Starbucks Sees Global Store Sales Fall in Disappointing 3rd Quarter Results
CoffeeNetwork (New York) - Starbucks Corporation (Nasdaq: SBUX) today reported financial results for its 13-week fiscal third quarter ended June 30, 2024.
Q3 Fiscal 2024 Highlights
- Global comparable store sales declined 3%, driven by a 5% decline in comparable transactions, partially offset by a 2% increase in average ticket
- North America comparable store sales declined 2%, driven by a 6% decline in comparable transactions, partially offset by a 3% increase in average ticket; U.S. comparable store sales declined 2%, driven by a 6% decline in comparable transactions, partially offset by a 4% increase in average ticket
- International comparable store sales declined 7%, driven by a 4% decline in average ticket and a 3% decline in comparable transactions; China comparable store sales declined 14%, driven by a 7% decline in both average ticket and comparable transactions
- The company opened 526 net new stores in Q3, ending the period with 39,477 stores: 52% company-operated and 48% licensed
- At the end of Q3, stores in the U.S. and China comprised 61% of the company’s global portfolio, with 16,730 and 7,306 stores in the U.S. and China, respectively
- Consolidated net revenues declined 1% to $9.1 billion, or a 1% increase on a constant currency basis
- GAAP operating margin contracted 60 basis points year-over-year to 16.7%, primarily driven by increased promotional activity, investments in store partner wages and benefits, and deleverage. This contraction was partially offset by pricing and in-store operational efficiencies.
- Non-GAAP operating margin contracted 70 basis points year-over-year to 16.7% on a constant currency basis
- GAAP earnings per share of $0.93 declined 6% over prior year
- Non-GAAP earnings per share of $0.93 declined 7% over prior year, or declined 6% on a constant currency basis
- Starbucks Rewards loyalty program 90-day active members in the U.S. totaled 33.8 million, up 7% year-over-year
Q3 North America Segment Results
Net revenues for the North America segment increased 1% over Q3 FY23 to $6.8 billion in Q3 FY24, primarily driven by net new company-operated store growth of 5% over the past 12 months, as well as growth in our licensed store business. This increase was partially offset by a 2% decline in comparable store sales, driven by a 6% decline in comparable transactions, partially offset by a 3% increase in average ticket.
Operating income decreased to $1.4 billion in Q3 FY24 compared to $1.5 billion in Q3 FY23. Operating margin of 21.0% contracted from 21.7% in the prior year, primarily driven by investments in store partner wages and benefits, increased promotional activity, and deleverage. This contraction was partially offset by pricing and in-store operational efficiencies.
Q3 International Segment Results
Net revenues for the International segment declined 7% over Q3 FY23 to $1.8 billion in Q3 FY24, primarily driven by an approximate 5% unfavorable impact from foreign currency translation and a 7% decline in comparable store sales, driven by a 4% decline in average ticket and 3% decline in comparable transactions. Another factor was lower product and equipment sales to, and royalty revenues from, our licensees. This decline was partially offset by net new company-operated store growth of 11% over the past 12 months.
Operating income decreased to $287.5 million in Q3 FY24 compared to $374.5 million in Q3 FY23. Operating margin of 15.6% contracted from 19.0% in the prior year, primarily driven by promotional activities, investments in store partner wages and benefits, and strategic investments. This contraction was partially offset by in-store operational efficiencies.
Alexis Rubinstein
