01—Abstract
Summary
Summary of the 10-K filed November 20, 2024. Cited figures are marked; the original filing is the authoritative source.
Starbucks Corporation's fiscal year 2024 filing indicates a challenging year marked by a 1% increase in net revenues to $36.2 billiona, largely driven by new store openings, but this was offset by a 2% decline in comparable store sales and unfavorable foreign currency translation.
The company experienced a decrease in operating income to $5.4 billion and diluted earnings per share to $3.31b. This performance was attributed to reduced customer traffic and the impact of investments that did not fully improve customer behaviors as intended, alongside macroeconomic and competitive pressures in China. In response, Starbucks is implementing a "Back to Starbucks" strategy under new CEO Brian Niccol, focusing on reinvesting in partners, enhancing customer experience, and driving innovation.
The company continues to invest in its workforce, offering comprehensive benefits and focusing on diversity and inclusion. Despite operational challenges, Starbucks returned $3.8 billionc to shareholders through dividends and share repurchases in fiscal year 2024.
The company maintains a strong liquidity position with a $3.0 billiond revolving credit facility and no outstanding borrowings as of the fiscal year-end. The report also highlights ongoing efforts in cybersecurity and a commitment to ESG initiatives, while acknowledging risks related to competition, supply chain, and macroeconomic conditions.
02—Key points
Key Highlights
- Consolidated net revenues increased 1% to $36.2 billion in fiscal year 2024, primarily due to net new company-operated store growth, partially offset by a 2% decline in comparable store sales and unfavorable foreign currency translation.
- Operating income decreased to $5.4 billion in fiscal 2024 from $5.9 billion in fiscal 2023, with operating margin contracting 130 basis points to 15.0%, largely due to investments in partner wages and benefits and deleverage.
- Diluted earnings per share (EPS) decreased to $3.31 in fiscal 2024 from $3.58 in fiscal 2023, reflecting the contraction in operating margin.
- Starbucks is undergoing a strategic reset with its "Back to Starbucks" plan under new CEO Brian Niccol to address customer traffic decline and return to growth.
- Capital expenditures increased to $2.8 billion in fiscal 2024 from $2.3 billion in fiscal 2023, reflecting continued investment in store development and other initiatives.
- The company returned $3.8 billion to shareholders in fiscal 2024 through dividends ($2.6 billion) and share repurchases ($1.3 billion).
- As of September 29, 2024, Starbucks had $3.8 billion in cash and investments and maintained a $3.0 billion unsecured revolving credit facility with no outstanding borrowings.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2024filed November 20, 2024Financial Statements
FY2024 against FY2023
| Line item | FY2024FY2023 | Change |
|---|---|---|
| Revenue | $36.18B$35.98B | +0.6% |
| Operating Expenses | $31.07B$30.49B | +1.9% |
| Operating Income | $5.41B$5.87B | −7.9% |
| Interest Expense | $562.00M$550.10M | +2.2% |
| Net Income | $3.76B$4.12B | −8.8% |
| EPS (Basic) | $3.32$3.60 | −7.8% |
| EPS (Diluted) | $3.31$3.58 | −7.5% |
| Shares Outstanding (Basic) | 1.13B1.15B | −1.1% |
| Shares Outstanding (Diluted) | 1.14B1.15B | −1.2% |
05—Questions
Frequently Asked Questions
What was Starbucks' financial performance in fiscal year 2024?
In fiscal year 2024, Starbucks reported a 1% increase in net revenues to $36.2 billion. However, comparable store sales declined by 2%, and operating income decreased to $5.4 billion, resulting in diluted earnings per share of $3.31. The company experienced reduced customer traffic and noted challenges in the macroeconomic and competitive environment, particularly in China.
What is Starbucks' strategy to address the recent performance challenges?
Under new CEO Brian Niccol, Starbucks is implementing a "Back to Starbucks" strategy. This plan focuses on reinvesting in partners (employees), enhancing the customer experience, re-establishing the company as a community coffee house, and innovating the coffee tasting experience through product development and marketing.
How did Starbucks manage its capital and shareholder returns in fiscal year 2024?
Starbucks returned $3.8 billion to shareholders in fiscal year 2024 through $2.6 billion in dividends and $1.3 billion in share repurchases. The company invested $2.8 billion in capital expenditures, primarily in new and existing stores and supply chain initiatives, and maintained a strong liquidity position with $3.8 billion in cash and investments and an undrawn $3.0 billion credit facility.
What are the key risks Starbucks faces according to the filing?
Starbucks faces numerous risks, including those related to brand relevance and execution, business operations (such as managing growth and customer experience investments), operating a global business (especially dependence on North America and international markets like China), supply chain disruptions, macroeconomic conditions, human capital management (labor costs and availability), intense competition, environmental, social, and governance (ESG) matters, regulatory compliance, litigation, cybersecurity, and intellectual property protection.
06—Continue