.3
Operating income
$
191.7
$
216.0
(11.3
)%
40.0
%
52.2
%
Three Quarters
Ended
Net revenues
$
1,359.9
$
1,155.3
17.7
%
Product and distribution costs
885.2
733.8
20.6
65.1
%
63.5
%
Other operating expenses
35.7
14.2
151.4
2.6
1.2
Depreciation and amortization expenses
0.1
0.9
(88.9
)
0.0
0.1
General and administrative expenses
8.1
7.4
9.5
0.6
0.6
Total operating expenses
929.1
756.3
22.8
68.3
65.5
Income from equity investees
141.9
170.3
(16.7
)
10.4
14.7
Operating income
$
572.7
$
569.3
0.6
%
42.1
%
49.3
%
Corporate and Other (1)
Jul 3, 2022
Jun 27, 2021
% Change
Quarter
Ended
Net revenues
$
27.3
$
23.8
14.7
%
Product and distribution costs
24.3
19.8
22.7
Other operating expenses
5.9
3.3
78.8
Depreciation and amortization expenses
30.6
35.5
(13.8
)
General and administrative expenses
326.1
324.1
0.6
Restructuring and impairments
2.0
—
nm
Total operating expenses
388.9
382.7
1.6
Operating loss
$
(361.6
)
$
(358.9
)
0.8
%
Three Quarters
Ended
Net revenues
$
76.7
$
66.8
14.8
%
Product and distribution costs
67.9
58.1
16.9
Other operating expenses
13.2
10.4
26.9
Depreciation and amortization expenses
95.8
109.1
(12.2
)
General and administrative expenses
1,008.7
940.4
7.3
Restructuring and impairments
2.0
—
nm
Total operating expenses
1,187.6
1,118.0
6.2
Operating loss
$
(1,110.9
)
$
(1,051.2
)
5.7
%
(1)
Corporate and other general and
administrative expenses, total operating expenses and operating
loss for the quarter and three quarters ended June 27, 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)
Jul 3, 2022
Oct 3, 2021
ASSETS
Current assets:
Cash and cash equivalents
$
3,177.5
$
6,455.7
Short-term investments
76.9
162.2
Accounts receivable, net
1,146.1
940.0
Inventories
2,132.9
1,603.9
Prepaid expenses and other current
assets
534.1
594.6
Total current assets
7,067.5
9,756.4
Long-term investments
292.5
281.7
Equity investments
302.7
268.5
Property, plant and equipment, net
6,408.2
6,369.5
Operating lease, right-of-use asset
8,037.1
8,236.0
Deferred income taxes, net
1,752.9
1,874.8
Other long-term assets
640.7
578.5
Other intangible assets
203.4
349.9
Goodwill
3,451.2
3,677.3
TOTAL ASSETS
$
28,156.2
$
31,392.6
LIABILITIES AND SHAREHOLDERS'
EQUITY/(DEFICIT)
Current liabilities:
Accounts payable
$
1,489.8
$
1,211.6
Accrued liabilities
2,068.9
2,321.2
Accrued payroll and benefits
706.8
772.3
Current portion of operating lease
liability
1,214.8
1,251.3
Stored value card liability and current
portion of deferred revenue
1,723.0
1,596.1
Short-term debt
200.0
—
Current portion of long-term debt
999.1
998.9
Total current liabilities
8,402.4
8,151.4
Long-term debt
13,930.8
13,616.9
Operating lease liability
7,554.4
7,738.0
Deferred revenue
6,333.1
6,463.0
Other long-term liabilities
594.4
737.8
Total liabilities
36,815.1
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
117.1
846.1
Retained deficit
(8,719.7
)
(6,315.7
)
Accumulated other comprehensive
income/(loss)
(65.0
)
147.2
Total shareholders’ deficit
(8,666.5
)
(5,321.2
)
Noncontrolling interests
7.6
6.7
Total deficit
(8,658.9
)
(5,314.5
)
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY/(DEFICIT)
$
28,156.2
$
31,392.6
STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited and in millions)
Three Quarters Ended
Jul 3, 2022
Jun 27, 2021
OPERATING ACTIVITIES:
Net earnings including noncontrolling
interests
$
2,404.8
$
2,435.7
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
1,169.0
1,146.2
Deferred income taxes, net
35.0
(113.2
)
Income earned from equity method
investees
(175.0
)
(238.3
)
Distributions received from equity method
investees
145.9
226.7
Stock-based compensation
206.6
255.3
Non-cash lease costs
1,090.4
931.7
Loss on retirement and impairment of
assets
89.6
204.7
Other
(44.7
)
(6.8
)
Cash provided by/(used in) changes in
operating assets and liabilities:
Accounts receivable
(245.5
)
(13.1
)
Inventories
(557.3
)
8.4
Accounts payable
341.7
108.2
Deferred revenue
32.7
52.4
Operating lease liability
(1,201.4
)
(1,029.8
)
Other operating assets and liabilities
5.8
500.3
Net cash provided by operating
activities
3,297.6
4,468.4
INVESTING ACTIVITIES:
Purchases of investments
(117.3
)
(367.3
)
Sales of investments
72.6
130.4
Maturities and calls of investments
59.5
298.7
Additions to property, plant and
equipment
(1,295.4
)
(985.7
)
Other
(95.7
)
(62.3
)
Net cash used in investing activities
(1,376.3
)
(986.2
)
FINANCING ACTIVITIES:
Net proceeds/(payments) from issuance of
commercial paper
200.0
(296.5
)
Net proceeds from issuance of short-term
debt
38.9
215.6
Repayments of short-term debt
(38.9
)
(346.2
)
Proceeds from issuance of long-term
debt
1,498.1
—
Repayments of long-term debt
(1,000.0
)
(1,250.0
)
Proceeds from issuance of common stock
75.5
191.6
Cash dividends paid
(1,701.1
)
(1,588.2
)
Repurchase of common stock
(4,013.0
)
—
Minimum tax withholdings on share-based
awards
(123.5
)
(94.2
)
Other
(9.2
)
—
Net cash used in financing activities
(5,073.2
)
(3,167.9
)
Effect of exchange rate changes on cash
and cash equivalents
(126.3
)
87.9
Net increase/(decrease) in cash and cash
equivalents
(3,278.2
)
402.2
CASH AND CASH EQUIVALENTS:
Beginning of period
6,455.7
4,350.9
End of period
$
3,177.5
$
4,753.1
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest, net of capitalized interest
$
344.9
$
373.6
Income taxes
$
911.2
$
407.9
Supplemental
Information
The following supplemental information is provided for
historical and comparative purposes.
