Q2 Consolidated Net Revenues Up 14% to $8.7
Billion Q2 Comparable Store Sales Up 11% Globally; Up 12% in North
America; Up 7% in International Q2 GAAP EPS $0.79; Non-GAAP EPS
$0.74 Reflecting Stronger-Than-Expected Performance Globally Q2
Active U.S. Starbucks® Rewards Membership Reaches 30.8 Million, Up
15% Over Prior Year
Starbucks Corporation (Nasdaq: SBUX) today reported financial
results for its 13-week fiscal second quarter ended April 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.
Q2 Fiscal 2023
Highlights
- Global comparable store sales increased 11%, primarily driven
by a 6% increase in comparable transactions and 4% increase in
average ticket
- North America comparable store sales increased 12%, driven by a
6% increase in comparable transactions and a 5% increase in average
ticket; U.S. comparable store sales increased 12%, driven by a 6%
increase in comparable transactions and a 6% increase in average
ticket
- International comparable store sales increased 7%, driven by a
7% increase in comparable transactions; China comparable store
sales increased 3%, driven by a 4% increase in comparable
transactions and a 1% decline in average ticket
- The company opened 464 net new stores in Q2, inclusive of
closures across North America and International as part of ongoing
efforts to strengthen the portfolio, ending the period with 36,634
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 16,044 and 6,243 stores in the
U.S. and China, respectively
- Consolidated net revenues up 14% to $8.7 billion, inclusive of
approximately 2% unfavorable impact from foreign currency
translation
- GAAP operating margin of 15.2% increased from 12.4% in the
prior year, primarily driven by sales leverage, pricing,
productivity improvement and gain on the sale of Seattle's Best
Coffee brand. This expansion was partially offset by previously
committed investments in labor, including enhanced store partner
wages and benefits, increased general and administrative costs
related to our Reinvention Plan as well as inflationary pressures.
- Non-GAAP operating margin of 14.3% increased from 13.0% in the
prior year
- GAAP earnings per share of $0.79 grew 36% over prior year
- Non-GAAP earnings per share of $0.74 grew 25% over prior
year
- Starbucks Rewards loyalty program 90-day active members in the
U.S. increased to 30.8 million, up 15% year-over-year
“I am very pleased with our Reinvention progress and grateful
for the opportunity to fully immerse into the company, which I
formally took over on March 20, 2023. It is a privilege to have
learned from our founder and partners around the world,” commented
Laxman Narasimhan, chief executive officer. “From my immersion
observations, our leadership team now has a clear line of sight
into our growth headroom, as well as our opportunities to enhance
margins and modernize the business, brand, partner experience and
culture of Starbucks. As we strive to continue to be a different
kind of company, we will unlock our limitless possibilities to meet
the needs of today and, importantly, the future of Starbucks,”
Narasimhan added.
“I am so proud of our outstanding second quarter performance,
underscoring strength in both topline and margin globally. This
momentum was made possible by the investments we are making in our
stores and partners, and allowed us to continue unlocking capital
to further reinvest in our business,” commented Rachel Ruggeri,
chief financial officer. “As we begin on this next step in our
journey, I’m confident that, together with our partners, our
execution against our Reinvention plan and broader strategies will
position us in our new era,” Ruggeri added.
“In support of our Reinvention Plan, and as part of our ongoing
efforts to transform our store portfolio, we continue to open,
close and evolve our stores as we assess, reposition and strengthen
our store portfolio. We are pleased to have opened over 100 net new
stores in North America during the quarter and are excited to now
have nearly 17,500 stores across the segment,” commented Sara
Trilling, executive vice president and president of Starbucks North
America. “International added more than 360 net new stores and
continues to grow in-line with our ambitious expectations,” added
Michael Conway, group president, International and Channel
Development.
