Q2 Comparable Store Sales Growth of 9% in the
U.S.; Demonstrating Full Sales Recovery Q2 Comparable Store Sales
Growth of 91% in China, Including Reinstated VAT Benefit Q2 GAAP
EPS $0.56; Non-GAAP EPS $0.62 Reflecting Meaningful Margin
Improvement from Prior Quarter Active Starbucks® Rewards Membership
in the U.S. Up 18% Year-Over-Year to 22.9 Million Raising Full-Year
Fiscal 2021 Revenue, Margin and Earnings Per Share Guidance
Starbucks Corporation (NASDAQ: SBUX) today reported financial
results for its 13-week fiscal second quarter ended March 28, 2021.
GAAP results in fiscal 2021 and fiscal 2020 include items that are
excluded from non-GAAP results. Please refer to the reconciliation
of GAAP measures to non-GAAP measures at the end of this release
for more information.
“I am very pleased with our progress to date in fiscal 2021, as
our second quarter results demonstrated impressive momentum in the
business with full sales recovery in the U.S. Our strong results
validate our ability to adapt to changes in our environment and the
needs of our customers,” said Kevin Johnson, president and ceo.
“We have positioned Starbucks for the inevitable great human
reconnection that we see unfolding in the U.S. and will propagate
in every market around the world, where people once again connect
with others face-to-face to heal, to belong, to reflect, to share
and to celebrate. Starbucks was built for this moment, and as we
celebrate our 50th anniversary, we remain confident in our ability
to execute our ‘Growth at Scale’ agenda and unlock the full
potential of the Starbucks brand,” concluded Johnson.
Q2 Fiscal 2021
Highlights
- Global comparable store sales increased 15%, driven by a 19%
increase in average ticket, partially offset by a 4% decline in
comparable transactions
- Americas comparable store sales increased 9%, driven by a 22%
increase in average ticket, partially offset by a 10% decline in
comparable transactions; U.S. comparable store sales increased 9%,
driven by a 21% increase in average ticket, partially offset by a
10% decline in comparable transactions
- International comparable store sales increased 35%, driven by a
26% increase in comparable transactions and a 7% increase in
average ticket; China comparable store sales increased 91%, driven
by a 93% increase in transactions, slightly offset by a 1% decline
in average ticket; International and China comparable store sales
are inclusive of a benefit from value-added tax exemptions in China
reinstated as of January 1, 2021, of approximately 4% and 9%,
respectively
- The company opened 5 net new stores in the second quarter of
fiscal 2021, yielding 3% year-over-year unit growth, ending the
period with 32,943 stores globally, of which 51% and 49% were
company-operated and licensed, respectively
- Net new store openings reflect the impact of approximately 300
U.S. and Canada company-operated store closures in relation to the
acceleration of the Americas Trade Area Transformation initiative
announced last June, which is part of our ongoing strategy to
strengthen and optimize our portfolio
- Stores in the U.S. and China comprised 62% of the company’s
global portfolio at the end of the second quarter of fiscal 2021,
with 15,288 and 4,973 stores, respectively
- Consolidated net revenues of $6.7 billion increased 11% from
the prior year, mainly driven by a 15% growth in comparable store
sales primarily from lapping the unfavorable impact of business
disruption in the prior year due to the COVID-19 pandemic and
strength in U.S. company-operated sales in the current year,
partially offset by the unfavorable impact of Global Coffee
Alliance transition-related activities
- GAAP operating margin of 14.8% increased from 8.1% in the prior
year primarily driven by sales leverage from business recovery and
the lapping of COVID-19 related costs in the prior year, partially
offset by growth and investments in wages and benefits for store
partners
- Non-GAAP operating margin of 16.1%, up from 9.2% in the prior
year
- GAAP earnings per share of $0.56, up from $0.28 in the prior
year
- Non-GAAP earnings per share of $0.62, up from $0.32 in the
prior year
- Starbucks® Rewards loyalty program 90-day active members in the
U.S. increased to 22.9 million, up 18% year-over-year
Q2 Americas Segment
Results
Quarter Ended
($ in millions)
Mar 28, 2021
Mar 29, 2020
Change (%)
Change in Comparable Store Sales (1)
9%
(3)%
Change in Transactions
(10)%
(7)%
Change in Ticket
22%
5%
Store Count
18,120
18,271
(1)%
Revenues
$4,664.6
$4,330.0
8%
Operating Income
$905.3
$621.2
46%
Operating Margin
19.4%
14.3%
510 bps
(1)
Includes only Starbucks® company-operated
stores open 13 months or longer. Comparable store sales exclude the
effects of fluctuations in foreign currency exchange rates and
Siren Retail stores. Stores that are temporarily closed or
operating at reduced hours due to the COVID-19 pandemic remain in
comparable store sales while stores identified for permanent
closure have been removed.
Net revenues for the Americas segment grew 8% over Q2 FY20 to
$4.7 billion in Q2 FY21, primarily driven by 9% growth in
company-operated comparable store sales, partially offset by lower
product sales to and royalty revenues from our licensees, primarily
due to the impact of the COVID-19 pandemic.
The Americas segment reported operating income of $905.3 million
in Q2 FY21, compared to $621.2 million in Q2 FY20. Operating margin
of 19.4% expanded 510 basis points, primarily driven by the lapping
of COVID-19 related costs in the prior year, sales leverage from
business recovery, pricing, temporary government subsidies and the
benefits of Trade Area Transformation, partially offset by growth
and investments in wages and benefits for store partners. The
pandemic-related costs incurred in the prior year were largely
catastrophe and service pay for store partners, as well as
inventory write-offs.
