10-QPeriod: Q2 FY2025

STARBUCKS CORP Quarterly Report for Q2 Ended Mar 30, 2025

Filed April 29, 2025For Securities:SBUX

Summary

Starbucks Corporation (SBUX) reported its financial results for the second quarter ended March 30, 2025. Total net revenues increased by 2.3% to $8.8 billion year-over-year, driven by the opening of new company-operated stores and the conversion of licensed stores following an acquisition. However, global comparable store sales declined by 1%, impacted by a 2% decrease in transactions in the U.S. market, despite a slight increase in average ticket. Profitability was significantly affected by a substantial contraction in operating margin, which fell by 590 basis points to 6.9%. This was primarily due to deleverage, increased labor costs associated with the 'Back to Starbucks' strategy, and significant restructuring charges of $116.2 million related to workforce reductions in its support organization. While revenue shows modest growth, the decline in comparable store sales and the substantial decrease in operating margin highlight ongoing challenges in driving top-line growth and managing costs effectively.

Financial Highlights

54 data points
Beta

Revenue

$8.76B

Net Income

$384.20M

4.4% Net Margin

EPS (Diluted)

$0.34

Total Assets

$31.63B

Cash & Equivalents

$2.67B

Free Cash Flow

-$297.20M

Financial Statements
Beta
Revenue$8.76B
Operating Expenses$8.22B
Operating Income$601.00M
Interest Expense$127.30M
Net Income$384.20M
EPS (Basic)$0.34
EPS (Diluted)$0.34
Shares Outstanding (Basic)1.14B
Shares Outstanding (Diluted)1.14B

Key Highlights

  • 1Total net revenues increased by 2.3% to $8.8 billion in the second quarter, primarily from new store openings.
  • 2Global comparable store sales decreased by 1%, with a 2% decline in the U.S. market driven by fewer transactions.
  • 3Operating margin significantly contracted by 590 basis points to 6.9% due to deleverage, increased labor costs, and restructuring charges.
  • 4Restructuring charges of $116.2 million were recorded, mainly for severance costs related to organizational simplification.
  • 5Company-operated store revenue grew by 3.3%, boosted by a 6% increase in net new stores over the past 12 months.
  • 6International segment revenues grew by 6%, benefiting from new store openings and higher licensed store royalties, though negatively impacted by foreign currency translation.
  • 7Cash provided by operating activities decreased to $2.4 billion for the first two quarters compared to $2.9 billion in the prior year, mainly due to lower net earnings.

Frequently Asked Questions

Revenue increased primarily due to incremental revenues from net new company-operated stores (a 6% increase over the past 12 months) and the conversion of 113 licensed stores to company-operated stores following the acquisition of 23.5 Degrees Topco Limited. These were partially offset by a decrease in comparable store sales and unfavorable foreign currency translation impacts.

The operating margin contracted by 590 basis points primarily due to deleverage (approximately 300 basis points in North America), additional labor costs in support of the 'Back to Starbucks' strategy (approximately 230 basis points in North America), and significant restructuring costs of $116.2 million related to simplifying the global support organization.

Global comparable store sales declined by 1% in the second quarter. The U.S. market saw a 2% decrease, driven by a 4% decrease in comparable transactions, partially offset by a 3% increase in average ticket. International comparable store sales increased by 2%.

Starbucks recorded $116.2 million in pre-tax restructuring charges, primarily associated with partner severance costs resulting from the simplification of its global support organization as part of the 'Back to Starbucks' strategy. Approximately $69 million of these severance costs remained accrued on the balance sheet as of March 30, 2025.