Q2 North America
Segment Results
Quarter Ended
Change (%)
($ in millions)
Apr 2, 2023
Apr 3, 2022
Change in Comparable Store Sales (1)
12%
12%
Change in Transactions
6%
5%
Change in Ticket
5%
7%
Store Count
17,482
16,926
3%
Revenues
$6,380.6
$5,445.7
17%
Operating Income
$1,217.9
$931.5
31%
Operating Margin
19.1%
17.1%
200 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.
Net revenues for the North America segment grew 17% over Q2 FY22
to $6.4 billion in Q2 FY23, primarily driven by a 12% increase in
company-operated comparable store sales, driven by a 6% increase in
comparable transactions and a 5% increase in average ticket, 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 $1.2 billion in Q2 FY23 compared
to $0.9 billion in Q2 FY22. Operating margin of 19.1% expanded from
17.1% in the prior year, primarily driven by strategic pricing,
sales leverage, productivity improvement, as well as lapping
COVID-19 related pay. This expansion was partially offset by
previously committed investments in labor, including enhanced store
partner wages and benefits, as well as higher commodity and supply
chain costs due to inflationary pressures.
Q2 International
Segment Results
Quarter Ended
Change (%)
($ in millions)
Apr 2, 2023
Apr 3, 2022
Change in Comparable Store Sales (1)
7%
(8)%
Change in Transactions
7%
(3)%
Change in Ticket
0%
(5)%
Store Count
19,152
17,704
8%
Revenues
$1,854.8
$1,702.4
9%
Operating Income
$314.7
$180.7
74%
Operating Margin
17.0%
10.6%
640 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 9% over Q2 FY22
to $1.9 billion in Q2 FY23, primarily driven by growth in our
licensed store revenue including higher product sales and royalty
revenues, net new company-operated store growth of 10% over the
past 12 months, as well as 7% increase in comparable store sales.
These increases were partially offset by approximately 10%
unfavorable impact from foreign currency translation.
Operating income increased to $314.7 million in Q2 FY23 compared
to $180.7 million in Q2 FY22. Operating margin of 17.0% expanded
from 10.6% in the prior year, primarily driven by sales leverage as
well as lapping amortization expenses. This expansion was offset by
higher partner wages and benefits.
Q2 Channel
Development Segment Results
Quarter Ended
Change (%)
($ in millions)
Apr 2, 2023
Apr 3, 2022
Revenues
$480.7
$463.1
4%
Operating Income
$262.1
$197.9
32%
Operating Margin
54.5%
42.7%
1,180 bps
Net revenues for the Channel Development segment grew 4% over Q2
FY22 to $480.7 million in Q2 FY23, driven by growth in the Global
Coffee Alliance.
Operating income increased to $262.1 million in Q2 FY23 compared
to $197.9 million in Q2 FY22. Operating margin of 54.5% expanded
from 42.7% in the prior year, primarily due to the gain on the sale
of Seattle's Best Coffee brand, partially offset by impairment
charges against certain manufacturing assets.
Fiscal 2023 Financial
Targets
The company will discuss fiscal year 2023 financial targets
during its Q2 FY23 earnings conference call starting today at 2:00
p.m. Pacific Time. These items can be accessed on the company's
Investor Relations website during and after the call. The company
uses its website as a tool to disclose important information about
the company and comply with its disclosure obligations under
Regulation Fair Disclosure.
Company Updates
- In 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 unveiled a transformational innovation
in coffee, OleatoTM, a line of Starbucks arabica coffee that is
infused with Partanna® cold pressed, extra virgin olive oil. The
new offering is available at select Starbucks stores, Starbucks
Reserve® Roasteries and Reserve locations with more locations
coming later this year.
- In March, the company announced over $50 million in planned
investments to advance its ambitious target to cut its water and
waste footprints in half by 2030, including an initial anchor
investment of up to $25 million into WaterEquity’s Global Access
Fund IV and a $10 million investment in Circular Services to reduce
landfill waste.
- In March, the company announced that Laxman Narasimhan had
assumed the role of chief executive officer and would join the
company’s board of directors, succeeding the company's founder and
interim ceo, Howard Schultz. Schultz will remain on the board of
directors.
