Starbucks Reports Q3 Fiscal 2023 Results

Q3 Consolidated Net Revenues Up 12% to a Record $9.2 Billion - Q3 Comparable Store Sales Up 10% Globally; Up 7% in North America; Up 24% in International

Aug 2, 2023 - 07:33

Starbucks Corporation (Nasdaq: SBUX) today reported financial results for its 13-week fiscal third quarter ended July 2, 2023. GAAP results in fiscal 2023 and fiscal 2022 include items that are excluded from non-GAAP results.

Q3 Fiscal 2023 Highlights

  • Global comparable store sales increased 10%, primarily driven by a 5% increase in comparable transactions and a 4% increase in average ticket
    • North America and U.S. comparable store sales increased 7%, driven by a 6% increase in average ticket and a 1% increase in comparable transactions
    • International comparable store sales increased 24%, driven by a 21% increase in comparable transactions and a 2% increase in average ticket; China comparable store sales increased 46%, driven by a 48% increase in comparable transactions and a 1% decline in average ticket
  • The company opened 588 net new stores in Q3, crossing the 37,000 store count threshold globally, ending the period with 37,222 stores: 51% company-operated and 49% licensed
    • At the end of Q3, stores in the U.S. and China comprised 61% of the company’s global portfolio, with 16,144 and 6,480 stores in the U.S. and China, respectively
  • Consolidated net revenues of $9.2 billion, up 12% from the prior year, or 14%, inclusive of more than 1% unfavorable impact from foreign currency translation
  • GAAP operating margin of 17.3% increased from 15.9% in the prior year, primarily driven by sales leverage, pricing and productivity improvement. This expansion was partially offset by previously committed investments in labor, including enhanced store partner wages and benefits and higher general and administrative costs related to our Reinvention Plan.
    • Non-GAAP operating margin of 17.4% increased from 16.9% in the prior year
  • GAAP earnings per share of $0.99 grew 25% over prior year
    • Non-GAAP earnings per share of $1.00 grew 19% over prior year
  • Starbucks Rewards loyalty program 90-day active members in the U.S. increased to 31.4 million, up 15% year-over-year

“Our strong third quarter results point to all-around momentum in the business, and reflect the significant progress we are making against our Reinvention Plan. Our results were also amplified by the distinctive competitive advantages that set us apart in the market,” commented Laxman Narasimhan, chief executive officer. “Starbucks is an iconic, durable brand and I am confident in the multiple paths available for the company to drive significant growth and margin improvement, which position us well to create outsized long-term shareholder value,” Narasimhan added.

“I am pleased with our third quarter performance, which beat our expectations, including our International segment. Our performance was bolstered by the progress we are making against our strategies, specifically our Reinvention Plan, and its unfolding into tangible financial results, as we delivered earnings growth of 19% well above our revenue growth of 12%,” commented Rachel Ruggeri, chief financial officer. “The momentum we have built and strength we are seeing globally, gives us the confidence and optimism to close our fiscal year strong,” Ruggeri added.

Q3 North America Segment Results

 

 

 

 

 

 

Quarter Ended

 

Change (%)

($ in millions)

Jul 2, 2023

 

Jul 3, 2022

 

Change in Comparable Store Sales (1)

7%

 

9%

 

 

Change in Transactions

1%

 

1%

 

 

Change in Ticket

6%

 

8%

 

 

Store Count

17,592

 

17,050

 

3%

Revenues

$6,737.8

 

$6,058.4

 

11%

Operating Income

$1,463.9

 

$1,330.1

 

10%

Operating Margin

21.7%

 

22.0%

 

(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 due to the COVID-19 pandemic remain in comparable store sales while stores identified for permanent closure have been removed.

Net revenues for the North America segment grew 11% over Q3 FY22 to $6.7 billion in Q3 FY23, primarily driven by a 7% increase in company-operated comparable store sales, driven by a 6% increase in average ticket and a 1% increase in comparable transactions, 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 $1.5 billion in Q3 FY23 compared to $1.3 billion in Q3 FY22. Operating margin of 21.7% contracted from 22.0% in the prior year, primarily driven by previously committed investments in labor, including enhanced store partner wages and benefits as well as increased spend on partner training. This contraction was partially offset by strategic pricing, productivity improvement and sales leverage.

Q3 International Segment Results

 

 

 

 

 

 

Quarter Ended

 

Change (%)

($ in millions)

Jul 2, 2023

 

Jul 3, 2022

 

Change in Comparable Store Sales (1)

24%

 

(18)%

 

 

Change in Transactions

21%

 

(15)%

 

 

Change in Ticket

2%

 

(4)%

 

 

Store Count

19,630

 

17,898

 

10%

Revenues

$1,972.9

 

$1,584.7

 

24%

Operating Income

$374.5

 

$135.3

 

177%

Operating Margin

19.0%

 

8.5%

 

1,050 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 24% over Q3 FY22 to $2.0 billion in Q3 FY23, primarily driven by a 24% increase in comparable store sales, net new company-operated store growth of 11% over the past 12 months, as well as growth in our licensed store revenue including higher product sales and royalty revenues. These increases were partially offset by approximately 5% unfavorable impact from foreign currency translation.