Q2 International Segment
Results
Quarter Ended
($ in millions)
Mar 28, 2021
Mar 29, 2020
Change (%)
Change in Comparable Store Sales (1)
35%
(31)%
Change in Transactions
26%
(32)%
Change in Ticket
7%
1%
Store Count
14,823
13,779
8%
Revenues
$1,610.9
$1,134.6
42%
Operating Income/(Loss)
$251.5
($15.4)
nm
Operating Margin/(Loss)
15.6%
(1.4)%
1,700 bps
(1)
Includes only Starbucks® company-operated
stores open 13 months or longer. Comparable store sales exclude the
effects of fluctuations in foreign currency exchange rates and
Siren Retail stores. Stores that are temporarily closed or
operating at reduced hours due to the COVID-19 pandemic remain in
comparable store sales while stores identified for permanent
closure have been removed. For the second quarter of fiscal 2021,
the International segment's comparable store sales included a 4%
benefit related to a temporary value-added tax exemption in
China.
Net revenues for the International segment grew 42% over Q2 FY20
to $1.6 billion in Q2 FY21, driven by 35% growth in comparable
store sales primarily due to lapping the severe impact of the
COVID-19 pandemic in the prior year, an 8% favorable impact from
foreign currency translation and 1,044 net new store openings, or
8% store growth, over the past 12 months, partially offset by lower
product sales to and royalty revenues from our licensees, primarily
due to the persisting impact of the COVID-19 pandemic.
The International segment reported operating income of $251.5
million in Q2 FY21 compared to operating loss of $15.4 million in
Q2 FY20. Operating margin of 15.6% increased from (1.4)% in the
prior year, primarily driven by sales leverage due to lapping the
severe impact of the COVID-19 pandemic in the prior year and, to a
lesser extent, favorability from temporary government
subsidies.
Q2 Channel Development Segment
Results
Quarter Ended
($ in millions)
Mar 28, 2021
Mar 29, 2020
Change (%)
Revenues
$369.9
$519.1
(29)%
Operating Income
$172.6
$189.6
(9)%
Operating Margin
46.7%
36.5%
1,020 bps
Net revenues for the Channel Development segment of $369.9
million in Q2 FY21 were 29% lower relative to Q2 FY20. The decline
was primarily driven by a 30% unfavorable impact of Global Coffee
Alliance transition-related activities, including a structural
change in our single-serve business and lapping additional product
sales in the prior year to Nestlé to transition Foodservice order
fulfillment, partially offset by growth in our ready-to-drink
business.
Operating income decreased 9% to $172.6 million in Q2 FY21, down
from $189.6 million in Q2 FY20. Operating margin expanded 1,020
basis points to 46.7%, primarily due to the structural change in
our single-serve business, lapping the transition of Foodservice
order fulfillment to Nestlé in the prior year and growth in our
ready-to-drink business.
Full Year Fiscal 2021
Guidance
Please note that Starbucks fiscal year 2021 is a 53-week year
instead of the usual 52 weeks. The impact of the 53rd week will be
reflected in our results for the fourth quarter of fiscal 2021. All
full-year guidance for the metrics noted below is for fiscal year
2021 on a 53-week basis except comparable store sales growth
metrics, which are relative to fiscal year 2020 on a 52-week
basis.
The company updates the following
fiscal year 2021 guidance:
- Consolidated revenue of $28.5 billion to $29.3 billion,
inclusive of a $500 million impact attributable to the 53rd week
- (previously $28.0 billion to $29.0 billion, inclusive of a $500
million impact attributable to the 53rd week)
- Consolidated GAAP operating margin of 15% to 16%
- Consolidated non-GAAP operating margin of 16.5% to 17.5%
- GAAP EPS in the range of $2.65 to $2.75, inclusive of a $0.10
impact attributable to the 53rd week
- (previously $2.42 to $2.62, inclusive of a $0.10 impact
attributable to the 53rd week)
- Non-GAAP EPS in the range of $2.90 to $3.00 inclusive of a
$0.10 impact attributable to the 53rd week
- (previously $2.70 to $2.90, inclusive of a $0.10 impact
attributable to the 53rd week)
- GAAP and non-GAAP effective tax rates in the low to mid-20%s
The company reiterates the
following fiscal year 2021 guidance:
- Global comparable store sales growth of 18% to 23%
- Americas and U.S. comparable store sales growth of 17% to
22%
- International comparable store sales growth of 25% to 30%
- China comparable store sales growth of 27% to 32%
- Approximately 2,150 new store openings and 1,100 net new
Starbucks stores globally
- Americas approximately 850 new store openings and approximately
50 net new stores
- International approximately 1,300 new store openings and 1,050
net new stores
- Approximately 600 net new stores in China
- Channel Development revenue of $1.4 billion to $1.6
billion
- Interest expense of approximately $470 million to $480
million
- Capital expenditures of approximately $1.9 billion
Please note, the guidance provided above is dependent on our
current expectations, which may be impacted by evolving external
conditions, local safety guidelines, shifts in customer routines,
preferences and mobility as well as tax policy changes.
Please refer to the reconciliation of GAAP measures to non-GAAP
measures at the end of this release.
