Summary
Starbucks Corporation (SBUX) reported its first quarter fiscal year 2018 results for the period ending December 30, 2017. The company demonstrated robust revenue growth, up 6% year-over-year to $6.1 billion, driven by a combination of net new store openings and a 2% increase in global comparable store sales. A significant event during the quarter was the acquisition of the remaining 50% interest in the East China joint venture for approximately $1.4 billion, which contributed to a substantial one-time gain. This acquisition is expected to bolster future growth in the key China/Asia Pacific market. Net earnings attributable to Starbucks saw a dramatic increase to $2.25 billion from $751.8 million in the prior year's comparable quarter. This surge was largely influenced by a $1.3 billion gain from the East China joint venture remeasurement and other streamlining gains, including the sale of the Tazo brand and divestiture of Taiwan operations. While operational performance was solid, investors should note the impact of strategic streamlining efforts, including the closure of Teavana stores, which contributed to restructuring expenses. The company also highlighted the initial impacts of the Tax Cuts and Jobs Act, including a lower effective tax rate.
Financial Highlights
58 data points| Revenue | $6.07B |
| Cost of Revenue | $2.50B |
| Gross Profit | $3.57B |
| Operating Expenses | $5.05B |
| Operating Income | $1.12B |
| Interest Expense | $25.90M |
| Net Income | $2.25B |
| EPS (Basic) | $1.58 |
| EPS (Diluted) | $1.57 |
| Shares Outstanding (Basic) | 1.42B |
| Shares Outstanding (Diluted) | 1.43B |
Key Highlights
- 1Total net revenues increased by 6% to $6.1 billion, driven by 2,305 net new stores and 2% comparable store sales growth.
- 2Net earnings attributable to Starbucks surged by 199% to $2.25 billion, significantly boosted by a $1.3 billion gain from the acquisition of the East China joint venture.
- 3The company acquired the remaining 50% of its East China joint venture for approximately $1.4 billion, a strategic move to enhance its presence in a key growth market.
- 4Restructuring expenses were recognized due to ongoing streamlining efforts, including the closure of Teavana retail stores and other operational adjustments.
- 5The Tax Cuts and Jobs Act resulted in a lower effective tax rate for the quarter, with provisional adjustments recorded for remeasured deferred tax liabilities and transition tax on foreign earnings.
- 6Starbucks returned significant capital to shareholders, repurchasing $1.6 billion of common stock and declaring a quarterly cash dividend of $0.30 per share.
- 7Operating income saw a slight decrease of 1% to $1.1 billion, with operating margin declining 140 basis points to 18.4% due to the impact of a food-related mix shift and restructuring costs.