U.S. Supplemental
Data
Quarter Ended
Change (%)
($ in millions)
Jul 3, 2022
Jun 27, 2021
Revenues
$5,622.9
$4,984.6
13%
Change in Comparable Store Sales (1)
9%
83%
Change in Transactions
0%
80%
Change in Ticket
8%
1%
Store Count
15,650
15,348
2%
(1)
Includes only Starbucks® company-operated
stores open 13 months or longer. Comparable store sales exclude
Siren Retail stores. Stores that are temporarily closed or
operating at reduced hours due to the COVID-19 pandemic remain in
comparable store sales while stores identified for permanent
closure have been removed.
China
Supplemental Data
Quarter Ended
Change (%)
($ in millions)
Jul 3, 2022
Jun 27, 2021
Revenues
$544.5
$905.2
(40)%
Change in Comparable Store Sales (1)
(44)%
19%
Change in Transactions
(43)%
30%
Change in Ticket
(1)%
(9)%
Store Count
5,761
5,135
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, 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.
Store
Data
Net stores opened/(closed) and
transferred during the period
Quarter Ended
Three Quarters Ended
Stores open as of
Jul 3, 2022
Jun 27, 2021
Jul 3, 2022
Jun 27, 2021
Jul 3, 2022
Jun 27, 2021
North America:
Company-operated stores
96
40
189
(249
)
10,050
9,860
Licensed stores
28
11
35
61
7,000
6,892
Total North America (1)
124
51
224
(188
)
17,050
16,752
International:
Company-operated stores
130
177
445
485
7,717
7,013
Licensed stores
64
124
446
338
10,181
9,530
Total International (1)
194
301
891
823
17,898
16,543
Total Company
318
352
1,115
635
34,948
33,295
(1)
North America and International licensed
and total stores as of June 27, 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
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.
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.
Nestlé transaction and integration-related
costs
Management excludes the transaction and
integration-related costs related to the Global Coffee Alliance
with Nestlé (inclusive of incremental costs to grow and develop the
alliance) for reasons discussed above.
Non-GAAP G&A, non-GAAP operating income, 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
Jul 3, 2022
Jun 28, 2021
(2)
Change
Operating income, as reported (GAAP)
$
1,295.5
$
1,488.7
(13.0
)%
Restructuring and impairment costs (3)
14.0
19.8
Transaction and integration-related costs
(4)
63.5
42.3
Nestlé transaction and integration-related
costs (5)
—
(22.8
)
Non-GAAP operating income
$
1,373.0
$
1,528.0
(10.1
)%
Operating margin, as reported (GAAP)
15.9
%
19.9
%
(400) bps
Restructuring and impairment costs (3)
0.2
0.3
Transaction and integration-related costs
(4)
0.8
0.6
Nestlé transaction and integration-related
costs (5)
—
(0.3
)
Non-GAAP operating margin
16.9
%
20.4
%
(350) bps
Diluted net earnings per share, as
reported (GAAP)
$
0.79
$
0.97
(18.6
)%
Restructuring and impairment costs (3)
0.01
0.02
Transaction and integration-related costs
(4)
0.06
0.04
Nestlé transaction and integration-related
costs (5)
—
(0.02
)
Income tax effect on Non-GAAP adjustments
(6)
(0.02
)
(0.02
)
Non-GAAP EPS
$
0.84
$
0.99
(15.2
)%
(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; non-GAAP measures for the quarter ended June 27,
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.
The third quarter of fiscal 2022 also includes other expenses
associated with our Russia market exit. The third quarter of fiscal
2021 also includes amortization expense of acquired intangible
assets associated with the acquisition of Starbucks Japan.
(5)
Represents costs associated with the
Global Coffee Alliance with Nestlé and a change in estimate
relating to a transaction cost accrual.
(6)
Adjustments were determined based on the
nature of the underlying items and their relevant jurisdictional
tax rates.
Q3 QTD FY22 NON-GAAP
DISCLOSURE DETAILS
(in millions and before income
taxes)
Q3 QTD FY22
North America
International
Channel Development
Corporate and Other
Consolidated
Statement of Earnings Line Item
Restructuring and Impairment
Costs
Transaction and
Integration-Related
Costs
Nestlé Transaction and
Integration- Related Costs
Transaction and
Integration-Related Costs
Restructuring andImpairment Costs
Total Non-GAAP
Adjustment
Other operating expenses
$
—
$
20.0
$
—
$
2.1
$
—
$
22.1
Depreciation and amortization expenses
—
41.4
—
—
—
41.4
Restructuring and impairments
12.0
—
—
—
2.0
14.0
Total impact to operating income
$
(12.0
)
$
(61.4
)
$
—
$
(2.1
)
$
(2.0
)
$
(77.5
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220802005158/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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