Results Reflect Challenged Customer Experience;
Management is Developing a Plan to Get Back to Starbucks Q4
Consolidated Net Revenues Down 3% to $9.1 Billion; Frequency
Declined Across Customer Segments Q4 GAAP and Non-GAAP EPS of
$0.80; Traffic Focused Investments Further Pressured Results Q4
Active U.S. Starbucks® Rewards Membership Totals 33.8 Million, Up
4% Over Prior Year
Starbucks Corporation (Nasdaq: SBUX) today reported financial
results for its 13-week fiscal fourth quarter and 52-week fiscal
year ended September 29, 2024. GAAP results in fiscal 2024 and
fiscal 2023 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.
Q4 Fiscal Year 2024
Highlights
- Global comparable store sales declined 7%, driven by an 8%
decline in comparable transactions, partially offset by a 2%
increase in average ticket
- North America and U.S. comparable store sales declined 6%,
driven by a 10% decline in comparable transactions, partially
offset by a 4% increase in average ticket
- International comparable store sales declined 9%, driven by a
5% decline in average ticket and a 4% decline in comparable
transactions; China comparable store sales declined 14%, driven by
an 8% decline in average ticket and a 6% decline in comparable
transactions
- The company opened 722 net new stores in Q4, ending the period
with 40,199 stores: 52% company-operated and 48% licensed
- At the end of Q4, stores in the U.S. and China comprised 61% of
the company’s global portfolio, with 16,941 and 7,596 stores in the
U.S. and China, respectively
- Consolidated net revenues declined 3%, including on a constant
currency basis, to $9.1 billion
- GAAP operating margin contracted 380 basis points
year-over-year to 14.4%, primarily driven by deleverage,
investments in store partner wages and benefits, and increased
promotional activity. This contraction was partially offset by
pricing and in-store operational efficiencies.
- Non-GAAP operating margin contracted 380 basis points
year-over-year to 14.4%, or contracted 370 basis points on a
constant currency basis
- GAAP earnings per share of $0.80 declined 25% over prior year
- Non-GAAP earnings per share of $0.80 declined 25% over prior
year, or declined 24% on a constant currency basis
- Starbucks Rewards loyalty program 90-day active members in the
U.S. totaled 33.8 million, up 4% year-over-year and flat
quarter-over-quarter
Full Fiscal Year 2024
Highlights
- Global comparable store sales declined 2%, driven by a 4%
decline in comparable transactions, partially offset by a 2%
increase in average ticket
- North America and U.S. comparable store sales declined 2%,
driven by a 5% decline in comparable transactions, partially offset
by a 4% increase in average ticket
- International comparable store sales declined 4%, driven by a
4% decline in average ticket; China comparable store sales declined
8%, driven by an 8% decline in average ticket
- Consolidated net revenues increased 1%, including on a constant
currency basis, to $36.2 billion
- GAAP operating margin contracted 130 basis points
year-over-year to 15.0%, primarily driven by investments in store
partner wages and benefits, deleverage, and increased promotional
activity. This contraction was partially offset by pricing and
in-store operational efficiencies.
- Non-GAAP operating margin contracted 110 basis points
year-over-year, including on a constant currency basis, to
15.0%
- GAAP earnings per share of $3.31 declined 8% over prior year
- Non-GAAP earnings per share of $3.31 declined 6% over prior
year, including on a constant currency basis
“As shared in our Press Release last week, our results do not
reflect the strength of our brand,” commented Rachel Ruggeri, chief
financial officer. “I have seen what Starbucks is capable of when
we focus on what we do best. I have confidence in our ability to
turn around our business and expect we will return to long-term
growth,” Ruggeri added.
“It is clear we need to fundamentally change our strategy to win
back customers. ‘Back to Starbucks’ is that fundamental change,”
commented Brian Niccol, chairman and chief executive officer. “My
experience tells me that when we get back to our core identity and
consistently deliver a great experience, our customers will come
back. We have a clear plan and are moving quickly to return
Starbucks to growth,” Niccol added.
Q4 North America Segment
Results
Quarter Ended
($ in millions)
Sep 29, 2024
Oct 1, 2023
Change (%)
Change in Comparable Store Sales (1)
(6)%
8%
Change in Transactions
(10)%
2%
Change in Ticket
4%
6%
Store Count
18,424
17,810
3%
Revenues
$6,691.9
$6,900.0
(3)%
Operating Income
$1,253.5
$1,601.4
(22)%
Operating Margin
18.7%
23.2%
(450) 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 remain in comparable store sales while
stores identified for permanent closure have been removed.
Net revenues for the North America segment decreased 3% over Q4
FY23 to $6.7 billion in Q4 FY24, primarily due to a 6% decline in
comparable store sales, driven by a 10% decline in comparable
transactions, partially offset by a 4% increase in average ticket,
as well as a decline in our licensed store business. This decrease
was partially offset by net new company-operated store growth of 5%
over the past 12 months.