- In March, Laxman Narasimhan hosted the company's 31st Annual
Meeting of Shareholders, and shared his immersion journey and
learnings. Narasimhan also shared how his immersion observations
will shape the refounding of the company.
- In March, Beth Ford, Chief Executive Officer of Land O'Lakes,
Inc., joined the company's board of directors.
- In Q2 fiscal 2023, the company repurchased 3.0 million shares
of common stock valued at $303.9 million, bringing total shares
repurchased this fiscal year to $495.3 million; approximately 47.7
million shares remain available for purchase under the current
authorization.
- In April, the company published workforce diversity data as of
October 2, 2022. Since 2018, the company has consistently achieved
and maintained gender and race pay equity in the U.S. for partners
performing similar work.
- In April, the company announced the appointment of Brad Lerman
as executive vice president and general counsel.
- In April, the company published its 2022 Global Environmental
& Social Impact report for the 21st consecutive year.
- The board of directors declared a cash dividend of $0.53 per
share, payable on May 26, 2023, to shareholders of record on May
12, 2023. The company had 52 consecutive quarters of dividend
payouts with CAGR greater than 20%.
Conference Call
Starbucks will hold a conference call today at 2:00 p.m. Pacific
Time, which will be hosted by Laxman Narasimhan, ceo, and Rachel
Ruggeri, cfo. The call will be webcast and can be accessed at
http://investor.starbucks.com. A replay of the webcast will be
available until end of day Friday, June 2, 2023.
About Starbucks
Since 1971, Starbucks Coffee Company has been committed to
ethically sourcing and roasting high-quality arabica coffee. Today,
with more than 36,000 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; strategic 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; the success of our licensing
relationship with Nestlé, of our consumer packaged goods and
foodservice business and its effects on our Channel Development
segment results; tax rates; business opportunities, expansions and
new initiatives, including Starbucks Odyssey; 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 or
other public health events on our financial results; 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,
including the Inflation Reduction Act of 2022 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
Apr 2, 2023
Apr 3, 2022
% Change
Apr 2, 2023
Apr 3, 2022
As a % of total net
revenues
Net revenues:
Company-operated stores
$
7,142.3
$
6,276.7
13.8
%
81.9
%
82.2
%
Licensed stores
1,069.5
849.5
25.9
12.3
11.1
Other
508.0
509.4
(0.3
)
5.8
6.7
Total net revenues
8,719.8
7,635.6
14.2
100.0
100.0
Product and distribution costs
2,801.7
2,465.8
13.6
32.1
32.3
Store operating expenses
3,636.0
3,314.7
9.7
41.7
43.4
Other operating expenses
126.2
101.7
24.1
1.4
1.3
Depreciation and amortization expenses
341.9
367.7
(7.0
)
3.9
4.8
General and administrative expenses
620.4
481.5
28.8
7.1
6.3
Restructuring and impairments
8.8
4.4
100.0
0.1
0.1
Total operating expenses
7,535.0
6,735.8
11.9
86.4
88.2
Income from equity investees
51.4
49.1
4.7
0.6
0.6
Gain from sale of assets
91.3
—
nm
1.0
—
Operating income
1,327.5
948.9
39.9
15.2
12.4