Operating income increased to $374.5 million in Q3 FY23 compared to $135.3 million in Q3 FY22. Operating margin of 19.0% expanded from 8.5% in the prior year, primarily driven by sales leverage including lapping mobility restrictions in China and prior year amortization expenses. This expansion was offset by digital investments and inflationary pressures.

Q3 Channel Development Segment Results

 

 

 

 

 

 

Quarter Ended

 

Change (%)

($ in millions)

Jul 2, 2023

 

Jul 3, 2022

 

Revenues

$448.8

 

$479.7

 

(6)%

Operating Income

$208.0

 

$191.7

 

9%

Operating Margin

46.3%

 

40.0%

 

630 bps

Net revenues for the Channel Development segment decreased 6% over Q3 FY22 to $448.8 million in Q3 FY23, driven by a decline in revenue in the Global Coffee Alliance.

Operating income increased to $208.0 million in Q3 FY23 compared to $191.7 million in Q3 FY22. Operating margin of 46.3% expanded from 40.0% in the prior year, primarily driven by growth in our North American Coffee Partnership joint venture income and mix shift.

Fiscal 2023 Financial Targets

The company will discuss fiscal year 2023 financial targets during its Q3 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 May, the company opened the first store in Paraguay, entering the 24th market in Latin America and the Caribbean and 86th market globally, underscoring the company's commitment to the Latin America & Caribbean region and the opportunity for growth globally.
  2. In May, the company celebrated over 10,000 partners (employees) that graduated through the Starbucks College Achievement Plan to date, offering eligible partners 100 percent upfront tuition coverage for a first-time bachelor's degree through Arizona State University's online degree program.
  3. In May, the company introduced Starbucks® Green Apron Blend, a new coffee blend created by Starbucks retail partners. As part of an ongoing commitment to partners, Starbucks is designating $5 for each one-pound whole bean bag of Starbucks Green Apron Blend sold from participating stores to the Starbucks Caring Unites Partners Fund, a Starbucks program for eligible partners in times of need.
  4. In May, the company opened its first store in Rome, which overlooks Piazza Montecitorio, in partnership with Percassi, our Italian licensee partner.
  5. In June, the company announced plans to expand their farm capability beyond coffee to include a new sustainability learning and innovation lab at Hacienda Alsacia in Costa Rica, the global agronomy headquarters for research and development. The lab will serve as a learning hub for Starbucks partners and industry leaders to innovate and scale sustainable solutions to some of the world's most challenging issues, helping to ensure the future of coffee for all.
  6. In June, the company launched Frozen Lemonade Starbucks® Refreshers beverages to their permanent menu. The launch included three different beverage flavors, all based on their signature Starbucks Refreshers beverages line-up.
  7. In Q3 FY23, the company repurchased 2.0 million shares of common stock valued at $204.0 million, bringing total shares repurchased this fiscal year to $699.3 million; approximately 45.7 million shares remain available for purchase under the current authorization.
  8. In July, the company announced Arthur Valdez as executive vice president and global supply and customer solutions officer.
  9. The board of directors declared a cash dividend of $0.53 per share, payable on August 25, 2023, to shareholders of record on August 11, 2023. The company had 53 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

 

Jul 2,
2023

 

Jul 3,
2022

 

%
Change

 

Jul 2,
2023

 

Jul 3,
2022

 

 

 

 

 

 

 

 

As a % of total net revenues

Net revenues:

 

 

 

 

 

 

 

 

 

Company-operated stores

$

7,556.7

 

 

$

6,675.5

 

 

13.2

%

 

82.4

%

 

81.9

%

Licensed stores

 

1,136.2

 

 

 

956.8

 

 

18.8

 

 

12.4

 

 

11.7

 

Other

 

475.4

 

 

 

517.8

 

 

(8.2

)

 

5.2

 

 

6.4

 

Total net revenues

 

9,168.3

 

 

 

8,150.1

 

 

12.5

 

 

100.0

 

 

100.0

 

Product and distribution costs

 

2,864.2

 

 

 

2,613.6

 

 

9.6

 

 

31.2

 

 

32.1

 

Store operating expenses

 

3,697.6

 

 

 

3,302.5

 

 

12.0

 

 

40.3

 

 

40.5

 

Other operating expenses

 

138.7

 

 

 

135.1

 

 

2.7

 

 

1.5

 

 

1.7

 

Depreciation and amortization expenses

 

342.2

 

 

 

356.8

 

 

(4.1

)

 

3.7

 

 

4.4

 

General and administrative expenses

 

604.3

 

 

 

486.7

 

 

24.2

 

 

6.6

 

 

6.0

 

Restructuring and impairments

 

