Market Overview

Starbucks Reports Record Q3 Fiscal 2018 Revenues and EPS

Share:

Consolidated Net Revenues Up 11% to a Record $6.3 Billion; Comparable
Store Sales Up 1% Globally and in the U.S.

GAAP EPS of $0.61; Non-GAAP EPS of $0.62, Up 13% Year-Over-Year

Active Starbucks RewardsTM Membership in the U.S. Increases
14% Year-Over-Year to 15.1 Million

Cash Returned to Shareholders Exceeds $5 Billion Fiscal Year-To-Date

Starbucks Corporation (NASDAQ:SBUX) today reported financial results
for its 13-week fiscal third quarter ended July 1, 2018. GAAP results in
fiscal 2018 and fiscal 2017 include items which 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.

Q3 Fiscal 2018 Highlights

  • Global comparable store sales increased 1%, driven by a 3% increase in
    average ticket
    • Americas and U.S. comparable store sales increased 1%
    • CAP comparable store sales decreased 1%
      • China comparable store sales decreased 2%
  • Consolidated net revenues of $6.3 billion, up 11% over the prior year
    including:
    • 3% net benefit from consolidation of the acquired East China
      business and other streamline-driven activities, including Teavana
      mall store closures, the Tazo divestiture, and the conversion of
      certain international retail operations from company-owned to
      licensed models
    • 1% benefit from foreign currency translation
  • GAAP operating margin, inclusive of restructuring and impairment
    charges, declined 190 basis points year-over-year to 16.5%
    • Non-GAAP operating margin of 18.5% declined 230 basis points
      compared to the prior year
  • GAAP Earnings Per Share of $0.61, up 30% over the prior year
    • Non-GAAP EPS of $0.62, up 13% over the prior year
    • GAAP and non-GAAP EPS include $0.02 of unfavorability associated
      with May 29th anti-bias training
  • Starbucks RewardsTM loyalty program added 1.9 million
    active members in the U.S., up 14% year-over-year; total member spend
    now represents 40% of U.S. company-operated sales
  • Mobile Order and Pay represented 13% of U.S. company-operated
    transactions
  • The company opened 511 net new stores in Q3 and now operates 28,720
    stores across 77 markets
  • The company returned $1.3 billion to shareholders through a
    combination of dividends and share repurchases

"Starbucks record performance in Q3 reflects successful execution
against our strategic growth priorities and our commitment to deliver
predictable, sustainable growth at scale - and meaningful increases in
long-term value - for our shareholders," said Kevin Johnson, Starbucks
ceo and president. "We remain confident in our global growth strategies,
in the sustainability of our leadership position around all things
coffee and tea and in our leadership teams around the world to navigate
our next phase of growth."

"Starbucks record Q3 revenues and profits once again reflect the
underlying strength of the Starbucks business and brand all around the
world," said Scott Maw, cfo. "We continue to grow share in virtually
every market and channel in which we operate at the same time that our
streamline initiatives are enabling us to sharpen our focus - and
leverage our resources - against our highest value, long-term growth
opportunities."

Third Quarter Fiscal 2018 Summary

 
 
Quarter Ended Jul 1, 2018
Comparable Store Sales(1)   Sales Growth   Change in Transactions   Change in Ticket
Consolidated 1%   (2)%   3%
Americas 1% (2)% 4%
CAP (1)% (3)% 2%
EMEA(2)   0%   (2)%   3%
(1)   Includes only Starbucks company-operated stores open 13 months or
longer. Comparable store sales exclude the effect of fluctuations in
foreign currency exchange rates.
(2) Company-operated stores represent 15% of the EMEA segment store
portfolio as of July 1, 2018.
 
       
Operating Results Quarter Ended   Change
($ in millions, except per share amounts)   Jul 1, 2018   Jul 2, 2017  
Net New Stores 511   575 (64)
Revenues $6,310.3 $5,661.5 11%
Operating Income $1,038.2 $1,044.2 (1)%
Operating Margin 16.5% 18.4% (190) bps
EPS   $0.61   $0.47   30%
 

Consolidated net revenues grew 11% over Q3 FY17 to $6.3 billion in Q3
FY18, primarily driven by incremental revenues from the impact of our
ownership change in East China, incremental revenues from 2,015 net new
Starbucks store openings over the past 12 months, favorable foreign
currency translation, and 1% growth in global comparable store sales.

Consolidated operating income declined 1% to $1,038.2 million in Q3
FY18, down from $1,044.2 million in Q3 FY17. Consolidated operating
margin declined 190 basis points to 16.5%, primarily due to higher
investments in our store partners (employees), product mix shift,
largely food related, and the impact of our ownership change in East
China, partially offset by lower restructuring and impairment costs.

 

Q3 Americas Segment Results

           
Quarter Ended   Change
($ in millions)   Jul 1, 2018   Jul 2, 2017  
Net New Stores 180   244 (64)
Revenues $4,230.6 $3,991.9 6%
Operating Income $908.7 $974.8 (7)%
Operating Margin   21.5%   24.4%   (290) bps
 

Net revenues for the Americas segment grew 6% over Q3 FY17 to $4.2
billion in Q3 FY18, primarily driven by incremental revenues from 902
net new store openings over the past 12 months and 1% growth in
comparable store sales, partially offset by the absence of revenue
related to the sale of our Brazil retail operations to a licensed
partner in Q2 FY18.

Operating income declined 7% to $908.7 million in Q3 FY18, down from
$974.8 million in Q3 FY17. Operating margin of 21.5% declined 290 basis
points, primarily due to higher investments in our store partners
(employees), food-related mix shift, and the impact of the May 29th
anti-bias training for U.S. partners.

Q3 China/Asia Pacific Segment Results

           
Quarter Ended   Change
($ in millions)   Jul 1, 2018   Jul 2, 2017  
Net New Stores 257   250
View Comments and Join the Discussion!
 
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com