The company will provide additional information regarding its
business outlook during its regularly scheduled quarterly earnings
conference call today; this information will also be available
following the call on the company’s website at
http://investor.starbucks.com.
Company Updates
- In January, the company announced its commitment to invest $100
million by 2025 to create the Starbucks Community Resilience Fund.
The fund focuses on advancing racial equity and environmental
resilience by supporting small business growth and community
development projects in Black, Indigenous and People of Color
neighborhoods with historically limited access to capital.
- As a progression towards environmental goals previously
announced in 2020, in March, the company announced its commitment
to achieving carbon neutral green coffee and conserve water usage
in green coffee processing by 50% by 2030.
- In March, the company celebrated its 50th anniversary during
its Annual Meeting of Shareholders. During the virtual meeting,
senior leadership and partners from around the world gathered to
reflect on the company’s history and celebrate the remarkable story
of Starbucks.
- In March, the company published its third edition of an
objective assessment of its work on civil rights, called the Civil
Rights Assessment. This evaluation conducted by Covington &
Burling LLP under the leadership of former U.S. Attorney General
Eric Holder, Jr. addresses the company's progress over time. It
also provides recommendations for improvements to advancing
inclusion, diversity and equity on behalf of our partners,
customers and communities.
- The Board of Directors declared a cash dividend of $0.45 per
share, payable on May 28, 2021, to shareholders of record as of May
13, 2021.
Conference Call
Starbucks will hold a conference call today at 2:00 p.m. Pacific
Time, which will be hosted by Kevin Johnson, president and ceo, and
Rachel Ruggeri, cfo. The call will be webcast and can be accessed
at http://investor.starbucks.com. A replay of the webcast will be
available until end of day Friday, May 28, 2021.
About Starbucks
Since 1971, Starbucks Coffee Company has been committed to
ethically sourcing and roasting high-quality arabica coffee. Today,
with nearly 33,000 stores worldwide, the company is the premier
roaster and retailer of specialty coffee in the world. Through our
unwavering commitment to excellence and our guiding principles, we
bring the unique Starbucks Experience to life for every customer
through every cup. To share in the experience, please visit us in
our stores or online at stories.starbucks.com or
www.starbucks.com.
Forward-Looking
Statements
Certain statements contained herein and in our investor
conference call related to these results are “forward-looking”
statements within the meaning of the applicable securities laws and
regulations. Generally, these statements can be identified by the
use of words such as “anticipate,” “believe,” “continue,” “could,”
“estimate,” “expect,” “forecast,” “intend,” “may,” “outlook,”
“plan,” “potential,” “predict,” “project,” “remain,” “should,”
“will,” “would,” and similar expressions intended to identify
forward-looking statements, although not all forward-looking
statements contain these identifying words. These statements
include statements relating to: the estimated financial impact
related to the outbreak of coronavirus disease (COVID-19) including
the outlook, guidance and projections for revenues, earnings per
share, operating income, operating margins, comparable store sales,
net new stores, capital expenditures, interest expense and fiscal
2021 guidance; the nature and extent of the impact of COVID-19 on
our business, operations and financial results; the anticipated
timing and effects of recovery of our business, including our
ability to expand seating and operating hours at our stores; our
plans for streamlining our operations, including store openings,
closures and changes in store formats and models; our ability to
continue steady business improvement and improve customer and
partner experiences; and our ability to emerge from this global
crisis and drive long-term growth. These forward-looking statements
do not represent historical data, are based on currently available
operating, financial and competitive information and are subject to
a number of significant risks and uncertainties. Actual future
results and trends may differ materially depending on a variety of
factors, including, but not limited to: further spread of COVID-19;
regulatory measures or voluntary actions that may be put in place
to limit the spread of COVID-19, including restrictions on business
operations or social distancing requirements and the duration and
efficacy of such restrictions; the potential for a resurgence of
COVID-19 infections in a given geographic region after it has hit
its “peak”; fluctuations in U.S. and international economies and
currencies; our ability to preserve, grow and leverage our brands;
the ability of our business partners and third-party providers to
fulfill their responsibilities and commitments; potential negative
effects of incidents involving food or beverage-borne illnesses,
tampering, adulteration, contamination or mislabeling; potential
negative effects of material breaches of our information technology
systems to the extent we experience a material breach; material
failures of our information technology systems; costs associated
with, and the successful execution of, the company’s initiatives
and plans, including the successful expansion of our Global Coffee
Alliance with Nestlé; our ability to obtain financing on acceptable
terms; the acceptance of the company’s products by our customers,
evolving consumer preferences and tastes and the availability of
consumer financing; changes in the availability and cost of labor;
the impact of competition; inherent risks of operating a global
business; the prices and availability of coffee, dairy and other
raw materials; the effect of legal proceedings; and the effects of
changes in tax laws and related guidance and regulations that may
be implemented and other risks detailed in the company filings with
the Securities and Exchange Commission, including the “Risk
Factors” sections of Starbucks Annual Report on Form 10-K for the
fiscal year ended September 27, 2020 and Quarterly Report on Form
10-Q for the fiscal quarter ended December 27, 2020. The company
assumes no obligation to update any of these forward-looking
statements.