Interest income and other, net
18.4
46.3
(60.3
)
0.2
0.6
Interest expense
(136.3
)
(119.1
)
14.4
(1.6
)
(1.6
)
Earnings before income taxes
1,209.6
876.1
38.1
13.9
11.5
Income tax expense
301.3
201.1
49.8
3.5
2.6
Net earnings including noncontrolling
interests
908.3
675.0
34.6
10.4
8.8
Net earnings attributable to
noncontrolling interests
0.0
0.5
nm
0.0
0.0
Net earnings attributable to
Starbucks
$
908.3
$
674.5
34.7
10.4
%
8.8
%
Net earnings per common share -
diluted
$
0.79
$
0.58
36.2
%
Weighted avg. shares outstanding -
diluted
1,152.7
1,153.9
Cash dividends declared per share
$
0.53
$
0.49
Supplemental Ratios:
Store operating expenses as a % of
company-operated store revenues
50.9
%
52.8
%
Effective tax rate including
noncontrolling interests
24.9
%
23.0
%
Two Quarters Ended
Two Quarters Ended
Apr 2, 2023
Apr 3, 2022
% Change
Apr 2, 2023
Apr 3, 2022
As a % of total net
revenues
Net revenues:
Company-operated stores
$
14,225.7
$
12,999.1
9.4
%
81.6
%
82.9
%
Licensed stores
2,189.0
1,700.3
28.7
12.6
10.8
Other
1,019.1
986.6
3.3
5.8
6.3
Total net revenues
17,433.8
15,686.0
11.1
100.0
100.0
Product and distribution costs
5,611.9
4,992.7
12.4
32.2
31.8
Store operating expenses
7,301.3
6,714.6
8.7
41.9
42.8
Other operating expenses
255.4
203.4
25.6
1.5
1.3
Depreciation and amortization expenses
669.0
733.8
(8.8
)
3.8
4.7
General and administrative expenses
1,201.3
1,007.3
19.3
6.9
6.4
Restructuring and impairments
14.7
(3.1
)
nm
0.1
0.0
Total operating expenses
15,053.6
13,648.7
10.3
86.3
87.0
Income from equity investees
109.2
89.4
22.1
0.6
0.6
Gain from sale of assets
91.3
—
nm
0.5
—
Operating income
2,580.7
2,126.7
21.3
14.8
13.6
Interest income and other, net
30.0
46.2
(35.1
)
0.2
0.3
Interest expense
(266.0
)
(234.4
)
13.5
(1.5
)
(1.5
)
Earnings before income taxes
2,344.7
1,938.5
21.0
13.4
12.4
Income tax expense
581.1
447.4
29.9
3.3
2.9
Net earnings including noncontrolling
interests
1,763.6
1,491.1
18.3
10.1
9.5
Net earnings attributable to
noncontrolling interests
0.0
0.7
nm
0.0
0.0
Net earnings attributable to
Starbucks
$
1,763.6
$
1,490.4
18.3
10.1
%
9.5
%
Net earnings per common share -
diluted
$
1.53
$
1.28
19.5
%
Weighted avg. shares outstanding -
diluted
1,152.8
1,165.2
Cash dividends declared per share
$
1.06
$
0.98
Supplemental Ratios:
Store operating expenses as a % of
company-operated store revenues
51.3
%
51.7
%
Effective tax rate including
noncontrolling interests
24.8
%
23.1
%
Segment
Results (in millions)
North America
Apr 2, 2023
Apr 3, 2022
% Change
Apr 2, 2023
Apr 3, 2022
Quarter
Ended
As a % of North America
total net revenues
Net revenues:
Company-operated stores
$
5,742.7
$
4,936.3
16.3
%
90.0
%
90.6
%
Licensed stores
637.4
507.0
25.7
10.0
9.3
Other
0.5
2.4
(79.2
)
0.0
0.0
Total net revenues
6,380.6
5,445.7
17.2
100.0
100.0
Product and distribution costs
1,821.7
1,564.0
16.5
28.6
28.7
Store operating expenses
2,951.6
2,625.4
12.4
46.3
48.2
Other operating expenses
63.4
47.1
34.6
1.0
0.9
Depreciation and amortization expenses
226.3
202.0
12.0
3.5
3.7
General and administrative expenses
91.2
71.3
27.9
1.4
1.3
Restructuring and impairments
8.5
4.4
93.2
0.1
0.1
Total operating expenses
5,162.7
4,514.2
14.4
80.9
82.9
Operating income
$
1,217.9
$
931.5
30.7
%
19.1
%
17.1
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