Operating income decreased to $1.3 billion in Q4 FY24 compared
to $1.6 billion in Q4 FY23. Operating margin of 18.7% contracted
from 23.2% in the prior year, primarily driven by deleverage,
investments in store partner wages and benefits, and increased
promotional activity. This contraction was partially offset by
pricing, and in-store operational efficiencies.
Q4 International Segment
Results
Quarter Ended
($ in millions)
Sep 29, 2024
Oct 1, 2023
Change (%)
Change in Comparable Store Sales (1)
(9)%
5%
Change in Transactions
(4)%
6%
Change in Ticket
(5)%
(1)%
Store Count
21,775
20,228
8%
Revenues
$1,893.2
$1,979.9
(4)%
Operating Income
$282.9
$301.3
(6)%
Operating Margin
14.9%
15.2%
(30) bps
(1)
Includes only Starbucks® company-operated
stores open 13 months or longer. Comparable store sales exclude the
effects of fluctuations in foreign currency exchange rates and
Siren Retail stores. Stores that are temporarily closed or
operating at reduced hours remain in comparable store sales while
stores identified for permanent closure have been removed.
Net revenues for the International segment declined 4% over Q4
FY23 to $1.9 billion in Q4 FY24, primarily due to a 9% decline in
comparable store sales, driven by a 5% decline in average ticket
and a 4% decline in comparable transactions, as well as a decline
in our licensed store business. Another factor was an approximate
1% unfavorable impact from foreign currency translation. This
decline was partially offset by net new company-operated store
growth of 10% over the past 12 months.
Operating income decreased to $282.9 million in Q4 FY24 compared
to $301.3 million in Q4 FY23. Operating margin of 14.9% contracted
from 15.2% in the prior year, primarily driven by increased
promotional activity and investments in store partner wages and
benefits. This contraction was partially offset by in-store
operational efficiencies and pricing.
Q4 Channel Development Segment
Results
Quarter Ended
($ in millions)
Sep 29, 2024
Oct 1, 2023
Change (%)
Revenues
$465.4
$486.1
(4)%
Operating Income
$264.7
$271.2
(2)%
Operating Margin
56.9%
55.8%
110 bps
Net revenues for the Channel Development segment declined 4%
over Q4 FY23 to $465.4 million in Q4 FY24, primarily due to a
decline in revenue in the Global Coffee Alliance from SKU
optimization. This decline was partially offset by an increase in
global ready-to-drink revenue.
Operating income decreased to $264.7 million in Q4 FY24 compared
to $271.2 million in Q4 FY23. Operating margin of 56.9% expanded
from 55.8% in the prior year, primarily driven by sales mix shift
and lower product costs related to the Global Coffee Alliance. This
expansion was partially offset by the higher costs in our North
American Coffee Partnership joint venture income.
Fiscal Year 2025 Financial
Targets
As stated in our October 22, 2024 announcement, given the
company’s ceo transition coupled with the current state of the
business, guidance is suspended for full fiscal year 2025. We
believe this will allow ample opportunity to complete an assessment
of the business and solidify key strategies, while stabilizing and
positioning the business for long-term growth. The company will
provide initial information regarding its new strategies during its
Q4 and full fiscal year 2024 earnings conference call starting
today at 2:00 p.m. Pacific Time. Our October 22, 2024 announcement
and accompanying prepared remarks from our chairman and ceo can be
accessed on the company's Investor Relations website. 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 Update
- In August, the company announced that Brian Niccol had been
appointed chief executive officer and chairman of the Starbucks
Board of Directors (the "Board"), effective September 9, 2024.
Mellody Hobson, former chairman of the Board, became the lead
independent director of the Board. Laxman Narasimhan, former chief
executive officer and member of the Board, stepped down from his
position effective August 12, 2024, with the Board appointing
Rachel Ruggeri, chief financial officer, as interim chief executive
officer.
- In September, Brian Niccol shared an open letter of his early
observations and commitment to getting "Back to Starbucks," a
welcoming coffeehouse where people gather and where we serve the
finest coffee, handcrafted by our skilled baristas. Niccol also
shared his initial four key areas of focus.
- In September, the company announced Michael Conway, chief
executive officer, North America, would retire from the company
effective November 30, 2024.
- In September, the company announced Molly Liu as executive vice
president and chief executive officer of Starbucks China, and
Belinda Wong as chairwoman of Starbucks China, each effective
September 30, 2024.
- In October, the company announced the addition of two new
coffee innovation farms located in Guatemala and Costa Rica, with
future farm investments in Africa and Asia. The expansion of its
collaborative coffee innovation network further connects farmers
from around the world with resources to protect the future of
coffee for all.
- On October 22, 2024, the company shared preliminary Q4 and full
fiscal year 2024 results, reflecting a challenged customer
experience and reiterating a fundamental change to our
strategy.
- The Board declared a cash dividend of $0.61 per share, payable
on November 29, 2024, to shareholders of record on November 15,
2024. The company had 58 consecutive quarters of dividend payouts
with CAGR of approximately 20% over that time period, demonstrating
the company's commitment to consistent value creation for
shareholders.