Non-GAAP Financial
Measures
Certain non-GAAP measures included in our press release and in
our investor conference call related to these results were not
reconciled to the comparable GAAP financial measures because the
GAAP measures are not accessible on a forward-looking basis. The
company is unable to reconcile these forward-looking non-GAAP
financial measures to the most directly comparable GAAP measures
without unreasonable efforts because the company is currently
unable to predict with a reasonable degree of certainty the type
and extent of certain items that would be expected to impact GAAP
measures for these periods but would not impact the non-GAAP
measures. Such items may include acquisitions, divestitures,
restructuring and other items. The unavailable information could
have a significant impact on the company’s GAAP financial
results.
Two-year Comparable Store
Sales
The two-year comparable store sales metric discussed in today's
investor conference call is calculated as ((1 + % change in
comparable store sales in Year 1) * (1 + % change in comparable
store sales in Year 2)) - 1. Refer to footnote 1 in the Segment
Results and Supplemental Information sections in this press release
for definitions of change in comparable store sales.
STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF
EARNINGS
(unaudited, in millions, except
per share data)
Quarter Ended
Quarter Ended
Mar 28,
Mar 29,
%
Mar 28,
Mar 29,
2021
2020
Change
2021
2020
As a % of total net
revenues
Net revenues:
Company-operated stores
$
5,653.1
$
4,766.0
18.6
%
84.8
%
79.5
%
Licensed stores
595.0
689.8
(13.7)
8.9
11.5
Other
419.9
539.9
(22.2)
6.3
9.0
Total net revenues
6,668.0
5,995.7
11.2
100.0
100.0
Product and distribution costs
1,992.4
1,997.7
(0.3)
29.9
33.3
Store operating expenses
2,823.3
2,721.4
3.7
42.3
45.4
Other operating expenses
87.7
95.0
(7.7)
1.3
1.6
Depreciation and amortization expenses
366.7
356.3
2.9
5.5
5.9
General and administrative expenses
464.4
406.5
14.2
7.0
6.8
Restructuring and impairments
23.0
(0.7)
nm
0.3
—
Total operating expenses
5,757.5
5,576.2
3.3
86.3
93.0
Income from equity investees
77.1
67.9
13.5
1.2
1.1
Operating income
987.6
487.4
102.6
14.8
8.1
Interest income and other, net
17.3
2.0
765.0
0.3
—
Interest expense
(115.0)
(99.2)
15.9
(1.7)
(1.7)
Earnings before income taxes
889.9
390.2
128.1
13.3
6.5
Income tax expense
230.5
65.4
252.4
3.5
1.1
Net earnings including noncontrolling
interests
659.4
324.8
103.0
9.9
5.4
Net loss attributable to noncontrolling
interests
—
(3.6)
nm
—
(0.1)
Net earnings attributable to
Starbucks
$
659.4
$
328.4
100.8
9.9
%
5.5
%
Net earnings per common share -
diluted
$
0.56
$
0.28
100.0
Weighted avg. shares outstanding -
diluted
1,184.8
1,180.7
Cash dividends declared per share
$
0.45
$
0.41
Supplemental Ratios:
Store operating expenses as a % of
company-operated store revenues
49.9
%
57.1
%
Effective tax rate including
noncontrolling interests
25.9
%
16.8
%
Two Quarters Ended
Two Quarters Ended
Mar 28,
Mar 29,
%
Mar 28,
Mar 29,
2021
2020
Change
2021
2020
As a % of total net
revenues
Net revenues:
Company-operated stores
$
11,379.6
$
10,546.6
7.9
%
84.8
%
80.6
%
Licensed stores
1,208.8
1,481.9
(18.4)
9.0
11.3
Other
829.1
1,064.3
(22.1)
6.2
8.1
Total net revenues
13,417.5
13,092.8
2.5
100.0
100.0
Product and distribution costs
4,041.5
4,234.2
(4.6)
30.1
32.3
Store operating expenses
5,690.7
5,542.9
2.7
42.4
42.3
Other operating expenses
179.5
196.7
(8.7)
1.3
1.5
Depreciation and amortization expenses
732.6
707.4
3.6
5.5
5.4
General and administrative expenses
936.5
840.7
11.4
7.0
6.4
Restructuring and impairments
95.2
5.6
nm
0.7
—
Total operating expenses
11,676.0
11,527.5
1.3
87.0
88.0
Income from equity investees
159.7
141.9
12.5
1.2
1.1
Operating income
1,901.2
1,707.2
11.4
14.2
13.0
Interest income and other, net
32.7
18.0
81.7
0.2
0.1
Interest expense
(235.8)
(191.1)
23.4
(1.8)
(1.5)
Earnings before income taxes
1,698.1
1,534.1
10.7
12.7
11.7
Income tax expense
416.5
324.0
28.5
3.1
2.5
Net earnings including noncontrolling
interests
1,281.6
1,210.1
5.9
9.6
9.2
Net loss attributable to noncontrolling
interests
—
(4.0)
nm
—
—
Net earnings attributable to
Starbucks
$
1,281.6
$
1,214.1
5.6
9.6
%
9.3
%
Net earnings per common share -
diluted
$
1.08
$
1.02
5.9
%
Weighted avg. shares outstanding -
diluted
1,183.9
1,185.8
Cash dividends declared per share
$
1.35
$
0.82
Supplemental Ratios:
Store operating expenses as a % of
company-operated store revenues
50.0
%
52.6
%
Effective tax rate including
noncontrolling interests
24.5
%
21.1
%
Segment Results (in
millions)
Americas
Mar 28,
Mar 29,
%
Mar 28,
Mar 29,
2021
2020
Change
2021
2020
Quarter
