01—Abstract
Summary
Summary of the 10-Q filed April 30, 2024. Cited figures are marked; the original filing is the authoritative source.
Starbucks Corporation reported second-quarter fiscal year 2024 results showing a slight decrease in total net revenues to $8.6 billiona, 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 billionb, 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%c increase in total stores year-over-year.
Diluted earnings per share for the quarter were $0.68, compared to $0.79d in the prior year. Management remains confident in the long-term growth model and the effectiveness of its strategies to navigate the current environment.
02—Key points
Key Highlights
- Total net revenues for the quarter decreased 1.8% to $8.6 billion.
- Global comparable store sales declined 4%, with a 3% decrease in the U.S. and a 6% decrease internationally.
- Operating income decreased 17.2% to $1.1 billion, and operating margin compressed by 240 basis points to 12.8%.
- Net new company-operated store openings contributed $255 million in incremental revenue, and the total store count increased by 6% year-over-year.
- Product and distribution costs as a percentage of total net revenues decreased 120 basis points.
- Store operating expenses as a percentage of total net revenues increased 180 basis points, primarily due to increased wages and benefits.
- Diluted earnings per share decreased to $0.68 from $0.79 in the prior year quarter.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed April 30, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $8.56B$8.71B | −1.7% |
| Operating Expenses | $7.53B$7.52B | +0.2% |
| Operating Income | $1.10B$1.25B | −12.3% |
| Interest Expense | $140.60M$129.70M | +8.4% |
| Net Income | $772.40M$855.20M | −9.7% |
| EPS (Basic) | $0.68$0.74 | −8.1% |
| EPS (Diluted) | $0.68$0.74 | −8.1% |
| Shares Outstanding (Basic) | 1.13B1.15B | −1.4% |
| Shares Outstanding (Diluted) | 1.14B1.15B | −1.5% |
05—Questions
Frequently Asked Questions
What was the primary driver of the revenue decline in the second quarter of fiscal year 2024?
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.
How did operating expenses change, and what impacted the operating margin?
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%.
What is the company's outlook given the current challenging environment?
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.
How is the company returning value to shareholders?
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.
06—Continue