Conference Call
Starbucks will hold a conference call today at 2:00 p.m. Pacific
Time, which will be hosted by Brian Niccol, chairman and 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, December 13, 2024.
About Starbucks
Since 1971, Starbucks Coffee Company has been committed to
ethically sourcing and roasting high-quality arabica coffee. Today,
with more than 40,000 stores worldwide, the company is the premier
roaster and retailer of specialty coffee in the world. Through our
unwavering commitment to excellence and our guiding principles, we
bring the unique Starbucks Experience to life for every customer
through every cup. To share in the experience, please visit us in
our stores or online at stories.starbucks.com or
www.starbucks.com.
Forward-Looking
Statements
Certain statements contained herein and in our investor
conference call related to these results are “forward-looking”
statements within the meaning of applicable securities laws and
regulations. Generally, these statements can be identified by the
use of words such as “aim,” “anticipate,” “believe,” “continue,”
“could,” “estimate,” “expect,” “feel,” “forecast,” “intend,” “may,”
“outlook,” “plan,” “potential,” “predict,” “project,” “seek,”
“should,” “will,” “would,” and similar expressions intended to
identify forward-looking statements, although not all
forward-looking statements contain these identifying words. By
their nature, forward-looking statements involve risks,
uncertainties, and other factors (many beyond our control) that
could cause our actual results to differ materially from our
historical experience or from our current expectations or
projections. Our forward-looking statements, and the risks and
uncertainties related thereto, include, but are not limited to,
those described under the “Risk Factors” and “Management's
Discussion and Analysis of Financial Condition and Results of
Operations” sections of the company’s most recently filed periodic
reports on Form 10-K and Form 10-Q and in other filings with the
SEC, as well as, among others:
- our ability to preserve, grow, and leverage our brands,
including the risk of negative responses by consumers (such as
boycotts or negative publicity campaigns), governmental actors
(such as retaliatory legislative treatment), or other third parties
who object to certain actions taken or not taken by the Company,
which responses could adversely affect our brand value;
- the impact of our marketing strategies, promotional and
advertising plans, pricing strategies, platforms, reformulations,
innovations, or customer experience initiatives or
investments;
- the costs and risks associated with, and the successful
execution and effects of, our existing and any future business
opportunities, expansions, initiatives, strategies, investments,
and plans, including our "Back to Starbucks" plan;
- changes in consumer preferences, demand, consumption, or
spending behavior, including due to shifts in demographic or health
and wellness trends, reduction in discretionary spending and price
increases, and our ability to anticipate or react to these
changes;
- the ability of our business partners, suppliers and third-party
providers to fulfill their responsibilities and commitments;
- the potential negative effects of incidents involving food or
beverage-borne illnesses, tampering, adulteration, contamination or
mislabeling;
- our ability to open new stores and efficiently maintain the
attractiveness of our existing stores;
- our dependence on the financial performance of our North
America operating segment, and our increasing dependence on certain
international markets;
- our anticipated operating expenses, including our anticipated
total capital expenditures;
- inherent risks of operating a global business including
changing conditions in our markets, local factors affecting store
openings, protectionist trade or foreign investment policies,
economic or trade sanctions, compliance with local laws and other
regulations, and local labor policies and conditions, including
labor strikes and work stoppages;
- higher costs, lower quality, or unavailability of coffee,
dairy, cocoa, energy, water, raw materials, or product
ingredients;
- the potential impact on our supply chain of adverse weather
conditions, natural disasters, or significant increases in
logistics costs;
- the ability of our supply chain to meet current or future
business needs and our ability to scale and improve our
forecasting, planning, production, and logistics management;
- a worsening in the terms and conditions upon which we engage
with our manufacturers and source suppliers, whether resulting from
broader local or global conditions, or dynamics specific to our
relationships with such parties;
- the impact of unfavorable global or regional economic
conditions and related economic slowdowns or recessions, low
consumer confidence, high unemployment, weak credit or capital
markets, budget deficits, burdensome government debt, austerity
measures, higher interest rates, higher taxes, international trade
disputes, government restrictions, geopolitical instability, higher
inflation, or deflation;
- failure to meet our announced guidance or market expectations
and the impact thereof;
- failure to attract or retain key executive or partner talent or
successfully transition executives;
- the impacts of partner investments and changes in the
availability and cost of labor including any union organizing
efforts and our responses to such efforts;
- the impact of foreign currency translation, particularly a
stronger U.S. dollar;
- the impact of, and our ability to respond to, substantial
competition from new entrants, consolidations by competitors, and
other competitive activities, such as pricing actions (including
price reductions, promotions, discounting, couponing, or free
goods), marketing, category expansion, product introductions, or
entry or expansion in our geographic markets;
- potential impacts of climate change;
- evolving corporate governance and public disclosure regulations
and expectations;
- the potential impact of activist shareholder actions or
tactics;
- failure to comply with applicable laws and changing legal and
regulatory requirements;
- the impact or likelihood of significant legal disputes and
proceedings, or government investigations;
- potential negative effects of, and our ability to respond to, a
material failure, inadequacy or interruption of our information
technology systems or those of our third-party business partners or
service providers, or failure to comply with data protection laws;
and
- our ability to adequately protect our intellectual property or
adequately ensure that we are not infringing the intellectual
property of others.
