Starbucks Reports Q4 and Full Fiscal Year 2024 Results, Revenues Decline in North America & Abroad
CoffeeNetwork (New York) - Starbucks Corporation (Nasdaq: SBUX) today reported financial results for its 13-week fiscal fourth quarter and 52-week fiscal year ended September 29, 2024.
Q4 Fiscal Year 2024 Highlights
- Global comparable store sales declined 7%, driven by an 8% decline in comparable transactions, partially offset by a 2% increase in average ticket
- North America and U.S. comparable store sales declined 6%, driven by a 10% decline in comparable transactions, partially offset by a 4% increase in average ticket
- International comparable store sales declined 9%, driven by a 5% decline in average ticket and a 4% decline in comparable transactions; China comparable store sales declined 14%, driven by an 8% decline in average ticket and a 6% decline in comparable transactions
- The company opened 722 net new stores in Q4, ending the period with 40,199 stores: 52% company-operated and 48% licensed
- At the end of Q4, stores in the U.S. and China comprised 61% of the company’s global portfolio, with 16,941 and 7,596 stores in the U.S. and China, respectively
- Consolidated net revenues declined 3%, including on a constant currency basis, to $9.1 billion
- GAAP operating margin contracted 380 basis points year-over-year to 14.4%, primarily driven by deleverage, investments in store partner wages and benefits, and increased promotional activity. This contraction was partially offset by pricing and in-store operational efficiencies.
- Non-GAAP operating margin contracted 380 basis points year-over-year to 14.4%, or contracted 370 basis points on a constant currency basis
- GAAP earnings per share of $0.80 declined 25% over prior year
- Non-GAAP earnings per share of $0.80 declined 25% over prior year, or declined 24% on a constant currency basis
- Starbucks Rewards loyalty program 90-day active members in the U.S. totaled 33.8 million, up 4% year-over-year and flat quarter-over-quarter
Full Fiscal Year 2024 Highlights
- Global comparable store sales declined 2%, driven by a 4% decline in comparable transactions, partially offset by a 2% increase in average ticket
- North America and U.S. comparable store sales declined 2%, driven by a 5% decline in comparable transactions, partially offset by a 4% increase in average ticket
- International comparable store sales declined 4%, driven by a 4% decline in average ticket; China comparable store sales declined 8%, driven by an 8% decline in average ticket
- Consolidated net revenues increased 1%, including on a constant currency basis, to $36.2 billion
- GAAP operating margin contracted 130 basis points year-over-year to 15.0%, primarily driven by investments in store partner wages and benefits, deleverage, and increased promotional activity. This contraction was partially offset by pricing and in-store operational efficiencies.
- Non-GAAP operating margin contracted 110 basis points year-over-year, including on a constant currency basis, to 15.0%
- GAAP earnings per share of $3.31 declined 8% over prior year
- Non-GAAP earnings per share of $3.31 declined 6% over prior year, including on a constant currency basis
“As shared in our Press Release last week, our results do not reflect the strength of our brand,” commented Rachel Ruggeri, chief financial officer. “I have seen what Starbucks is capable of when we focus on what we do best. I have confidence in our ability to turn around our business and expect we will return to long-term growth,” Ruggeri added.
“It is clear we need to fundamentally change our strategy to win back customers. ‘Back to Starbucks’ is that fundamental change,” commented Brian Niccol, chairman and chief executive officer. “My experience tells me that when we get back to our core identity and consistently deliver a great experience, our customers will come back. We have a clear plan and are moving quickly to return Starbucks to growth,” Niccol added.
Q4 North America Segment Results
Net revenues for the North America segment decreased 3% over Q4 FY23 to $6.7 billion in Q4 FY24, primarily due to a 6% decline in comparable store sales, driven by a 10% decline in comparable transactions, partially offset by a 4% increase in average ticket, as well as a decline in our licensed store business. This decrease was partially offset by net new company-operated store growth of 5% over the past 12 months.
Operating income decreased to $1.3 billion in Q4 FY24 compared to $1.6 billion in Q4 FY23. Operating margin of 18.7% contracted from 23.2% in the prior year, primarily driven by deleverage, investments in store partner wages and benefits, and increased promotional activity. This contraction was partially offset by pricing, and in-store operational efficiencies.
Q4 International Segment Results
Net revenues for the International segment declined 4% over Q4 FY23 to $1.9 billion in Q4 FY24, primarily due to a 9% decline in comparable store sales, driven by a 5% decline in average ticket and a 4% decline in comparable transactions, as well as a decline in our licensed store business. Another factor was an approximate 1% unfavorable impact from foreign currency translation. This decline was partially offset by net new company-operated store growth of 10% over the past 12 months.
Operating income decreased to $282.9 million in Q4 FY24 compared to $301.3 million in Q4 FY23. Operating margin of 14.9% contracted from 15.2% in the prior year, primarily driven by increased promotional activity and investments in store partner wages and benefits. This contraction was partially offset by in-store operational efficiencies and pricing.
Q4 Channel Development Segment Results
Net revenues for the Channel Development segment declined 4% over Q4 FY23 to $465.4 million in Q4 FY24, primarily due to a decline in revenue in the Global Coffee Alliance from SKU optimization. This decline was partially offset by an increase in global ready-to-drink revenue.
Operating income decreased to $264.7 million in Q4 FY24 compared to $271.2 million in Q4 FY23. Operating margin of 56.9% expanded from 55.8% in the prior year, primarily driven by sales mix shift and lower product costs related to the Global Coffee Alliance. This expansion was partially offset by the higher costs in our North American Coffee Partnership joint venture income.
Alexis Rubinstein