7.1

 

 

 

14.0

 

 

(49.3

)

 

0.1

 

 

0.2

 

Total operating expenses

 

7,654.1

 

 

 

6,908.7

 

 

10.8

 

 

83.5

 

 

84.8

 

Income from equity investees

 

69.7

 

 

 

54.1

 

 

28.8

 

 

0.8

 

 

0.7

 

Operating income

 

1,583.9

 

 

 

1,295.5

 

 

22.3

 

 

17.3

 

 

15.9

 

Interest income and other, net

 

21.3

 

 

 

19.8

 

 

7.6

 

 

0.2

 

 

0.2

 

Interest expense

 

(140.9

)

 

 

(123.1

)

 

14.5

 

 

(1.5

)

 

(1.5

)

Earnings before income taxes

 

1,464.3

 

 

 

1,192.2

 

 

22.8

 

 

16.0

 

 

14.6

 

Income tax expense

 

322.4

 

 

 

278.5

 

 

15.8

 

 

3.5

 

 

3.4

 

Net earnings including noncontrolling interests

 

1,141.9

 

 

 

913.7

 

 

25.0

 

 

12.5

 

 

11.2

 

Net earnings attributable to noncontrolling interests

 

0.2

 

 

 

0.8

 

 

(75.0

)

 

0.0

 

 

0.0

 

Net earnings attributable to Starbucks

$

1,141.7

 

 

$

912.9

 

 

25.1

 

 

12.5

%

 

11.2

%

Net earnings per common share - diluted

$

0.99

 

 

$

0.79

 

 

25.3

%

 

 

 

 

Weighted avg. shares outstanding - diluted

 

1,150.5

 

 

 

1,151.0

 

 

 

 

 

 

 

Cash dividends declared per share

$

0.53

 

 

$

0.49

 

 

 

 

 

 

 

Supplemental Ratios:

 

 

 

 

 

 

 

 

 

Store operating expenses as a % of company-operated store revenues

 

 

 

48.9

%

 

49.5

%

Effective tax rate including noncontrolling interests

 

 

 

22.0

%

 

23.4

%

 

Three Quarters Ended

 

Three Quarters Ended

 

Jul 2,
2023

 

Jul 3,
2022

 

%
Change

 

Jul 2,
2023

 

Jul 3,
2022

 

 

 

 

 

 

 

 

As a % of total net revenues

Net revenues:

 

 

 

 

 

 

 

 

 

Company-operated stores

$

21,782.4

 

 

$

19,674.7

 

 

10.7

%

 

81.9

%

 

82.5

%

Licensed stores

 

3,325.2

 

 

 

2,657.0

 

 

25.1

 

 

12.5

 

 

11.1

 

Other

 

1,494.4

 

 

 

1,504.4

 

 

(0.7

)

 

5.6

 

 

6.3

 

Total net revenues

 

26,602.0

 

 

 

23,836.1

 

 

11.6

 

 

100.0

 

 

100.0

 

Product and distribution costs

 

8,476.1

 

 

 

7,606.4

 

 

11.4

 

 

31.9

 

 

31.9

 

Store operating expenses

 

10,998.9

 

 

 

10,017.1

 

 

9.8

 

 

41.3

 

 

42.0

 

Other operating expenses

 

394.1

 

 

 

338.4

 

 

16.5

 

 

1.5

 

 

1.4

 

Depreciation and amortization expenses

 

1,011.2

 

 

 

1,090.5

 

 

(7.3

)

 

3.8

 

 

4.6

 

General and administrative expenses

 

1,805.6

 

 

 

1,494.0

 

 

20.9

 

 

6.8

 

 

6.3

 

Restructuring and impairments

 

21.8

 

 

 

10.9

 

 

100.0

 

 

0.1

 

 

0.0

 

Total operating expenses

 

22,707.7

 

 

 

20,557.3

 

 

10.5

 

 

85.4

 

 

86.2

 

Income from equity investees

 

179.0

 

 

 

143.5

 

 

24.7

 

 

0.7

 

 

0.6

 

Gain from sale of assets

 

91.3

 

 

 

 

 

nm

 

 

0.3

 

 

 

Operating income

 

4,164.6

 

 

 

3,422.3

 

 

21.7

 

 

15.7

 

 

14.4

 

Interest income and other, net

 

51.1

 

 

 

66.0

 

 

(22.6

)

 

0.2

 

 

0.3

 

Interest expense

 

(406.9

)

 

 

(357.6

)

 

13.8

 

 

(1.5

)

 

(1.5

)

Earnings before income taxes

 

3,808.8

 

 

 

3,130.7

 

 

21.7

 

 

14.3

 

 

13.1

 

Income tax expense

 

903.4

 

 

 

725.9

 

 

24.5

 

 

3.4

 

 

3.0

 

Net earnings including noncontrolling interests

 

2,905.4

 

 

 

2,404.8

 

 

20.8

 

 

10.9

 

