10-QPeriod: Q2 FY2024

STARBUCKS CORP Quarterly Report for Q2 Ended Mar 31, 2024

Filed April 30, 2024For Securities:SBUX

Summary

Starbucks Corporation reported second-quarter fiscal year 2024 results showing a slight decrease in total net revenues to $8.6 billion, down 1.8% year-over-year, impacted by a 4% decline in global comparable store sales and unfavorable foreign currency fluctuations. This decline was partially offset by new store openings. Operating income decreased by 17.2% to $1.1 billion, leading to a lower operating margin of 12.8%. The company faced headwinds from a complex global operating environment, including softening consumer sentiment and inflation. Despite the near-term challenges, Starbucks highlighted progress in its 'Reinvention' strategy, which is driving operational efficiencies. The company continues to expand its store footprint, with a 6% increase in total stores year-over-year. Diluted earnings per share for the quarter were $0.68, compared to $0.79 in the prior year. Management remains confident in the long-term growth model and the effectiveness of its strategies to navigate the current environment.

Financial Highlights

54 data points
Beta

Revenue

$8.56B

Net Income

$772.40M

9.0% Net Margin

EPS (Diluted)

$0.68

Total Assets

$29.36B

Cash & Equivalents

$2.76B

Free Cash Flow

-$153.10M

Financial Statements
Beta
Revenue$8.56B
Operating Expenses$7.53B
Operating Income$1.10B
Interest Expense$140.60M
Net Income$772.40M
EPS (Basic)$0.68
EPS (Diluted)$0.68
Shares Outstanding (Basic)1.13B
Shares Outstanding (Diluted)1.14B

Key Highlights

  • 1Total net revenues for the quarter decreased 1.8% to $8.6 billion.
  • 2Global comparable store sales declined 4%, with a 3% decrease in the U.S. and a 6% decrease internationally.
  • 3Operating income decreased 17.2% to $1.1 billion, and operating margin compressed by 240 basis points to 12.8%.
  • 4Net new company-operated store openings contributed $255 million in incremental revenue, and the total store count increased by 6% year-over-year.
  • 5Product and distribution costs as a percentage of total net revenues decreased 120 basis points.
  • 6Store operating expenses as a percentage of total net revenues increased 180 basis points, primarily due to increased wages and benefits.
  • 7Diluted earnings per share decreased to $0.68 from $0.79 in the prior year quarter.

Frequently Asked Questions

The primary driver of the revenue decline was a 4% decrease in global comparable store sales, which was affected by a 6% decrease in comparable transactions and unfavorable foreign currency translation impacts. This was partially offset by the incremental revenue from 1,454 net new company-operated stores.

Store operating expenses as a percentage of total net revenues increased by 180 basis points, mainly due to higher investments in store partner wages and benefits, deleverage, and increased promotional activity. This, along with other expense increases, contributed to the 240 basis point decrease in operating margin to 12.8%.

Starbucks anticipates that the complex global operating environment and headwinds may continue. However, the company expresses confidence in its 'Triple Shot Reinvention' strategy, which is driving operational efficiencies, and its long-term growth model, global brand strength, and innovative product pipeline to navigate these challenges.

Starbucks repurchased $1.25 billion of common stock during the first two quarters of fiscal 2024 and has 29.8 million shares remaining available for repurchase. The company also approved a quarterly cash dividend of $0.57 per share, to be paid in May 2024.