In addition, many of the foregoing risks and uncertainties are,
or could be, exacerbated by any worsening of the global business
and economic environment. A forward-looking statement is neither a
prediction nor a guarantee of future events or circumstances, and
those future events or circumstances may not occur. You should not
place undue reliance on the forward-looking statements, which speak
only as of the date of this report. We are under no obligation to
update or alter any forward-looking statements, whether as a result
of new information, future events, or otherwise.
Key Metrics
We believe 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
Sep 29, 2024
Oct 1, 2023
% Change
Sep 29, 2024
Oct 1, 2023
As a % of total net
revenues
Net revenues:
Company-operated stores
$
7,442.1
$
7,679.9
(3.1
)%
82.0
%
81.9
%
Licensed stores
1,129.5
1,187.5
(4.9
)
12.4
12.7
Other
502.4
506.2
(0.8
)
5.5
5.4
Total net revenues
9,074.0
9,373.6
(3.2
)
100.0
100.0
Product and distribution costs
2,810.3
2,933.1
(4.2
)
31.0
31.3
Store operating expenses
3,881.7
3,721.3
4.3
42.8
39.7
Other operating expenses
138.7
145.2
(4.5
)
1.5
1.5
Depreciation and amortization expenses
395.0
351.4
12.4
4.4
3.7
General and administrative expenses
644.8
635.8
1.4
7.1
6.8
Total operating expenses
7,870.5
7,786.8
1.1
86.7
83.1
Income from equity investees
103.4
119.4
(13.4
)
1.1
1.3
Operating income
1,306.9
1,706.2
(23.4
)
14.4
18.2
Interest income and other, net
26.8
30.1
(11.0
)
0.3
0.3
Interest expense
(140.0
)
(143.2
)
(2.2
)
(1.5
)
(1.5
)
Earnings before income taxes
1,193.7
1,593.1
(25.1
)
13.2
17.0
Income tax expense
284.1
373.8
(24.0
)
3.1
4.0
Net earnings including noncontrolling
interests
909.6
1,219.3
(25.4
)
10.0
13.0
Net earnings attributable to
noncontrolling interests
0.3
0.0
nm
0.0
0.0
Net earnings attributable to
Starbucks
$
909.3
$
1,219.3
(25.4
)
10.0
%
13.0
%
Net earnings per common share -
diluted
$
0.80
$
1.06
(24.5
)%
Weighted avg. shares outstanding -
diluted
1,137.3
1,149.4
Cash dividends declared per share
$
0.61
$
0.57
Supplemental Ratios:
Store operating expenses as a % of
company-operated store revenues
52.2
%
48.5
%
Effective tax rate including
noncontrolling interests
23.8
%
23.5
%
Year Ended
Year Ended
Sep 29, 2024
Oct 1, 2023
% Change
Sep 29, 2024
Oct 1, 2023
As a % of total net
revenues
Net revenues:
Company-operated stores
$
29,765.9
$
29,462.3
1.0
%
82.3
%
81.9
%
Licensed stores
4,505.1
4,512.7
(0.2
)
12.5
12.5
Other
1,905.2
2,000.6
(4.8
)
5.3
5.6
Total net revenues
36,176.2
35,975.6
0.6
100.0
100.0
Product and distribution costs
11,180.6
11,409.1
(2.0
)
30.9
31.7
Store operating expenses
15,286.5
14,720.3
3.8
42.3
40.9
Other operating expenses
565.6
539.4
4.9
1.6
1.5
Depreciation and amortization expenses
1,512.6
1,362.6
11.0
4.2
3.8
General and administrative expenses
2,523.3
2,441.3
3.4
7.0
6.8
Restructuring and impairments
—
21.8
nm
—
0.1
Total operating expenses
31,068.6
30,494.5
1.9
85.9
84.8
Income from equity investees
301.2
298.4
0.9
0.8
0.8
Gain from sale of assets
—
91.3
nm
—
0.3
Operating income
5,408.8
5,870.8
(7.9
)
15.0
16.3
Interest income and other, net
122.8
81.2
51.2
0.3
0.2
Interest expense
(562.0
)
(550.1
)
2.2
(1.6
)
(1.5
)
Earnings before income taxes
4,969.6
5,401.9
(8.0
)
13.7
15.0
Income tax expense
1,207.3
1,277.2
(5.5
)
3.3
3.6
Net earnings including noncontrolling
interests
3,762.3
4,124.7
(8.8
)
10.4
11.5
Net earnings attributable to
noncontrolling interests
1.4
0.2
600.0
0.0
0.0
Net earnings attributable to
Starbucks
$
3,760.9
$
4,124.5
(8.8
)
10.4
%
11.5
%
Net earnings per common share -
diluted
$
3.31
$
3.58
(7.5
)%
Weighted avg. shares outstanding -
diluted
1,137.3
1,151.3
Cash dividends declared per share
$
2.32
$
2.16
Supplemental Ratios:
Store operating expenses as a % of
company-operated store revenues
51.4
%
50.0
%
Effective tax rate including
noncontrolling interests
24.3
%
23.6
%
Segment Results (in
millions)
North America
Sep 29, 2024
Oct 1, 2023
% Change