 

10.1

 

Net earnings attributable to noncontrolling interests

 

0.2

 

 

 

1.5

 

 

(86.7

)

 

0.0

 

 

0.0

 

Net earnings attributable to Starbucks

$

2,905.2

 

 

$

2,403.3

 

 

20.9

 

 

10.9

%

 

10.1

%

Net earnings per common share - diluted

$

2.52

 

 

$

2.07

 

 

21.7

%

 

 

 

 

Weighted avg. shares outstanding - diluted

 

1,152.0

 

 

 

1,160.5

 

 

 

 

 

 

 

Cash dividends declared per share

$

1.59

 

 

$

1.47

 

 

 

 

 

 

 

Supplemental Ratios:

 

 

 

 

 

 

 

 

 

Store operating expenses as a % of company-operated store revenues

 

 

 

50.5

%

 

50.9

%

Effective tax rate including noncontrolling interests

 

 

 

23.7

%

 

23.2

%

Segment Results (in millions)





















 

North America





















 

 

Jul 2,
2023

 

Jul 3,
2022

 

%

Change

 

Jul 2,
2023

 

Jul 3,
2022



Quarter Ended

 

 

 

 

 

 

As a % of North America

total net revenues


Net revenues:

 

 

 

 

 

 

 

 

 


Company-operated stores

$

6,080.6


 

$

5,513.2


 

10.3

%

 

90.2

%

 

91.0

%


Licensed stores

 

655.8

 

 

 

544.2

 

 

20.5

 

 

9.7

 

 

9.0

 


Other

 

1.4

 

 

 

1.0

 

 

40.0

 

 

0.0

 

 

0.0

 


Total net revenues

 

6,737.8

 

 

 

6,058.4

 

 

11.2

 

 

100.0

 

 

100.0

 


Product and distribution costs

 

1,885.4

 

 

 

1,713.2

 

 

10.1

 

 

28.0

 

 

28.3

 


Store operating expenses

 

2,990.1

 

 

 

2,670.0

 

 

12.0

 

 

44.4

 

 

44.1

 


Other operating expenses

 

67.8

 

 

 

55.4

 

 

22.4

 

 

1.0

 

 

0.9

 


Depreciation and amortization expenses

 

230.4

 

 

 

201.2

 

 

14.5

 

 

3.4

 

 

3.3

 


General and administrative expenses

 

93.1

 

 

 

76.5

 

 

21.7

 

 

1.4

 

 

1.3

 


Restructuring and impairments

 

7.1

 

 

 

12.0

 

 

(40.8

)

 

0.1

 

 

0.2

 


Total operating expenses

 

5,273.9

 

 

 

4,728.3

 

 

11.5

 

 

78.3

 

 

78.0

 


Operating income

$

1,463.9

 

 

$

1,330.1

 

 

10.1

%

 

21.7

%

 

22.0

%


Supplemental Ratio:

 

 

 

 

 

 

 

 

 


Store operating expenses as a % of company-operated store revenues

 

 

 

49.2

%

 

48.4

%


 

 

 

 

 

 

 

 

 

 


Three Quarters Ended

 

 

 

 

 

 

 

 

 


Net revenues:

 

 

 

 

 

 

 

 

 


Company-operated stores

$

17,693.9

 

 

$

15,663.6

 

 

13.0

%

 

90.0

%

 

90.9

%


Licensed stores

 

1,973.2

 

 

 

1,567.1

 

 

25.9

 

 

10.0

 

 

9.1

 


Other

 

2.6

 

 

 

5.7

 

 

(54.4

)

 

0.0

 

 

0.0

 


Total net revenues

 

19,669.7

 

 

 

17,236.4

 

 

14.1

 

 

100.0

 

 

100.0

 


Product and distribution costs

 

5,624.7

 

 

 

4,906.5

 

 

14.6

 

 

28.6

 

 

28.5

 


Store operating expenses

 

8,973.2

 

 

 

7,997.8

 

 

12.2

 

 

45.6

 

 

46.4

 


Other operating expenses

 

196.7

 

 

 

150.7

 

 

30.5

 

 

1.0

 

 

0.9

 


Depreciation and amortization expenses

 

673.5

 

 

 

603.2

 

 

11.7

 

 

3.4

 

 

3.5

 


General and administrative expenses

 

286.6

 

 

 

224.5

 

 

27.7

 

 

1.5

 

 

1.3

 


Restructuring and impairments

 

20.7

 

 

 

8.9

 

 

132.6

 

 

0.1

 

 

0.1

 


Total operating expenses

 

15,775.4

 

 

 

13,891.6

 

 

13.6

 

 

80.2

 

 

80.6

 


Operating income

$

3,894.3

 

 

$

3,344.8

 

 

16.4

%

 

19.8

%

 

19.4

%


Supplemental Ratio:

 

 

 

 

 

 

 

 

 


Store operating expenses as a % of company-operated store revenues

 

 

 

