Starbucks Reports Q2 Fiscal 2023 Results

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

May 3, 2023 - 08:23

Starbucks Corporation (Nasdaq: SBUX) yesterday 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. 

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

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. In March, Beth Ford, Chief Executive Officer of Land O'Lakes, Inc., joined the company's board of directors.
  7. 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.
  8. 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.
  9. In April, the company announced the appointment of Brad Lerman as executive vice president and general counsel.
  10. In April, the company published its 2022 Global Environmental & Social Impact report for the 21st consecutive year.
  11. 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%.

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

)