Sep 29, 2024
Oct 1, 2023
Quarter
Ended
As a % of North America
total net revenues
Net revenues:
Company-operated stores
$
6,018.0
$
6,211.5
(3.1
)%
89.9
%
90.0
%
Licensed stores
673.4
685.9
(1.8
)
10.1
9.9
Other
0.5
2.6
(80.8
)
0.0
0.0
Total net revenues
6,691.9
6,900.0
(3.0
)
100.0
100.0
Product and distribution costs
1,854.5
1,905.7
(2.7
)
27.7
27.6
Store operating expenses
3,150.8
2,986.0
5.5
47.1
43.3
Other operating expenses
67.0
67.1
(0.1
)
1.0
1.0
Depreciation and amortization expenses
278.2
236.6
17.6
4.2
3.4
General and administrative expenses
87.9
103.2
(14.8
)
1.3
1.5
Total operating expenses
5,438.4
5,298.6
2.6
81.3
76.8
Operating income
$
1,253.5
$
1,601.4
(21.7
)%
18.7
%
23.2
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
52.4
%
48.1
%
Year
Ended
Net revenues:
Company-operated stores
$
24,258.7
$
23,905.4
1.5
%
89.8
%
90.0
%
Licensed stores
2,747.4
2,659.1
3.3
10.2
10.0
Other
3.4
5.1
(33.3
)
0.0
0.0
Total net revenues
27,009.5
26,569.6
1.7
100.0
100.0
Product and distribution costs
7,478.0
7,530.4
(0.7
)
27.7
28.3
Store operating expenses
12,467.1
11,959.2
4.2
46.2
45.0
Other operating expenses
280.9
263.8
6.5
1.0
1.0
Depreciation and amortization expenses
1,052.4
910.1
15.6
3.9
3.4
General and administrative expenses
375.8
389.7
(3.6
)
1.4
1.5
Restructuring and impairments
—
20.7
nm
—
0.1
Total operating expenses
21,654.2
21,073.9
2.8
80.2
79.3
Operating income
$
5,355.3
$
5,495.7
(2.6
)%
19.8
%
20.7
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
51.4
%
50.0
%
International
Sep 29, 2024
Oct 1, 2023
% Change
Sep 29, 2024
Oct 1, 2023
Quarter
Ended
As a % of International total
net revenues
Net revenues:
Company-operated stores
$
1,424.1
$
1,468.4
(3.0
)%
75.2
%
74.2
%
Licensed stores
456.1
501.6
(9.1
)
24.1
25.3
Other
13.0
9.9
31.3
0.7
0.5
Total net revenues
1,893.2
1,979.9
(4.4
)
100.0
100.0
Product and distribution costs
651.6
704.7
(7.5
)
34.4
35.6
Store operating expenses
730.9
735.3
(0.6
)
38.6
37.1
Other operating expenses
56.3
64.0
(12.0
)
3.0
3.2
Depreciation and amortization expenses
87.3
84.3
3.6
4.6
4.3
General and administrative expenses
84.9
91.0
(6.7
)
4.5
4.6
Total operating expenses
1,611.0
1,679.3
(4.1
)
85.1
84.8
Income from equity investees
0.7
0.7
—
0.0
0.0
Operating income
$
282.9
$
301.3
(6.1
)%
14.9
%
15.2
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
51.3
%
50.1
%
Year
Ended
Net revenues:
Company-operated stores
$
5,507.2
$
5,556.9
(0.9
)%
75.0
%
74.2
%
Licensed stores
1,757.7
1,853.6
(5.2
)
24.0
24.8
Other
74.0
77.1
(4.0
)
1.0
1.0
Total net revenues
7,338.9
7,487.6
(2.0
)
100.0
100.0
Product and distribution costs
2,575.2
2,608.4
(1.3
)
35.1
34.8
Store operating expenses
2,819.4
2,761.1
2.1
38.4
36.9
Other operating expenses
225.1
219.0
2.8
3.1
2.9
Depreciation and amortization expenses
338.3
335.1
1.0
4.6
4.5
General and administrative expenses
338.8
335.8
0.9
4.6
4.5
Total operating expenses
6,296.8
6,259.4
0.6
85.8
83.6
Income from equity investees
3.6
2.7
33.3
0.0
0.0
Operating income
$
1,045.7
$
1,230.9
(15.0
)%
14.2
%
16.4
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
51.2
%
49.7
%
Channel Development
Sep 29, 2024
Oct 1, 2023
% Change
Sep 29, 2024
Oct 1, 2023
Quarter
Ended
As a % of Channel
Development total net revenues
Net revenues
$
465.4
$
486.1
(4.3
)%
Product and distribution costs
286.1
317.3
(9.8
)
61.5
%
65.3
%
Other operating expenses
15.3
14.0
9.3
3.3
2.9
Depreciation and amortization expenses
—
0.0
nm
—
0.0
General and administrative expenses
2.0
2.3
(13.0
)
0.4
0.5
Total operating expenses
303.4
333.6
(9.1
)
65.2
68.6
Income from equity investees
102.7
118.7
(13.5
)
22.1
24.4
Operating income
$
264.7
$
271.2
(2.4
)%
56.9
%
55.8
%
Year
Ended
Net revenues
$
1,769.8
$
1,893.8
(6.5
)%
Product and distribution costs
1,075.4
1,250.1
(14.0
)
60.8
%
66.0
%
Other operating expenses
58.4
54.6
7.0
3.3
2.9
Depreciation and amortization expenses
0.0
0.1
nm
0.0
0.0
General and administrative expenses
7.7
8.4
(8.3
)
0.4
0.4