Ended
As a % of Americas total net
revenues
Net revenues:
Company-operated stores
$
4,268.4
$
3,863.6
10.5
%
91.5
%
89.2
%
Licensed stores
394.2
464.2
(15.1)
8.5
10.7
Other
2.0
2.2
(9.1)
—
0.1
Total net revenues
4,664.6
4,330.0
7.7
100.0
100.0
Product and distribution costs
1,227.6
1,248.2
(1.7)
26.3
28.8
Store operating expenses
2,203.1
2,158.6
2.1
47.2
49.9
Other operating expenses
41.9
41.8
0.2
0.9
1.0
Depreciation and amortization expenses
186.0
191.5
(2.9)
4.0
4.4
General and administrative expenses
77.7
68.2
13.9
1.7
1.6
Restructuring and impairments
23.0
0.5
nm
0.5
—
Total operating expenses
3,759.3
3,708.8
1.4
80.6
85.7
Operating income
$
905.3
$
621.2
45.7
%
19.4
%
14.3
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
51.6
%
55.9
%
Two Quarters
Ended
Net revenues:
Company-operated stores
$
8,553.2
$
8,334.6
2.6
%
91.3
%
89.2
%
Licensed stores
810.3
1,001.5
(19.1)
8.6
10.7
Other
4.4
4.8
(8.3)
—
0.1
Total net revenues
9,367.9
9,340.9
0.3
100.0
100.0
Product and distribution costs
2,503.8
2,636.6
(5.0)
26.7
28.2
Store operating expenses
4,442.1
4,373.0
1.6
47.4
46.8
Other operating expenses
84.7
84.3
0.5
0.9
0.9
Depreciation and amortization expenses
374.9
380.7
(1.5)
4.0
4.1
General and administrative expenses
148.5
140.6
5.6
1.6
1.5
Restructuring and impairments
95.2
5.7
nm
1.0
0.1
Total operating expenses
7,649.2
7,620.9
0.4
81.7
81.6
Operating income
$
1,718.7
$
1,720.0
(0.1)
%
18.3
%
18.4
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
51.9
%
52.5
%
International
Mar 28,
Mar 29,
%
Mar 28,
Mar 29,
2021
2020
Change
2021
2020
Quarter
Ended
As a % of International total
net revenues
Net revenues:
Company-operated stores
$
1,384.7
$
902.4
53.4
%
86.0
%
79.5
%
Licensed stores
200.8
225.6
(11.0)
12.5
19.9
Other
25.4
6.6
284.8
1.6
0.6
Total net revenues
1,610.9
1,134.6
42.0
100.0
100.0
Product and distribution costs
513.5
387.7
32.4
31.9
34.2
Store operating expenses
620.2
562.8
10.2
38.5
49.6
Other operating expenses
29.3
31.8
(7.9)
1.8
2.8
Depreciation and amortization expenses
143.4
130.0
10.3
8.9
11.5
General and administrative expenses
79.8
63.7
25.3
5.0
5.6
Restructuring and impairments
—
(1.2)
nm
—
(0.1)
Total operating expenses
1,386.2
1,174.8
18.0
86.1
103.5
Income from equity investees
26.8
24.8
8.1
1.7
2.2
Operating income/(loss)
$
251.5
$
(15.4)
nm
15.6
%
(1.4)
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
44.8
%
62.4
%
Two Quarters
Ended
Net revenues:
Company-operated stores
$
2,826.4
$
2,212.0
27.8
%
86.6
%
81.8
%
Licensed stores
398.5
480.4
(17.0)
12.2
17.8
Other
40.4
13.3
203.8
1.2
0.5
Total net revenues
3,265.3
2,705.7
20.7
100.0
100.0
Product and distribution costs
1,033.9
876.2
18.0
31.7
32.4
Store operating expenses
1,248.6
1,169.9
6.7
38.2
43.2
Other operating expenses
63.6
67.7
(6.1)
1.9
2.5
Depreciation and amortization expenses
283.4
256.7
10.4
8.7
9.5
General and administrative expenses
162.5
130.9
24.1
5.0
4.8
Restructuring and impairments
—
(0.4)
nm
—
—
Total operating expenses
2,792.0
2,501.0
11.6
85.5
92.4
Income from equity investees
53.0
55.8
(5.0)
1.6
2.1
Operating income
$
526.3
$
260.5
102.0
%
16.1
%
9.6
%
Supplemental Ratio:
Store operating expenses as a % of
company-operated store revenues
44.2
%
52.9
%
Channel Development
Mar 28,
Mar 29,
%
Mar 28,
Mar 29,
2021
2020
Change
2021
2020
Quarter
Ended
As a % of Channel Development
total net revenues
Net revenues
$
369.9
$
519.1
(28.7)
%
Product and distribution costs
231.9
351.6
(34.0)
62.7
%
67.7
%
Other operating expenses
13.1
17.7
(26.0)
3.5
3.4
Depreciation and amortization expenses
0.3
0.3
—
0.1
0.1
General and administrative expenses
2.3
3.0
(23.3)
0.6
0.6
Total operating expenses
247.6
372.6
(33.5)
66.9
71.8
Income from equity investees
50.3
43.1
16.7
13.6
8.3
Operating income
$
172.6
$
189.6
(9.0)
%
46.7
%
36.5
%
Two Quarters
Ended
Net revenues
$
741.2
$
1,013.7
(26.9)
%
Product and distribution costs
465.4
690.4
(32.6)
62.8
%
68.1
%
Other operating expenses
24.1
38.3
(37.1)
3.3
3.8
Depreciation and amortization expenses
0.6
0.6
—
0.1
0.1
General and administrative expenses
4.5
5.4
(16.7)
0.6
0.5
Total operating expenses
494.6
734.7
(32.7)
66.7
72.5
Income from equity investees
106.7
86.1
23.9
14.4
8.5
Operating income
$
353.3
$
365.1
(3.2)
%
47.7
%
36.0
%
Corporate and Other
Mar 28,
Mar 29,
%
Quarter
Ended
2021
2020
Change
Net revenues
$
22.6
$
12.0
88.3
%
Product and distribution costs
19.4
10.2
90.2
Other operating expenses
3.4
3.7
(8.1)
Depreciation and amortization expenses
37.0
34.5
7.2
General and administrative expenses
304.6
271.6
12.2
Total operating expenses
364.4
320.0
13.9
Operating loss
$
(341.8)
$
(308.0)
11.0
%
Two Quarters
Ended
Net revenues