51.4
%
53.2
%
Two Quarters
Ended
Net revenues:
Company-operated stores
$
11,613.2
$
10,150.4
14.4
%
89.8
%
90.8
%
Licensed stores
1,317.4
1,022.9
28.8
10.2
9.2
Other
1.2
4.7
(74.5
)
0.0
0.0
Total net revenues
12,931.8
11,178.0
15.7
100.0
100.0
Product and distribution costs
3,739.3
3,193.4
17.1
28.9
28.6
Store operating expenses
5,983.0
5,327.7
12.3
46.3
47.7
Other operating expenses
128.9
95.3
35.3
1.0
0.9
Depreciation and amortization expenses
443.1
402.1
10.2
3.4
3.6
General and administrative expenses
193.5
148.0
30.7
1.5
1.3
Restructuring and impairments
13.6
(3.1
)
nm
0.1
0.0
Total operating expenses
10,501.4
9,163.4
14.6
81.2
82.0
Operating income
$
2,430.4
$
2,014.6
20.6
%
18.8
%
18.0
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
51.5
%
52.5
%
International
Apr 2, 2023
Apr 3, 2022
%
Change
Apr 2, 2023
Apr 3, 2022
Quarter
Ended
As a % of
International
total net revenues
Net revenues:
Company-operated stores
$
1,399.6
$
1,340.4
4.4
%
75.5
%
78.7
%
Licensed stores
432.1
342.5
26.2
23.3
20.1
Other
23.1
19.5
18.5
1.2
1.1
Total net revenues
1,854.8
1,702.4
9.0
100.0
100.0
Product and distribution costs
632.9
580.5
9.0
34.1
34.1
Store operating expenses
684.4
689.3
(0.7
)
36.9
40.5
Other operating expenses
49.9
39.5
26.3
2.7
2.3
Depreciation and amortization expenses
86.3
133.4
(35.3
)
4.7
7.8
General and administrative expenses
87.4
79.6
9.8
4.7
4.7
Total operating expenses
1,540.9
1,522.3
1.2
83.1
89.4
Income from equity investees
0.8
0.6
33.3
0.0
0.0
Operating income
$
314.7
$
180.7
74.2
%
17.0
%
10.6
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
48.9
%
51.4
%
Two Quarters
Ended
Net revenues:
Company-operated stores
$
2,612.5
$
2,848.7
(8.3
)%
73.9
%
79.6
%
Licensed stores
871.6
677.4
28.7
24.7
18.9
Other
50.8
52.3
(2.9
)
1.4
1.5
Total net revenues
3,534.9
3,578.4
(1.2
)
100.0
100.0
Product and distribution costs
1,226.5
1,196.4
2.5
34.7
33.4
Store operating expenses
1,318.3
1,386.9
(4.9
)
37.3
38.8
Other operating expenses
100.6
78.7
27.8
2.8
2.2
Depreciation and amortization expenses
167.7
266.5
(37.1
)
4.7
7.4
General and administrative expenses
167.9
170.9
(1.8
)
4.7
4.8
Total operating expenses
2,981.0
3,099.4
(3.8
)
84.3
86.6
Income from equity investees
1.2
1.3
(7.7
)
0.0
0.0
Operating income
$
555.1
$
480.3
15.6
%
15.7
%
13.4
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
50.5
%
48.7
%
Channel Development
Apr 2, 2023
Apr 3, 2022
%
Change
Apr 2, 2023
Apr 3, 2022
Quarter
Ended
As a % of
Channel Development
total net revenues
Net revenues:
$
480.7
$
463.1
3.8
%
Product and distribution costs
345.6
300.5
15.0
71.9
%
64.9
%
Other operating expenses
12.8
10.7
19.6
2.7
2.3
Depreciation and amortization expenses
0.0
0.0
nm
0.0
0.0
General and administrative expenses
2.1
2.5
(16.0
)
0.4
0.5
Total operating expenses
360.5
313.7
14.9
75.0
67.7
Income from equity investees
50.6
48.5
4.3
10.5
10.5
Gain from sale of assets
91.3
—
nm
19.0
—
Operating income
262.1
197.9
32.4
54.5
42.7
Two Quarters
Ended
Net revenues
$
958.9
$
880.1
9.0
%
Product and distribution costs
639.8
559.3
14.4
66.7
%
63.5
%
Other operating expenses
25.8
22.0
17.3
2.7
2.5
Depreciation and amortization expenses
0.1
0.0
nm
0.0
0.0
General and administrative expenses
4.1
5.8
(29.3
)
0.4
0.7
Total operating expenses