Total operating expenses
1,141.5
1,313.2
(13.1
)
64.5
69.3
Income from equity investees
297.6
295.7
0.6
16.8
15.6
Gain from sale of assets
—
91.3
nm
—
4.8
Operating income
$
925.9
$
967.6
(4.3
)%
52.3
%
51.1
%
Corporate and Other
Sep 29, 2024
Oct 1, 2023
% Change
Quarter
Ended
Net revenues
$
23.5
$
7.6
209.2
%
Product and distribution costs
18.1
5.4
235.2
Other operating expenses
0.1
0.1
0.0
Depreciation and amortization expenses
29.5
30.5
(3.3
)
General and administrative expenses
470.0
439.3
7.0
Total operating expenses
517.7
475.3
8.9
Operating loss
$
(494.2
)
$
(467.7
)
5.7
%
Year
Ended
Net revenues
$
58.0
$
24.6
135.8
%
Product and distribution costs
52.0
20.2
157.4
Other operating expenses
1.2
2.0
(40.0
)
Depreciation and amortization expenses
121.9
117.3
3.9
General and administrative expenses
1,801.0
1,707.4
5.5
Restructuring and impairments
—
1.1
nm
Total operating expenses
1,976.1
1,848.0
6.9
Operating loss
$
(1,918.1
)
$
(1,823.4
)
5.2
%
STARBUCKS CORPORATION
CONSOLIDATED BALANCE
SHEETS
(unaudited, in millions, except
per share data)
Sep 29, 2024
Oct 1, 2023
ASSETS
Current assets:
Cash and cash equivalents
$
3,286.2
$
3,551.5
Short-term investments
257.0
401.5
Accounts receivable, net
1,213.8
1,184.1
Inventories
1,777.3
1,806.4
Prepaid expenses and other current
assets
313.1
359.9
Total current assets
6,847.4
7,303.4
Long-term investments
276.0
247.4
Equity investments
463.9
439.9
Property, plant and equipment, net
8,665.5
7,387.1
Operating lease, right-of-use asset
9,286.2
8,412.6
Deferred income taxes, net
1,766.7
1,769.8
Other long-term assets
617.0
546.5
Other intangible assets
100.9
120.5
Goodwill
3,315.7
3,218.3
TOTAL ASSETS
$
31,339.3
$
29,445.5
LIABILITIES AND SHAREHOLDERS’
EQUITY/(DEFICIT)
Current liabilities:
Accounts payable
$
1,595.5
$
1,544.3
Accrued liabilities
2,194.7
2,145.1
Accrued payroll and benefits
786.6
828.3
Current portion of operating lease
liability
1,463.1
1,275.3
Stored value card liability and current
portion of deferred revenue
1,781.2
1,700.2
Short-term debt
—
33.5
Current portion of long-term debt
1,248.9
1,818.6
Total current liabilities
9,070.0
9,345.3
Long-term debt
14,319.5
13,547.6
Operating lease liability
8,771.6
7,924.8
Deferred revenue
5,963.6
6,101.8
Other long-term liabilities
656.2
513.8
Total liabilities
38,780.9
37,433.3
Shareholders’ deficit:
Common stock ($0.001 par value) —
authorized, 2,400.0 shares; issued and outstanding, 1,133.5 and
1,142.6 shares, respectively
1.1
1.1
Additional paid-in capital
322.6
38.1
Retained deficit
(7,343.8
)
(7,255.8
)
Accumulated other comprehensive
income/(loss)
(428.8
)
(778.2
)
Total shareholders’ deficit
(7,448.9
)
(7,994.8
)
Noncontrolling interests
7.3
7.0
Total deficit
(7,441.6
)
(7,987.8
)
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY/(DEFICIT)
$
31,339.3
$
29,445.5
STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited, in millions)
Year Ended
Sep 29, 2024
Oct 1, 2023
Oct 2, 2022
OPERATING ACTIVITIES:
Net earnings including noncontrolling
interests
$
3,762.3
$
4,124.7
$
3,283.4
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
1,592.4
1,450.3
1,529.4
Deferred income taxes, net
(13.8
)
(59.4
)
(37.8
)
Income earned from equity method
investees
(306.4
)
(301.8
)
(268.7
)
Distributions received from equity method
investees
333.3
222.8
231.2
Gain on sale of assets
—
(91.3
)
—
Stock-based compensation
308.3
302.7
271.5
Non-cash lease costs
1,314.9
1,365.9
1,497.7
Loss on retirement and impairment of
assets
121.5
101.4
91.4
Other
31.9
26.8
(67.8
)
Cash provided by/(used in) changes in
operating assets and liabilities:
Accounts receivable
18.4
(4.1
)
(326.1
)
Inventories
42.8
366.4
(641.0
)
Income taxes payable
(61.9
)
52.5
(149.6
)
Accounts payable
28.0
100.1
345.5
Deferred revenue
(72.2
)
(110.8
)
(75.8
)
Operating lease liability
(1,294.9
)
(1,443.8
)
(1,625.6
)
Other operating assets and liabilities
291.0
(93.7
)
339.6
Net cash provided by operating
activities
6,095.6
6,008.7
4,397.3