43.1
32.5
32.6
Product and distribution costs
38.4
31.0
23.9
Other operating expenses
7.1
6.4
10.9
Depreciation and amortization expenses
73.7
69.4
6.2
General and administrative expenses
621.0
563.8
10.1
Restructuring and impairments
—
0.3
nm
Total operating expenses
740.2
670.9
10.3
Operating loss
$
(697.1)
$
(638.4)
9.2
%
Corporate and Other primarily consists of
our unallocated corporate operating expenses and Evolution
Fresh.
STARBUCKS CORPORATION
CONSOLIDATED BALANCE
SHEETS
(unaudited, in millions, except
per share data)
Mar 28, 2021
Sep 27, 2020
ASSETS
Current assets:
Cash and cash equivalents
$
3,880.7
$
4,350.9
Short-term investments
123.0
281.2
Accounts receivable, net
880.2
883.4
Inventories
1,503.6
1,551.4
Prepaid expenses and other current
assets
592.0
739.5
Total current assets
6,979.5
7,806.4
Long-term investments
284.8
206.1
Equity investments
499.4
478.7
Property, plant and equipment, net
6,123.1
6,241.4
Operating lease, right-of-use asset
8,036.8
8,134.1
Deferred income taxes, net
1,770.0
1,789.9
Other long-term assets
574.9
568.6
Other intangible assets
444.3
552.1
Goodwill
3,658.9
3,597.2
TOTAL ASSETS
$
28,371.7
$
29,374.5
LIABILITIES AND SHAREHOLDERS'
EQUITY/(DEFICIT)
Current liabilities:
Accounts payable
$
1,033.6
$
997.9
Accrued liabilities
1,771.6
1,160.7
Accrued payroll and benefits
646.1
696.0
Income taxes payable
117.0
98.2
Current portion of operating lease
liability
1,296.4
1,248.8
Stored value card liability and current
portion of deferred revenue
1,622.1
1,456.5
Short-term debt
18.3
438.8
Current portion of long-term debt
—
1,249.9
Total current liabilities
6,505.1
7,346.8
Long-term debt
14,630.3
14,659.6
Operating lease liability
7,577.7
7,661.7
Deferred revenue
6,532.1
6,598.5
Other long-term liabilities
774.8
907.3
Total liabilities
36,020.0
37,173.9
Shareholders' deficit:
Common stock ($0.001 par value) —
authorized, 2,400.0 shares; issued and outstanding, 1,177.9 and
1,173.3 shares, respectively
1.2
1.2
Additional paid-in capital
595.4
373.9
Retained deficit
(8,124.3)
(7,815.6)
Accumulated other comprehensive loss
(126.3)
(364.6)
Total shareholders’ deficit
(7,654.0)
(7,805.1)
Noncontrolling interests
5.7
5.7
Total deficit
(7,648.3)
(7,799.4)
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY/(DEFICIT)
$
28,371.7
$
29,374.5
STARBUCKS CORPORATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited and in millions)
Two Quarters Ended
Mar 28, 2021
Mar 29, 2020
OPERATING ACTIVITIES:
Net earnings including noncontrolling
interests
$
1,281.6
$
1,210.1
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
772.9
746.9
Deferred income taxes, net
(25.2)
47.7
Income earned from equity method
investees
(131.3)
(116.3)
Distributions received from equity method
investees
130.2
98.1
Stock-based compensation
175.3
146.6
Non-cash lease costs
617.9
596.3
Loss on retirement and impairment of
assets
175.4
30.9
Other
(15.4)
36.8
Cash provided by/(used in) changes in
operating assets and liabilities:
Accounts receivable
12.8
(60.7)
Inventories
51.3
36.9
Prepaid expenses and other current
assets
139.7
(247.7)
Income taxes payable
40.0
(1,227.4)
Accounts payable
21.3
(186.4)
Deferred revenue
89.8
112.1
Operating lease liability
(676.3)
(608.6)
Other operating assets and liabilities
59.5
(140.5)
Net cash provided by operating
activities
2,719.5
474.8
INVESTING ACTIVITIES:
Purchases of investments
(321.7)
(65.1)
Sales of investments
121.7
93.7
Maturities and calls of investments
289.0
4.3
Additions to property, plant and
equipment
(647.9)
(758.3)
Other
(20.1)
(22.5)
Net cash used in investing activities
(579.0)
(747.9)
FINANCING ACTIVITIES:
Net proceeds/(payments) from issuance of
commercial paper
(296.5)
613.0
Net proceeds from issuance of short-term
debt
203.3
494.1
Repayments of short-term debt
(320.5)
—
Proceeds from issuance of long-term
debt
—
1,739.7
Repayments of long-term debt
(1,250.0)
—
Proceeds from issuance of common stock
134.4
65.4
Cash dividends paid
(1,058.0)
(965.2)
Repurchase of common stock
—
(1,698.9)
Minimum tax withholdings on share-based
awards
(90.1)
(87.6)
Other
—
(10.4)
Net cash provided by/(used in) financing
activities
(2,677.4)
150.1
Effect of exchange rate changes on cash
and cash equivalents
66.7
8.7
Net decrease in cash and cash
equivalents
(470.2)
(114.3)
CASH AND CASH EQUIVALENTS:
Beginning of period
4,350.9
2,686.6
End of period
$
3,880.7
$
2,572.3
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid during the period for:
Interest, net of capitalized interest
$
250.8
$
186.3
Income taxes
$
236.2
$
1,726.2
Supplemental
Information
The following supplemental information is provided for
historical and comparative purposes.