50.7

%

 

51.1

%


International





















 

 

Jul 2,
2023

 

Jul 3,
2022

 

%

Change

 

Jul 2,
2023

 

Jul 3,
2022



Quarter Ended

 

 

 

 

 

 

As a % of International

total net revenues


Net revenues:

 

 

 

 

 

 

 

 

 


Company-operated stores

$

1,476.1


 

$

1,162.3


 

27.0

%

 

74.8

%

 

73.3

%


Licensed stores

 

480.4

 

 

 

412.6

 

 

16.4

 

 

24.3

 

 

26.0

 


Other

 

16.4

 

 

 

9.8

 

 

67.3

 

 

0.8

 

 

0.6

 


Total net revenues

 

1,972.9

 

 

 

1,584.7

 

 

24.5

 

 

100.0

 

 

100.0

 


Product and distribution costs

 

677.3

 

 

 

550.3

 

 

23.1

 

 

34.3

 

 

34.7

 


Store operating expenses

 

707.5

 

 

 

632.5

 

 

11.9

 

 

35.9

 

 

39.9

 


Other operating expenses

 

54.3

 

 

 

60.2

 

 

(9.8

)

 

2.8

 

 

3.8

 


Depreciation and amortization expenses

 

83.1

 

 

 

125.0

 

 

(33.5

)

 

4.2

 

 

7.9

 


General and administrative expenses

 

77.0

 

 

 

81.8

 

 

(5.9

)

 

3.9

 

 

5.2

 


Total operating expenses

 

1,599.2

 

 

 

1,449.8

 

 

10.3

 

 

81.1

 

 

91.5

 


Income from equity investees

 

0.8

 

 

 

0.4

 

 

100.0

 

 

0.0

 

 

0.0

 


Operating income

$

374.5

 

 

$

135.3

 

 

176.8

%

 

19.0

%

 

8.5

%


Supplemental Ratio:

 

 

 

 

 

 

 

 

 


Store operating expenses as a % of company-operated store revenues

 

 

 

47.9

%

 

54.4

%


 

 

 

 

 

 

 

 

 

 


Three Quarters Ended

 

 

 

 

 

 

 

 

 


Net revenues:

 

 

 

 

 

 

 

 

 


Company-operated stores

$

4,088.5

 

 

$

4,011.1

 

 

1.9

%

 

74.2

%

 

77.7

%


Licensed stores

 

1,352.0

 

 

 

1,089.9

 

 

24.0

 

 

24.5

 

 

21.1

 


Other

 

67.3

 

 

 

62.1

 

 

8.4

 

 

1.2

 

 

1.2

 


Total net revenues

 

5,507.8

 

 

 

5,163.1

 

 

6.7

 

 

100.0

 

 

100.0

 


Product and distribution costs

 

1,903.8

 

 

 

1,746.8

 

 

9.0

 

 

34.6

 

 

33.8

 


Store operating expenses

 

2,025.7

 

 

 

2,019.3

 

 

0.3

 

 

36.8

 

 

39.1

 


Other operating expenses

 

155.0

 

 

 

138.8

 

 

11.7

 

 

2.8

 

 

2.7

 


Depreciation and amortization expenses

 

250.8

 

 

 

391.4

 

 

(35.9

)

 

4.6

 

 

7.6

 


General and administrative expenses

 

244.9

 

 

 

252.7

 

 

(3.1

)

 

4.4

 

 

4.9

 


Total operating expenses

 

4,580.2

 

 

 

4,549.0

 

 

0.7

 

 

83.2

 

 

88.1

 


Income from equity investees

 

2.0

 

 

 

1.6

 

 

25.0

 

 

0.0

 

 

0.0

 


Operating income

$

929.6

 

 

$

615.7

 

 

51.0

%

 

16.9

%

 

11.9

%


Supplemental Ratio:

 

 

 

 

 

 

 

 

 


Store operating expenses as a % of company-operated store revenues

 

 

 

49.5

%

 

50.3

%


Channel Development





















 

 

Jul 2,
2023

 

Jul 3,
2022

 

%

Change

 

Jul 2,
2023

 

Jul 3,
2022



Quarter Ended

 

 

 

 

 

 

As a % of

Channel Development

total net revenues


Net revenues

$

448.8


 

$

479.7


 

(6.4

)%

 

 

 

 


Product and distribution costs

 

293.0

 

 

 

325.8

 

 

(10.1

)

 

65.3

%

 

67.9

%


Other operating expenses

 

14.8

 

 

 

13.6

 

 

8.8

 

 

3.3

 

 

2.8

 


Depreciation and amortization expenses

 

0.0

 

 

 

0.0

 

 

nm

 

0.0

 

 

0.0

 


General and administrative expenses

 

1.9

 

 

 

2.3

 

 

(17.4

)

 

0.4

 

 

0.5

 


Total operating expenses

 

309.7

 

 

 

341.7

 

 

(9.4

)

 