INVESTING ACTIVITIES:
Purchases of investments
(627.5
)
(610.5
)
(377.9
)
Sales of investments
10.3
2.5
72.6
Maturities and calls of investments
768.2
616.9
67.3
Additions to property, plant and
equipment
(2,777.5
)
(2,333.6
)
(1,841.3
)
Proceeds from sale of assets
—
110.0
—
Net proceeds from the divestiture of
certain operations
—
—
59.3
Other
(72.7
)
(56.1
)
(126.3
)
Net cash used in investing activities
(2,699.2
)
(2,270.8
)
(2,146.3
)
FINANCING ACTIVITIES:
Net (payments)/proceeds from issuance of
commercial paper
—
(175.0
)
175.0
Net proceeds from issuance of short-term
debt
123.8
114.6
36.6
Repayments of short-term debt
(157.5
)
(78.8
)
(36.6
)
Net proceeds from issuance of long-term
debt
1,995.3
1,497.8
1,498.1
Repayments of long-term debt
(1,825.1
)
(1,000.0
)
(1,000.0
)
Proceeds from issuance of common stock
108.0
167.4
101.6
Cash dividends paid
(2,585.0
)
(2,431.8
)
(2,263.3
)
Repurchase of common stock
(1,266.7
)
(984.4
)
(4,013.0
)
Minimum tax withholdings on share-based
awards
(100.4
)
(89.3
)
(127.2
)
Other
(10.6
)
(11.1
)
(9.2
)
Net cash used in financing activities
(3,718.2
)
(2,990.6
)
(5,638.0
)
Effect of exchange rate changes on cash
and cash equivalents
56.5
(14.2
)
(250.3
)
Net increase/(decrease) in cash and cash
equivalents
(265.3
)
733.1
(3,637.3
)
CASH AND CASH EQUIVALENTS:
Beginning of period
3,551.5
2,818.4
6,455.7
End of period
$
3,286.2
$
3,551.5
$
2,818.4
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest, net of capitalized interest
$
570.7
$
524.3
$
474.7
Income taxes
$
1,373.3
$
1,294.2
$
1,157.6
Supplemental
Information
The following supplemental information is provided for
historical and comparative purposes.
U.S. Supplemental Data
Quarter Ended
($ in millions)
Sep 29, 2024
Oct 1, 2023
Change (%)
Revenues
$6,245.1
$6,425.0
(3)%
Change in Comparable Store Sales (1)
(6)%
8%
Change in Transactions
(10)%
2%
Change in Ticket
4%
6%
Store Count
16,941
16,352
4%
(1)
Includes only Starbucks® company-operated
stores open 13 months or longer. Comparable store sales exclude
Siren Retail stores. Stores that are temporarily closed or
operating at reduced hours remain in comparable store sales while
stores identified for permanent closure have been removed.
China Supplemental Data
Quarter Ended
($ in millions)
Sep 29, 2024
Oct 1, 2023
Change (%)
Revenues
$783.7
$840.6
(7)%
Change in Comparable Store Sales (1)
(14)%
5%
Change in Transactions
(6)%
8%
Change in Ticket
(8)%
(3)%
Store Count
7,596
6,806
12%
(1)
Includes only Starbucks® company-operated
stores open 13 months or longer. Comparable store sales exclude the
effects of fluctuations in foreign currency exchange rates and
Siren Retail stores. Stores that are temporarily closed or
operating at reduced hours 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
Year Ended
Stores open as of
Sep 29, 2024
Oct 1, 2023
Sep 29, 2024
Oct 1, 2023
Sep 29, 2024
Oct 1, 2023
North America:
Company-operated stores
221
176
533
412
11,161
10,628
Licensed stores
5
42
81
103
7,263
7,182
Total North America
226
218
614
515
18,424
17,810
International:
Company-operated stores
331
384
893
927
9,857
8,964
Licensed stores
165
214
654
885
11,918
11,264
Total International
496
598
1,547
1,812
21,775
20,228
Total Company
722
816
2,161
2,327
40,199
38,038
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 (GAAP). When provided to
investors, our non-GAAP financial measures of non-GAAP general and
administrative expenses (G&A), non-GAAP operating income,
non-GAAP operating income growth (loss), 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 management
does not believe they 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 (loss), non-GAAP operating margin,
non-GAAP effective tax rate and non-GAAP earnings per share are
G&A, operating income, operating income growth (loss),
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 for reasons discussed above. Additionally, we
incur certain costs associated with certain divestiture activities.