669.8
587.1
14.1
69.9
66.7
Income from equity investees
108.0
88.1
22.6
11.3
10.0
Gain from sale of assets
91.3
—
nm
9.5
—
Operating income
$
488.4
$
381.1
28.2
%
50.9
%
43.3
%
Corporate and Other
Apr 2, 2023
Apr 3, 2022
%
Change
Quarter
Ended
Net revenues
$
3.7
$
24.4
(84.8
)%
Product and distribution costs
1.5
20.8
(92.8
)
Other operating expenses
0.1
4.4
(97.7
)
Depreciation and amortization expenses
29.3
32.3
(9.3
)
General and administrative expenses
439.7
328.1
34.0
Restructuring and impairments
0.3
—
nm
Total operating expenses
470.9
385.6
22.1
Operating loss
$
(467.2
)
$
(361.2
)
29.3
%
Two Quarters
Ended
Net revenues
$
8.2
$
49.5
(83.4
)%
Product and distribution costs
6.3
43.6
(85.6
)
Other operating expenses
0.1
7.4
(98.6
)
Depreciation and amortization expenses
58.1
65.2
(10.9
)
General and administrative expenses
835.8
682.6
22.4
Restructuring and impairments
1.1
—
nm
Total operating expenses
901.4
798.8
12.8
Operating loss
$
(893.2
)
$
(749.3
)
19.2
%
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)
Apr 2, 2023
Oct 2, 2022
ASSETS
Current assets:
Cash and cash equivalents
$
3,071.8
$
2,818.4
Short-term investments
379.4
364.5
Accounts receivable, net
1,185.8
1,175.5
Inventories
2,000.6
2,176.6
Prepaid expenses and other current
assets
408.6
483.7
Total current assets
7,046.2
7,018.7
Long-term investments
251.2
279.1
Equity investments
360.5
311.2
Property, plant and equipment, net
6,818.6
6,560.5
Operating lease, right-of-use asset
8,251.6
8,015.6
Deferred income taxes, net
1,811.1
1,799.7
Other long-term assets
526.7
554.2
Other intangible assets
130.8
155.9
Goodwill
3,412.3
3,283.5
TOTAL ASSETS
$
28,609.0
$
27,978.4
LIABILITIES AND SHAREHOLDERS'
EQUITY/(DEFICIT)
Current liabilities:
Accounts payable
$
1,434.0
$
1,441.4
Accrued liabilities
1,970.0
2,137.1
Accrued payroll and benefits
710.9
761.7
Current portion of operating lease
liability
1,269.5
1,245.7
Stored value card liability and current
portion of deferred revenue
1,795.9
1,641.9
Short-term debt
52.8
175.0
Current portion of long-term debt
1,888.7
1,749.0
Total current liabilities
9,121.8
9,151.8
Long-term debt
13,544.8
13,119.9
Operating lease liability
7,753.5
7,515.2
Deferred revenue
6,200.2
6,279.7
Other long-term liabilities
488.1
610.5
Total liabilities
37,108.4
36,677.1
Shareholders' deficit:
Common stock ($0.001 par value) —
authorized, 2,400.0 shares; issued and outstanding, 1,147.0 and
1,147.9 shares, respectively
1.1
1.1
Additional paid-in capital
38.2
205.3
Retained deficit
(8,024.6
)
(8,449.8
)
Accumulated other comprehensive
income/(loss)
(521.6
)
(463.2
)
Total shareholders’ deficit
(8,506.9
)
(8,706.6
)
Noncontrolling interests
7.5
7.9
Total deficit
(8,499.4
)
(8,698.7
)
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY/(DEFICIT)
$
28,609.0
$
27,978.4
STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited and in millions)
Two Quarters Ended
Apr 2, 2023
Apr 3, 2022
OPERATING ACTIVITIES:
Net earnings including noncontrolling
interests
$
1,763.6
$
1,491.1
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
709.3
777.7
Deferred income taxes, net
2.6
28.4
Income earned from equity method
investees
(109.9
)
(118.7
)
Distributions received from equity method
investees
88.0
100.8
Gain on sale of assets
(91.3
)
—