69.0

 

 

71.2

 


Income from equity investees

 

68.9

 

 

 

53.7

 

 

28.3

 

 

15.4

 

 

11.2

 


Operating income

$

208.0

 

 

$

191.7

 

 

8.5

%

 

46.3

%

 

40.0

%


 

 

 

 

 

 

 

 

 

 


Three Quarters Ended

 

 

 

 

 

 

 

 

 


Net revenues

$

1,407.7

 

 

$

1,359.9

 

 

3.5

%

 

 

 

 


Product and distribution costs

 

932.7

 

 

 

885.2

 

 

5.4

 

 

66.3

%

 

65.1

%


Other operating expenses

 

40.6

 

 

 

35.7

 

 

13.7

 

 

2.9

 

 

2.6

 


Depreciation and amortization expenses

 

0.1

 

 

 

0.1

 

 

nm

 

 

0.0

 

 

0.0

 


General and administrative expenses

 

6.2

 

 

 

8.1

 

 

(23.5

)

 

0.4

 

 

0.6

 


Total operating expenses

 

979.6

 

 

 

929.1

 

 

5.4

 

 

69.6

 

 

68.3

 


Income from equity investees

 

177.0

 

 

 

141.9

 

 

24.7

 

 

12.6

 

 

10.4

 


Gain from sale of assets

 

91.3

 

 

 

 

 

nm

 

 

6.5

 

 

 


Operating income

$

696.4

 

 

$

572.7

 

 

21.6

%

 

49.5

%

 

42.1

%


Corporate and Other











 

 

Jul 2,
2023

 

Jul 3,
2022

 

%

Change

 

 

Quarter Ended

 

 

 

 

Net revenues

$

8.8

 

 

$

27.3

 

 

(67.8

)%

Product and distribution costs

 

8.5

 

 

 

24.3

 

 

(65.0

)

Other operating expenses

 

1.8

 

 

 

5.9

 

 

(69.5

)

Depreciation and amortization expenses

 

28.7

 

 

 

30.6

 

 

(6.2

)

General and administrative expenses

 

432.3

 

 

 

326.1

 

 

32.6

 

Restructuring and impairments

 

 

 

 

2.0

 

 

nm

 

Total operating expenses

 

471.3

 

 

 

388.9

 

 

21.2

 

Operating loss

$

(462.5

)

 

$

(361.6

)

 

27.9

%

 

 

 

 

 

 

Three Quarters Ended

 

 

 

 

 

Net revenues

$

16.8

 

 

$

76.7

 

 

(78.1

)%

Product and distribution costs

 

14.9

 

 

 

67.9

 

 

(78.1

)

Other operating expenses

 

1.8

 

 

 

13.2

 

 

(86.4

)

Depreciation and amortization expenses

 

86.8

 

 

 

95.8

 

 

(9.4

)

General and administrative expenses

 

1,267.9

 

 

 

1,008.7

 

 

25.7

 

Restructuring and impairments

 

1.1

 

 

 

2.0

 

 

(45.0

)

Total operating expenses

 

1,372.5

 

 

 

1,187.6

 

 

15.6

 

Operating loss

$

(1,355.7

)

 

$

(1,110.9

)

 

22.0

%

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)




 

 

Jul 2,
2023

 

Oct 2,
2022

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

3,357.0

 

 

$

2,818.4

 

Short-term investments

 

263.0

 

 

 

364.5

 

Accounts receivable, net

 

1,140.2

 

 

 

1,175.5

 

Inventories

 

1,987.0

 

 

 

2,176.6

 

Prepaid expenses and other current assets

 

423.5

 

 

 

483.7

 

Total current assets

 

7,170.7

 

 

 

7,018.7

 

Long-term investments

 

238.6

 

 

 

279.1

 

Equity investments

 

384.4

 

 

 

311.2

 

Property, plant and equipment, net

 

7,053.5

 

 

 

6,560.5

 

Operating lease, right-of-use asset

 

8,178.5

 

 

 

8,015.6

 

Deferred income taxes, net

 

1,790.3

 

 

 

1,799.7

 

Other long-term assets

 

541.7

 

 

 

554.2

 

Other intangible assets

 

124.4

 

 

 

155.9

 

Goodwill

 

3,250.9

 

 

 

3,283.5

 

TOTAL ASSETS

$

28,733.0

 

 

$

27,978.4

 

LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

1,503.5

 

 

$

1,441.4

 

Accrued liabilities

 

2,060.5

 

 

 

2,137.1

 

Accrued payroll and benefits

 

755.4

 

 

 

761.7

 

Current portion of operating lease liability

 

1,265.2

 

 

 

1,245.7

 

Stored value card liability and current portion of deferred revenue

 

1,759.6

 

 

 

1,641.9

 

Short-term debt

 

34.5

 

 

 

175.0

 

Current portion of long-term debt

 

1,835.9

 

 

 

1,749.0

 

Total current liabilities

 