U.S. Supplemental Data
Quarter Ended
($ in millions)
Mar 28, 2021
Mar 29, 2020
Change (%)
Revenues
$4,302.9
$3,979.6
8%
Change in Comparable Store Sales (1)
9%
(3)%
Change in Transactions
(10)%
(7)%
Change in Ticket
21%
5%
Store Count
15,288
15,257
—%
(1)
Includes only Starbucks® company-operated
stores open 13 months or longer. The results from Siren Retail
operations are not reflected in comparable store sales. Comparable
store sales include stores that were temporarily closed as a result
of the COVID-19 pandemic and exclude stores identified for
permanent closure.
China Supplemental Data
Quarter Ended
($ in millions)
Mar 28, 2021
Mar 29, 2020
Change (%)
Revenues
$860.6
$384.0
124%
Change in Comparable Store Sales (1)
91%
(50)%
Change in Transactions
93%
(53)%
Change in Ticket
(1)%
6%
Store Count
4,973
4,351
14%
(1)
Includes only Starbucks® company-operated
stores open 13 months or longer. Comparable store sales exclude the
effects of fluctuations in foreign currency exchange rates, stores
identified for permanent closure and Siren Retail stores.
Comparable store sales include stores that were temporarily closed
as a result of the COVID-19 pandemic, and for the second quarter of
fiscal 2021, included a 9% benefit related to a temporary
value-added tax exemption.
Store Data
Net stores opened/(closed) and
transferred during the period
Quarter Ended
Two Quarters Ended
Stores open as of
Mar 28, 2021
Mar 29, 2020
Mar 28, 2021
Mar 29, 2020
Mar 28, 2021
Mar 29, 2020
Americas:
Company-operated stores
(209)
31
(289)
77
9,820
10,051
Licensed stores
21
37
55
127
8,300
8,220
Total Americas
(188)
68
(234)
204
18,120
18,271
International:
Company-operated stores
123
78
308
277
6,836
6,137
Licensed stores
70
109
209
313
7,987
7,642
Total International
193
187
517
590
14,823
13,779
Total Company
5
255
283
794
32,943
32,050
Non-GAAP Disclosure
In addition to the GAAP results provided in this release, the
company provides certain non-GAAP financial measures that are not
in accordance with, or alternatives for, generally accepted
accounting principles in the United States. Our non-GAAP financial
measures of non-GAAP G&A, non-GAAP operating income, non-GAAP
operating income growth, non-GAAP operating margin, non-GAAP
effective tax rate and non-GAAP EPS exclude the below-listed items
and their related tax impacts, as they do not contribute to a
meaningful evaluation of the company’s future operating performance
or comparisons to the company's past operating performance. The
GAAP measures most directly comparable to non-GAAP G&A,
non-GAAP operating income, non-GAAP operating income growth,
non-GAAP operating margin, non-GAAP effective tax rate and non-GAAP
EPS are general and administrative expenses, operating income,
operating income growth, operating margin, effective tax rate and
diluted net EPS, respectively.
Non-GAAP Exclusion
Rationale
Restructuring and impairment costs
Management excludes restructuring and
impairment costs relating to the write-down of certain
company-operated store assets. Management excludes these items for
reasons discussed above. These expenses are anticipated to be
completed within a finite period of time.
Integration costs
Management excludes integration costs and
amortization of the acquired intangible assets for reasons
discussed above. Additionally, the majority of these costs will be
recognized over a finite period of time.
Nestlé transaction and integration-related
costs
Management excludes the transaction and
integration-related costs related to the Global Coffee Alliance
with Nestlé (inclusive of incremental costs to grow and develop the
alliance) for reasons discussed above.
Non-GAAP G&A, non-GAAP operating income, non-GAAP operating
income growth, non-GAAP operating margin, non-GAAP effective tax
rate and non-GAAP EPS may have limitations as analytical tools.
These measures should not be considered in isolation or as a
substitute for analysis of the company’s results as reported under
GAAP. Other companies may calculate these non-GAAP financial
measures differently than the company does, limiting the usefulness
of those measures for comparative purposes.