Stock-based compensation
159.3
149.2
Non-cash lease costs
584.7
670.7
Loss on retirement and impairment of
assets
75.6
77.3
Other
22.6
(17.9
)
Cash provided by/(used in) changes in
operating assets and liabilities:
Accounts receivable
26.2
(62.1
)
Inventories
194.6
(324.9
)
Accounts payable
(51.2
)
133.0
Deferred revenue
54.0
110.2
Operating lease liability
(621.8
)
(766.3
)
Other operating assets and liabilities
(445.5
)
(215.7
)
Net cash provided by operating
activities
2,360.8
2,032.8
INVESTING ACTIVITIES:
Purchases of investments
(247.7
)
(67.5
)
Sales of investments
1.9
72.6
Maturities and calls of investments
270.0
55.7
Additions to property, plant and
equipment
(1,002.0
)
(871.9
)
Proceeds from sale of assets
110.0
—
Other
(39.2
)
(69.8
)
Net cash used in investing activities
(907.0
)
(880.9
)
FINANCING ACTIVITIES:
Net (payments)/proceeds from issuance of
commercial paper
(175.0
)
—
Net proceeds from issuance of short-term
debt
52.8
17.4
Repayments of short-term debt
—
(12.6
)
Net proceeds from issuance of long-term
debt
1,497.8
1,498.1
Repayments of long-term debt
(1,000.0
)
—
Proceeds from issuance of common stock
129.8
56.3
Cash dividends paid
(1,217.4
)
(1,139.2
)
Repurchase of common stock
(479.3
)
(3,997.5
)
Minimum tax withholdings on share-based
awards
(81.4
)
(122.1
)
Other
(10.7
)
(9.2
)
Net cash provided by/(used in) financing
activities
(1,283.4
)
(3,708.8
)
Effect of exchange rate changes on cash
and cash equivalents
83.0
14.6
Net increase/(decrease) in cash and cash
equivalents
253.4
(2,542.3
)
CASH AND CASH EQUIVALENTS:
Beginning of period
2,818.4
6,455.7
End of period
$
3,071.8
$
3,913.4
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest, net of capitalized interest
$
250.4
$
236.0
Income taxes
$
636.8
$
783.2
Supplemental
Information
The following supplemental information is provided for
historical and comparative purposes.
U.S. Supplemental Data
Quarter Ended
Change (%)
($ in millions)
Apr 2, 2023
Apr 3, 2022
Revenues
$5,955.8
$5,060.9
18%
Change in Comparable Store Sales (1)
12%
12%
Change in Transactions
6%
5%
Change in Ticket
6%
7%
Store Count
16,044
15,544
3%
(1)
Includes only Starbucks®
company-operated stores open 13 months or longer. Comparable store
sales exclude Siren Retail stores. Stores that are temporarily
closed or operating at reduced hours due to the COVID-19 pandemic
remain in comparable store sales.
China Supplemental Data
Quarter Ended
Change (%)
($ in millions)
Apr 2, 2023
Apr 3, 2022
Revenues
$763.8
$743.7
3%
Change in Comparable Store Sales (1)
3%
(23)%
Change in Transactions
4%
(20)%
Change in Ticket
(1)%
(4)%
Store Count
6,243
5,654
10%
(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
Two Quarters Ended
Stores open as of
Apr 2, 2023
Apr 3, 2022
Apr 2, 2023
Apr 3, 2022
Apr 2, 2023
Apr 3, 2022
North America:
Company-operated stores
91
54
131
93
10,347
9,954
Licensed stores
10
(16
)
56
7
7,135
6,972
Total North America
101
38
187
100
17,482
16,926
International:
Company-operated stores
174
102
271
315
8,308
7,587
Licensed stores
189
173
465
382
10,844
10,117
Total International
363
275
736
697
19,152
17,704
Total Company
464
313
923
797
36,634
34,630
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, we
incur certain costs associated with certain divestiture activities.