9,214.6

 

 

 

9,151.8

 

Long-term debt

 

13,544.4

 

 

 

13,119.9

 

Operating lease liability

 

7,691.2

 

 

 

7,515.2

 

Deferred revenue

 

6,152.5

 

 

 

6,279.7

 

Other long-term liabilities

 

471.9

 

 

 

610.5

 

Total liabilities

 

37,074.6

 

 

 

36,677.1

 

Shareholders' deficit:

 

 

 

Common stock ($0.001 par value) — authorized, 2,400.0 shares; issued and outstanding, 1,145.4 and 1,147.9 shares, respectively

 

1.1

 

 

 

1.1

 

Additional paid-in capital

 

38.3

 

 

 

205.3

 

Retained deficit

 

(7,610.5

)

 

 

(8,449.8

)

Accumulated other comprehensive income/(loss)

 

(777.5

)

 

 

(463.2

)

Total shareholders’ deficit

 

(8,348.6

)

 

 

(8,706.6

)

Noncontrolling interests

 

7.0

 

 

 

7.9

 

Total deficit

 

(8,341.6

)

 

 

(8,698.7

)

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)

$

28,733.0

 

 

$

27,978.4

 

STARBUCKS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in millions)


 

 

Three Quarters Ended

 

Jul 2,
2023

 

Jul 3,
2022

OPERATING ACTIVITIES:

 

 

 

Net earnings including noncontrolling interests

$

2,905.4

 

 

$

2,404.8

 

Adjustments to reconcile net earnings to net cash provided by operating activities:

 

 

 

Depreciation and amortization

 

1,073.8

 

 

 

1,169.0

 

Deferred income taxes, net

 

(30.2

)

 

 

35.0

 

Income earned from equity method investees

 

(182.7

)

 

 

(175.0

)

Distributions received from equity method investees

 

146.6

 

 

 

145.9

 

Gain on sale of assets

 

(91.3

)

 

 

 

Stock-based compensation

 

228.5

 

 

 

206.6

 

Non-cash lease costs

 

998.4

 

 

 

1,090.4

 

Loss on retirement and impairment of assets

 

79.1

 

 

 

89.6

 

Other

 

22.8

 

 

 

(44.7

)

Cash provided by/(used in) changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

44.3

 

 

 

(245.5

)

Inventories

 

194.5

 

 

 

(557.3

)

Accounts payable

 

47.3

 

 

 

341.7

 

Deferred revenue

 

(8.2

)

 

 

32.7

 

Operating lease liability

 

(1,056.1

)

 

 

(1,201.4

)

Other operating assets and liabilities

 

(308.5

)

 

 

5.8

 

Net cash provided by operating activities

 

4,063.7

 

 

 

3,297.6

 

INVESTING ACTIVITIES:

 

 

 

Purchases of investments

 

(357.1

)

 

 

(117.3

)

Sales of investments

 

2.0

 

 

 

72.6

 

Maturities and calls of investments

 

515.0

 

 

 

59.5

 

Additions to property, plant and equipment

 

(1,634.1

)

 

 

(1,295.4

)

Proceeds from sale of assets

 

110.0

 

 

 

 

Other

 

(42.0

)

 

 

(95.7

)

Net cash used in investing activities

 

(1,406.2

)

 

 

(1,376.3

)

FINANCING ACTIVITIES:

 

 

 

Net (payments)/proceeds from issuance of commercial paper

 

(175.0

)

 

 

200.0

 

Net proceeds from issuance of short-term debt

 

83.7

 

 

 

38.9

 

Repayments of short-term debt

 

(46.7

)

 

 

(38.9

)

Net proceeds from issuance of long-term debt

 

1,497.8

 

 

 

1,498.1

 

Repayments of long-term debt

 

(1,000.0

)

 

 

(1,000.0

)

Proceeds from issuance of common stock

 

149.4

 

 

 

75.5

 

Cash dividends paid

 

(1,824.8

)

 

 

(1,701.1

)

Repurchase of common stock

 

(699.3

)

 

 

(4,013.0

)

Minimum tax withholdings on share-based awards

 

(87.0

)

 

 

(123.5

)

Other

 

(11.0

)

 

 

(9.2

)

Net cash used in financing activities

 

(2,112.9

)

 

 

(5,073.2

)

Effect of exchange rate changes on cash and cash equivalents

 

(6.0

)

 

 

(126.3

)

Net increase/(decrease) in cash and cash equivalents

 

538.6

 

 

 

(3,278.2

)

CASH AND CASH EQUIVALENTS:

 

 

 

Beginning of period

 

2,818.4

 

 

 

6,455.7

 

End of period

$

3,357.0

 

 

$

3,177.5

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 

 

 

Cash paid during the period for:

 

 

 

Interest, net of capitalized interest

$

369.6

 

 

$

344.9

 

Income taxes

$

939.8

 

 

$

911.2

 

Supplemental Information

The following supplemental information is provided for historical and comparative purposes.