Certain non-GAAP measures included in this report were not
reconciled to the comparable GAAP financial measures because the
GAAP measures are not accessible on a forward-looking basis. The
company is unable to reconcile these forward-looking non-GAAP
financial measures to the most directly comparable GAAP measures
without unreasonable efforts because the company is currently
unable to predict with a reasonable degree of certainty the type
and extent of certain items that would be expected to impact GAAP
measures for these periods but would not impact the non-GAAP
measures. Such items may include acquisitions, divestitures,
restructuring and other items. The unavailable information could
have a significant impact on the company’s GAAP financial
results.
STARBUCKS CORPORATION
RECONCILIATION OF SELECTED
GAAP MEASURES TO NON-GAAP MEASURES
(unaudited)
($ in millions)
Quarter Ended
Consolidated
Mar 28, 2021
Mar 29, 2020
Change
General and administrative expenses, as
reported (GAAP)
$
464.4
$
406.5
14.2%
Restructuring and impairment costs (1)
—
(0.6)
Integration costs (2)
(4.6)
(2.3)
Nestlé transaction and integration-related
costs (3)
—
(0.2)
Non-GAAP G&A
$
459.8
$
403.4
14.0%
Non-GAAP G&A as a % of total net
revenues (4)
6.9
%
6.7
%
Operating income, as reported (GAAP)
$
987.6
$
487.4
102.6%
Restructuring and impairment costs (1)
23.0
(0.1)
Integration costs (2)
65.2
60.1
Nestlé transaction and integration-related
costs (3)
—
6.8
Non-GAAP operating income
$
1,075.8
$
554.2
94.1%
Operating margin, as reported (GAAP)
14.8
%
8.1
%
670 bps
Restructuring and impairment costs (1)
0.3
—
Integration costs (2)
1.0
1.0
Nestlé transaction and integration-related
costs (3)
—
0.1
Non-GAAP operating margin
16.1
%
9.2
%
690 bps
Diluted net earnings per share, as
reported (GAAP)
$
0.56
$
0.28
100.0%
Restructuring and impairment costs (1)
0.02
—
Integration costs (2)
0.05
0.05
Nestlé transaction and integration-related
costs (3)
—
0.01
Income tax effect on Non-GAAP adjustments
(5)
(0.01)
(0.02)
Non-GAAP EPS
$
0.62
$
0.32
93.8%
(1)
Represents costs associated with our
restructuring efforts, primarily asset impairments, accelerated
amortization of right-of-use lease assets and severance related to
certain company-operated store closures.
(2)
Includes ongoing amortization expense of
acquired intangible assets associated with the acquisition of East
China and Starbucks Japan; and the related post-acquisition
integration costs, such as incremental information technology and
compensation-related costs.
(3)
Represents costs associated with the
Global Coffee Alliance with Nestlé.
(4)
Non-GAAP G&A as a percentage of total
net revenues for the second quarter of fiscal 2021 was 6.9%.
Non-GAAP G&A as a percentage of total net revenues for fiscal
years 2020 and 2019 was 7.1% and 6.5%, respectively. Refer to the
Starbucks Investor Relations website for additional information
regarding historical non-GAAP information.
(5)
Adjustments were determined based on the
nature of the underlying items and their relevant jurisdictional
tax rates.
Q2 QTD FY21 NON-GAAP
DISCLOSURE DETAILS
(Pretax $ in millions and
USD)
Q2 QTD FY21
Americas
International
Corporate and Other
Consolidated
Statement of Earnings Line Item
Restructuring and Impairment
Costs
Integration Costs
Integration Costs
Total Non-GAAP
Adjustment
Net revenue
Production and distribution costs
—
Store operating expenses
3.7
3.7
Other operating expenses
—
Depreciation and amortization expenses
56.9
56.9
General and administrative expenses
4.4
0.2
4.6
Restructuring and impairments
23.0
23.0
Income from equity investees
—
Total impact to operating income
(23.0
)
(65.0
)
(0.2
)
(88.2
)
STARBUCKS CORPORATION
RECONCILIATION OF SELECTED
GAAP MEASURES TO NON-GAAP MEASURES
(unaudited)
Year Ended
Consolidated
Oct 3, 2021
(Projected 53-weeks)
Operating Margin (GAAP)
15.0 - 16.0%
Integration costs (1)
1.0
%
Restructuring costs (2)
0.5
%
Non-GAAP Operating Margin
16.5 - 17.5%
Diluted net earnings per share (GAAP)
$2.65 - $2.75
Integration costs (1)
0.20
Restructuring costs (2)
0.12
Income tax effect on Non-GAAP adjustments
(3)
(0.07)
Non-GAAP earnings per share
$2.90 - $3.00
(1)
Includes ongoing amortization expense of
acquired intangible assets associated with the acquisition of East
China and Starbucks Japan; and the related post-acquisition
integration costs, such as incremental information technology and
compensation-related costs.
(2)
Represents costs associated with our
restructuring efforts in the U.S. and Canada company-operated
businesses.
(3)
Adjustments were determined based on the
nature of the underlying items and their relevant jurisdictional
tax rates.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210427006044/en/
Starbucks Contact, Investor Relations: Durga Doraisamy
206-318-7118 investorrelations@starbucks.com
Starbucks Contact, Media: Reggie Borges 206-318-7100
press@starbucks.com
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