10-QPeriod: Q3 FY2021

STARBUCKS CORP Quarterly Report for Q3 Ended Jun 27, 2021

Filed July 27, 2021For Securities:SBUX

Summary

Starbucks Corporation reported robust financial results for the third quarter and first three quarters of fiscal year 2021, demonstrating a strong recovery and growth trajectory following the COVID-19 pandemic. Total net revenues saw a significant increase of 77.6% in the third quarter, reaching $7.5 billion, driven by a substantial 84.7% surge in company-operated store revenues. This growth was fueled by a 73% increase in global comparable store sales, indicating a strong return of customer demand. The company also experienced healthy growth in licensed stores and continued to manage its operations effectively, with significant improvements in operating income and margins across its key segments. The company's strategic focus on contactless experiences, digital capabilities, and beverage innovation appears to be paying off. While the international segment faced ongoing pandemic-related restrictions, its performance still showed considerable improvement year-over-year. Furthermore, the company's financial condition remains solid, with substantial cash and investments, and adequate borrowing capacity. The company has reaffirmed its quarterly cash dividend and anticipates significant capital expenditures in fiscal year 2021 to support business growth.

Financial Highlights

53 data points
Beta

Revenue

$7.50B

Net Income

$1.15B

15.4% Net Margin

EPS (Diluted)

$0.97

Total Assets

$29.48B

Cash & Equivalents

$4.75B

Free Cash Flow

$1.41B

Financial Statements
Beta
Revenue$7.50B
Operating Expenses$6.11B
Operating Income$1.49B
Interest Expense$113.40M
Net Income$1.15B
EPS (Basic)$0.98
EPS (Diluted)$0.97
Shares Outstanding (Basic)1.18B
Shares Outstanding (Diluted)1.19B

Key Highlights

  • 1Total net revenues increased by 77.6% to $7.5 billion for the third quarter of fiscal 2021, compared to $4.2 billion in the prior year period.
  • 2Global comparable store sales grew by 73% for the third quarter, indicating a strong recovery from the pandemic's impact.
  • 3Company-operated store revenues surged by 84.7% to $6.4 billion in Q3 FY21.
  • 4Operating income significantly improved to $1.5 billion in Q3 FY21 from a loss of $0.7 billion in Q3 FY20, with operating margins expanding considerably.
  • 5The Americas segment saw a strong rebound with operating income of $1.3 billion, a significant improvement from a loss of $0.4 billion in the prior year quarter.
  • 6The company reported $2.4 billion in net earnings attributable to Starbucks for the first three quarters of fiscal 2021, a substantial increase from $0.5 billion in the same period last year.
  • 7Starbucks ended the quarter with a healthy cash and investments balance of $5.2 billion and maintained ample borrowing capacity.

Frequently Asked Questions

Starbucks reported a significant increase in total net revenues, up 77.6% to $7.5 billion for the third quarter of fiscal year 2021, compared to $4.2 billion in the same period of fiscal year 2020. This growth was primarily driven by a strong recovery in company-operated store revenues and a substantial increase in comparable store sales.

The company continues to expand its store footprint. As of June 27, 2021, Starbucks had over 33,200 company-operated and licensed stores globally, an increase of 3% from the prior year. The Americas segment opened 55 net new stores in the third quarter, while the International segment added 297 net new stores.

While the company is still experiencing some lingering effects and continues to incur certain costs related to the pandemic, the third quarter of fiscal 2021 demonstrated a strong recovery beyond previous pandemic impacts. Consolidated net revenues increased substantially year-over-year, and comparable store sales showed robust growth, indicating a powerful momentum in business recovery.

Starbucks maintains a solid liquidity position with $5.2 billion in cash and investments as of June 27, 2021. The company has substantial unsecured revolving credit facilities totaling $3.0 billion and had no borrowings outstanding under these facilities or its commercial paper program at the end of the quarter. The company expects its future cash flows, existing cash, and investment balances, along with potential borrowing capacity, to be sufficient for its operational needs, capital expenditures, and shareholder returns.