U.S. Supplemental Data

 

Quarter Ended

 

Change (%)

($ in millions)

Jul 2, 2023

 

Jul 3, 2022

 

Revenues

$6,272.3

 

$5,622.9

 

12%

Change in Comparable Store Sales (1)

7%

 

9%

 

 

Change in Transactions

1%

 

0%

 

 

Change in Ticket

6%

 

8%

 

 

Store Count

16,144

 

15,650

 

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 while stores identified for permanent closure have been removed.

China Supplemental Data

 

Quarter Ended

 

Change (%)

($ in millions)

Jul 2, 2023

 

Jul 3, 2022

 

Revenues

$821.9

 

$544.5

 

51%

Change in Comparable Store Sales (1)

46%

 

(44)%

 

 

Change in Transactions

48%

 

(43)%

 

 

Change in Ticket

(1)%

 

(1)%

 

 

Store Count

6,480

 

5,761

 

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 due to the COVID-19 pandemic remain in comparable store sales while stores identified for permanent closure have been removed.

Store Data

 

Net stores opened/(closed) and transferred during the period

 

 

 

 

 

Quarter Ended

 

Three Quarters Ended

 

Stores open as of

 

Jul 2,
2023

 

Jul 3,
2022

 

Jul 2,
2023

 

Jul 3,
2022

 

Jul 2,
2023

 

Jul 3,
2022

North America:

 

 

 

 

 

 

 

 

 

 

 

Company-operated stores

105

 

96

 

236

 

189

 

10,452

 

10,050

Licensed stores

5

 

28

 

61

 

35

 

7,140

 

7,000

Total North America

110

 

124

 

297

 

224

 

17,592

 

17,050

International:

 

 

 

 

 

 

 

 

 

 

 

Company-operated stores

272

 

130

 

543

 

445

 

8,580

 

7,717

Licensed stores

206

 

64

 

671

 

446

 

11,050

 

10,181

Total International

478

 

194

 

1,214

 

891

 

19,630

 

17,898

Total Company

588

 

318

 

1,511

 

1,115

 

37,222

 

34,948

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, the majority of these costs will be recognized over a finite period of time.

Non-GAAP G&A, non-GAAP operating income, non-GAAP operating income growth, non-GAAP operating margin, non-GAAP effective tax rate and non-GAAP earnings per share may have limitations as analytical tools. These measures should not be considered in isolation or as a substitute for analysis of the company’s results as reported under GAAP. Other companies may calculate these non-GAAP financial measures differently than the company does, limiting the usefulness of those measures for comparative purposes.

STARBUCKS CORPORATION

RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES

(unaudited, in millions except per share data)




 

 

Quarter Ended (1)

 

 

Consolidated

Jul 2,
2023

 

Jul 3,
2022

 

Change

Operating income, as reported (GAAP)

$

1,583.9

 

 

$

1,295.5

 

 

22.3%

Restructuring and impairment costs (2)

 

7.1

 

 

 

14.0

 

 

 

Transaction and integration-related costs (3)

 

 

 

 

63.5

 

 

 

Non-GAAP operating income

$

1,591.0

 

 

$

1,373.0

 

 

15.9%

 

 

 

 

 

 

Operating margin, as reported (GAAP)

 

17.3

%

 

 

15.9

%

 

140 bps

Restructuring and impairment costs (2)

 

0.1

 

 

 

0.2

 

 

 

Transaction and integration-related costs (3)

 

 

 

 

0.8

 

 

 

Non-GAAP operating margin

 

17.4

%

 

 

16.9

%

 

50 bps

 

 

 

 

 

 

Diluted net earnings per share, as reported (GAAP)

$

0.99

 

 

$

0.79

 

 

25.3%

Restructuring and impairment costs (2)

 

0.01

 

 

 

0.01

 

 

 

Transaction and integration-related costs (3)

 

 

 

 

0.06

 

 

 

Income tax effect on Non-GAAP adjustments (4)

 

0.00

 

 

 

(0.02

)

 

 

Non-GAAP EPS

$

1.00

 

 

$

0.84

 

 

19.0%

(1)


Certain numbers may not foot due to rounding convention.

(2)


Represents costs associated with our restructuring efforts.

(3)


The third quarter of fiscal 2022 includes amortization expense of acquired intangible assets associated with the acquisition of East China and other expenses associated with our Russia market exit.

(4)


Adjustments were determined based on the nature of the underlying items and their relevant jurisdictional tax rates.

Q3 QTD FY23 NON-GAAP DISCLOSURE DETAILS

(in millions and before income taxes)






 

Q3 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

Transaction and
Integration-Related
Costs

Restructuring and
Impairment Costs

Total Non-GAAP
Adjustment

Restructuring and impairments

$

7.1

 

$


$


$


$


$

7.1

 

Total impact to operating income

$

(7.1

)

$

 

$

 

$

 

$

 

$

(7.1

)