The majority of these costs will 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.
The Company also presents constant currency information to
provide a framework for assessing how our underlying businesses
performed excluding the effect of foreign currency rate
fluctuations. To present the constant currency information, current
period results for entities reporting in currencies other than
United States dollars are converted into United States dollars
using the average monthly exchange rates from the comparative
period rather than the actual exchange rates in effect during the
respective periods, excluding related hedging activities. We
believe the presentation of results on a constant currency basis in
addition to GAAP results helps users better understand our
performance, because it excludes the effects of foreign currency
volatility that are not indicative of our underlying operating
results.
Non-GAAP G&A, non-GAAP operating income, non-GAAP operating
income growth (loss), non-GAAP operating margin, non-GAAP effective
tax rate, non-GAAP earnings per share and constant currency 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
NET REVENUE CONSTANT CURRENCY
RECONCILIATION
(unaudited, in millions)
Quarter Ended
Consolidated
Revenue for the quarter ended Oct 1, 2023
as reported (GAAP)
$
9,373.6
Revenue for the quarter ended Sep 29, 2024
as reported (GAAP)
$
9,074.0
Change (%)
(3.2
)%
Constant Currency Impact (%)
0.3
%
Change in Constant Currency (%)
(2.9
)%
Year Ended
Consolidated
Revenue for the year ended Oct 1, 2023 as
reported (GAAP)
$
35,975.6
Revenue for the year ended Sep 29, 2024 as
reported (GAAP)
$
36,176.2
Change (%)
0.6
%
Constant Currency Impact (%)
0.7
%
Change in Constant Currency (%)
1.3
%
STARBUCKS CORPORATION
RECONCILIATION OF SELECTED
GAAP MEASURES TO NON-GAAP MEASURES
(unaudited, in millions, except
per share data)
Quarter Ended
Consolidated
Sep 29, 2024
Oct 1, 2023
Change
Constant Currency
Impact
Change in Constant
Currency
Operating income, as reported (GAAP)
$
1,306.9
$
1,706.2
(23.4)%
Non-GAAP operating income
$
1,306.9
$
1,706.2
(23.4)%
0.8%
(22.6)%
Operating margin, as reported (GAAP)
14.4
%
18.2
%
(380) bps
Non-GAAP operating margin
14.4
%
18.2
%
(380) bps
10 bps
(370) bps
Diluted net earnings per share, as
reported (GAAP)
$
0.80
$
1.06
(24.5)%
Non-GAAP EPS
$
0.80
$
1.06
(24.5)%
0.9%
(23.6)%
Year Ended
Consolidated
Sep 29, 2024
Oct 1, 2023
Change
Constant Currency
Impact
Change in Constant
Currency
Operating income, as reported (GAAP)
$
5,408.8
$
5,870.8
(7.9)%
Restructuring and impairment costs (1)
—
21.8
Transaction and integration-related costs
(2)
—
0.1
Gain on sale of assets
—
(91.3
)
Non-GAAP operating income
$
5,408.8
$
5,801.4
(6.8)%
1.1%
(5.7)%
Operating margin, as reported (GAAP)
15.0
%
16.3
%
(130) bps
Restructuring and impairment costs (1)
—
0.1
Transaction and integration-related costs
(2)
—
0.0
Gain on sales of assets
—
(0.3
)
Non-GAAP operating margin
15.0
%
16.1
%
(110) bps
— bps
(110) bps
Diluted net earnings per share, as
reported (GAAP)
$
3.31
$
3.58
(7.5)%
Restructuring and impairment costs (1)
—
0.02
Transaction and integration-related costs
(2)
—
0.00
Gain on sale of assets
—
(0.08
)
Income tax effect on Non-GAAP adjustments
(3)
—
0.02
Non-GAAP EPS
$
3.31
$
3.54
(6.5)%
0.9%
(5.6)%
(1)
Represents costs associated with our
restructuring efforts.
(2)
Fiscal 2023 includes transaction-related
expenses related to the sale of our Seattle's Best Coffee
brand.
(3)
Adjustments were determined based on the
nature of the underlying items and their relevant jurisdictional
tax rates.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241030463090/en/
Starbucks Contact, Investor Relations: Tiffany Willis
investorrelations@starbucks.com
Starbucks Contact, Media: Emily Albright
press@starbucks.com
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