These costs are expected to be recognized over a finite period of
time.
Gain on sale of assets
Management excludes the gain related to
the sale of assets to Nestlé, primarily consisting of intellectual
properties associated with the Seattle's Best Coffee brand, as
these items do not reflect future gains or tax impacts for reasons
discussed above.
Sale of certain joint venture operations
and retail operations
Management excludes the gain or loss, and
subsequent adjustments, if any, related to the sale of certain
joint venture and retail operations as these activities were
specific to the sale and 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.
STARBUCKS CORPORATION
RECONCILIATION OF SELECTED
GAAP MEASURES TO NON-GAAP MEASURES
(unaudited, in millions except
per share data)
Quarter Ended (1)
Consolidated
Apr 2, 2023
Apr 3, 2022
Change
Operating income, as reported (GAAP)
$
1,327.5
$
948.9
39.9%
Restructuring and impairment costs (2)
8.8
4.4
Transaction and integration-related costs
(3)
0.1
43.1
Gain from sale of assets
(91.3
)
—
Non-GAAP operating income
$
1,245.1
$
996.4
25.0%
Operating margin, as reported (GAAP)
15.2
%
12.4
%
280 bps
Restructuring and impairment costs (2)
0.1
0.1
Transaction and integration-related costs
(3)
0.0
0.6
Gain from sale of assets
(1.0
)
—
Non-GAAP operating margin
14.3
%
13.0
%
120 bps
Diluted net earnings per share, as
reported (GAAP)
$
0.79
$
0.58
36.2%
Restructuring and impairment costs (2)
0.01
0.00
Transaction and integration-related costs
(3)
0.00
0.04
Gain from sale of assets
(0.08
)
—
Gain resulting from divestiture of certain
joint venture operations
—
(0.01
)
Correction of a prior year's estimated tax
expense (4)
—
(0.02
)
Income tax effect on Non-GAAP adjustments
(5)
0.02
(0.01
)
Non-GAAP EPS
$
0.74
$
0.59
25.4%
(1)
Certain numbers may not foot due
to rounding convention.
(2)
Represents costs associated with
our restructuring efforts.
(3)
The second quarter of fiscal 2023
includes transaction-related expenses related to the sale of our
Seattle's Best Coffee brand. The second quarter of fiscal 2022
includes amortization expense of acquired intangible assets
associated with the acquisition of East China.
(4)
The second quarter of fiscal 2022
includes a beneficial return-to-provision adjustment related to the
divestiture of certain joint venture operations in fiscal 2021 that
also received non-GAAP treatment.
(5)
Adjustments were determined based
on the nature of the underlying items and their relevant
jurisdictional tax rates.
Q2 QTD FY23 NON-GAAP
DISCLOSURE DETAILS
(in millions and before income
taxes)
Q2 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
Gain on sale of assets
Transaction and
Integration-Related Costs
Restructuring and Impairment
Costs
Total Non-GAAP
Adjustment
Other operating expenses
$
—
$
—
$
0.1
$
—
$
—
$
—
$
0.1
Restructuring and impairments
8.5
—
—
—
—
0.3
8.8
Gain on sale of assets
—
—
—
(91.3
)
—
—
(91.3
)
Total impact to operating income
$
(8.5
)
$
—
$
(0.1
)
$
91.3
$
—
$
(0.3
)
$
82.4
Non-Operating gain
Interest income and other, net
$
(7.1
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230502005204/en/
Starbucks Contact, Investor Relations: Tiffany Willis
investorrelations@starbucks.com
Starbucks Contact, Media: Reggie Borges
press@starbucks.com
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