Starbucks Reports Q1 Fiscal 2024 Results
Q1 Consolidated Net Revenues Up 8% to a Record $9.4 Billion
Q1 Comparable Store Sales Up 5% Globally; Up 5% in North America; Up 7% in International
Q1 GAAP EPS Up 22% to $0.90; Non-GAAP EPS Up 20% to $0.90 as Reinvention Unlocks Continued Efficiency
Q1 Active U.S. Starbucks(R) Rewards Membership Reaches 34.3 Million, Up 13% Over Prior Year
Q1 U.S. Card Loads Reaches a Record $3.6 Billion; Ranking as #2 U.S. Brand in Holiday Gift Card Activations
SEATTLE--(BUSINESS WIRE)--January 30, 2024--
Starbucks Corporation (Nasdaq: SBUX) today reported financial results for its 13-week fiscal first quarter ended December 31, 2023. GAAP results in fiscal 2024 and fiscal 2023 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.
Q1 Fiscal 2024 Highlights
-- Global comparable store sales increased 5%, driven by a 3% increase in
comparable transactions and 2% increase in average ticket
-- North America and U.S. comparable store sales increased 5%,
driven by a 4% increase in average ticket and 1% increase in
comparable transactions
-- International comparable store sales increased 7%, driven by a
11% increase in comparable transactions and 3% decline in average
ticket; China comparable store sales increased 10%, driven by a
21% increase in comparable transactions and 9% decline in average
ticket
-- The company opened 549 net new stores in Q1, ending the period with
38,587 stores: 51% company-operated and 49% licensed
-- At the end of Q1, stores in the U.S. and China comprised 61% of
the company's global portfolio, with 16,466 and 6,975 stores in
the U.S. and China, respectively
-- Consolidated net revenues up 8%, including on a constant currency basis,
to a record $9.4 billion
-- GAAP operating margin expanded 140 basis points year-over-year to 15.8%,
primarily driven by sales leverage and in-store operational efficiencies.
This expansion was partially offset by investments in store partner wages
and benefits, as well as higher general and administrative costs in
support of Reinvention.
-- Non-GAAP operating margin expanded 130 basis points to 15.8%
from 14.5% year-over-year, including on a constant currency basis
-- GAAP earnings per share of $0.90 grew 22% over prior year
-- Non-GAAP earnings per share of $0.90 grew 20% over prior year,
including on a constant currency basis
-- Starbucks Rewards loyalty program 90-day active members in the U.S.
increased to 34.3 million, up 13% year-over-year
“Our first quarter performance was strong on many measures. Of note was the unwavering commitment of our most loyal customers, the growth in rewards members, tender and spend per member,” commented Laxman Narasimhan, chief executive officer. “Despite headwinds, our brand is very strong, and that coupled with innovation and a relentless focus on our green apron partners form long-term differentiators, along with focused execution on Triple Shot Reinvention, will drive balanced and attractive earnings growth,” Narasimhan added.
“I am proud of the significant margin expansion and double-digit earnings growth we delivered in our first quarter, as it underscores our multiple paths to earnings growth,” commented Rachel Ruggeri, chief financial officer. “We are executing on several levers within those multiple paths to continue delivering against our balanced growth model over the remainder of the year,” Ruggeri added.
Q1 North America Segment Results
-----------------------------------
Quarter Ended
($ in millions) Dec 31, 2023 Jan 1, 2023 Change (%)
-----------------------------------
Change in Comparable Store Sales
(1) 5% 10%
Change in Transactions 1% 1%
Change in Ticket 4% 9%
Store Count 17,931 17,381 3%
Revenues $7,120.7 $6,551.3 9%
Operating Income $1,520.8 $1,212.4 25%
Operating Margin 21.4% 18.5% 290 bps
----------------------------------- ------------ ----------- ----------
(1) Includes only Starbucks(R) 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 remain in comparable
store sales while stores identified for permanent closure have been
removed.
Net revenues for the North America segment grew 9% over Q1 FY23 to $7.1 billion in Q1 FY24, primarily driven by a 5% increase in comparable store sales, driven by a 4% increase in average ticket and a 1% increase in comparable transactions, net new company-operated store growth of 4% over the past 12 months, as well as growth in our licensed store business.
Operating income increased to $1.5 billion in Q1 FY24 compared to $1.2 billion in Q1 FY23. Operating margin of 21.4% expanded from 18.5% in the prior year, primarily driven by in-store operational efficiencies and sales leverage. This expansion was partially offset by investments in store partner wages and benefits in support of Reinvention.
Q1 International Segment Results
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Quarter Ended
($ in millions) Dec 31, 2023 Jan 1, 2023 Change (%)
-----------------------------------
Change in Comparable Store Sales
(1) 7% (13)%
Change in Transactions 11% (12)%
Change in Ticket (3)% (1)%
Store Count 20,656 18,789 10%
Revenues $1,846.3 $1,680.1 10%
Operating Income $241.5 $240.4 0%
Operating Margin 13.1% 14.3% (120) bps
----------------------------------- ------------ ----------- ----------
(1) Includes only Starbucks(R) 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 remain in comparable
store sales while stores identified for permanent closure have been
removed.
Net revenues for the International segment grew 10% over Q1 FY23 to $1.8 billion in Q1 FY24, primarily driven by net new company-operated store growth of 12% over the past 12 months and a 7% increase in comparable store sales, driven by an 11% increase in comparable transactions and a 3% decline in average ticket. These increases were partially offset by approximately 2% unfavorable impact from foreign currency translation.
Operating income increased to $241.5 million in Q1 FY24 compared to $240.4 million in Q1 FY23. Operating margin of 13.1% contracted from 14.3% in the prior year, primarily driven by investments in store partner wages and benefits, business mix shift and strategic investments. This contraction was partially offset by sales leverage.
Q1 Channel Development Segment
Results
-----------------------------------
Quarter Ended
($ in millions) Dec 31, 2023 Jan 1, 2023 Change (%)
-----------------------------------
Revenues $448.0 $478.2 (6)%
Operating Income $209.7 $226.3 (7)%
Operating Margin 46.8% 47.3% (50) bps
----------------------------------- ------------ ----------- ----------
Net revenues for the Channel Development segment declined 6% over Q1 FY23 to $448.0 million in Q1 FY24, primarily due to a decline in revenue in the Global Coffee Alliance following the sale of Seattle’s Best Coffee brand in Q2 FY23 and a decrease in global ready-to-drink revenue.
Operating income decreased to $209.7 million in Q1 FY24 compared to $226.3 million in Q1 FY23. Operating margin of 46.8% contracted from 47.3% in the prior year, primarily driven by product costs related to the Global Coffee Alliance, partially offset by business mix shift.
Fiscal 2024 Financial Targets
The company will discuss fiscal year 2024 financial targets during its Q1 FY24 earnings conference call starting today at 2:00 p.m. Pacific Time. These items can be accessed on the company’s Investor Relations website during and after the call. The company uses its website as a tool to disclose important information about the company and comply with its disclosure obligations under Regulation Fair Disclosure.