“Our strong third quarter results point to all-around momentum in the business, and reflect the significant progress we are making against our Reinvention Plan. Our results were also amplified by the distinctive competitive advantages that set us apart in the market,” commented Laxman Narasimhan, chief executive officer.
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StarbucksStarbucks Corporation (Nasdaq: SBUX) reported financial results for its 13-week fiscal third quarter ended July 2, 2023. GAAP results in fiscal 2023 and fiscal 2022 include items that are excluded from non-GAAP results.
Q3 Consolidated Net Revenues Up 12% to a Record $9.2 Billion
Q3 Comparable Store Sales Up 10% Globally; Up 7% in North America; Up 24% in International
Q3 GAAP EPS $0.99; Non-GAAP EPS $1.00 Exceeding Expectations Globally
Q3 Active U.S. Starbucks® Rewards Membership Reaches 31.4 Million, Up 15% Over Prior Year
“Our strong third quarter results point to all-around momentum in the business, and reflect the significant progress we are making against our Reinvention Plan. Our results were also amplified by the distinctive competitive advantages that set us apart in the market,” commented Laxman Narasimhan, chief executive officer. “Starbucks is an iconic, durable brand and I am confident in the multiple paths available for the company to drive significant growth and margin improvement, which position us well to create outsized long-term shareholder value,” Narasimhan added.
“I am pleased with our third quarter performance, which beat our expectations, including our International segment. Our performance was bolstered by the progress we are making against our strategies, specifically our Reinvention Plan, and its unfolding into tangible financial results, as we delivered earnings growth of 19% well above our revenue growth of 12%,” commented Rachel Ruggeri, chief financial officer. “The momentum we have built and strength we are seeing globally, gives us the confidence and optimism to close our fiscal year strong,” Ruggeri added.
Q3 Fiscal 2023 Highlights
- Global comparable store sales increased 10%, primarily driven by a 5% increase in comparable transactions and a 4% increase in average ticket
- North America and U.S. comparable store sales increased 7%, driven by a 6% increase in average ticket and a 1% increase in comparable transactions
- International comparable store sales increased 24%, driven by a 21% increase in comparable transactions and a 2% increase in average ticket; China comparable store sales increased 46%, driven by a 48% increase in comparable transactions and a 1% decline in average ticket
- The company opened 588 net new stores in Q3, crossing the 37,000 store count threshold globally, ending the period with 37,222 stores: 51% company-operated and 49% licensed
- At the end of Q3, stores in the U.S. and China comprised 61% of the company’s global portfolio, with 16,144 and 6,480 stores in the U.S. and China, respectively
- Consolidated net revenues of $9.2 billion, up 12% from the prior year, or 14%, inclusive of more than 1% unfavorable impact from foreign currency translation
- GAAP operating margin of 17.3% increased from 15.9% in the prior year, primarily driven by sales leverage, pricing and productivity improvement. This expansion was partially offset by previously committed investments in labor, including enhanced store partner wages and benefits and higher general and administrative costs related to our Reinvention Plan.
- Non-GAAP operating margin of 17.4% increased from 16.9% in the prior year
- GAAP earnings per share of $0.99 grew 25% over prior year
- Non-GAAP earnings per share of $1.00 grew 19% over prior year
- Starbucks Rewards loyalty program 90-day active members in the U.S. increased to 31.4 million, up 15% year-over-year
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Q3 North America Segment Results |
Net revenues for the North America segment grew 11% over Q3 FY22 to $6.7 billion in Q3 FY23, primarily driven by a 7% increase in company-operated comparable store sales, driven by a 6% 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 strength in our licensed store sales.
Operating income increased to $1.5 billion in Q3 FY23 compared to $1.3 billion in Q3 FY22. Operating margin of 21.7% contracted from 22.0% in the prior year, primarily driven by previously committed investments in labor, including enhanced store partner wages and benefits as well as increased spend on partner training. This contraction was partially offset by strategic pricing, productivity improvement and sales leverage.
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Q3 International Segment Results |
Net revenues for the International segment grew 24% over Q3 FY22 to $2.0 billion in Q3 FY23, primarily driven by a 24% increase in comparable store sales, net new company-operated store growth of 11% over the past 12 months, as well as growth in our licensed store revenue including higher product sales and royalty revenues. These increases were partially offset by approximately 5% unfavorable impact from foreign currency translation.
Operating income increased to $374.5 million in Q3 FY23 compared to $135.3 million in Q3 FY22. Operating margin of 19.0% expanded from 8.5% in the prior year, primarily driven by sales leverage including lapping mobility restrictions in China and prior year amortization expenses. This expansion was offset by digital investments and inflationary pressures.
About Starbucks
Since 1971, Starbucks Coffee Company has been committed to ethically sourcing and roasting high-quality arabica coffee. Today, with more than 37,000 stores worldwide, the company is the premier roaster and retailer of specialty coffee in the world.
Source: Starbucks Corporation
