Starbucks Corporation reported financial results for its 13-week fiscal second quarter ending April 3, 2022.
GAAP results in fiscal 2022 and fiscal 2021 include items that are excluded from non-GAAP results.
Q2 fiscal 2022 highlights
- Global comparable store sales increased 7%, driven by a 4% increase in average ticket and a 3% increase in comparable transactions
- North America and U.S. comparable store sales increased 12%, driven by a 7% increase in average ticket and a 5% increase in comparable transactions.
- International comparable store sales decreased 8%, driven by a 5% decline in average ticket and a 3% decline in comparable transactions; China comparable store sales decreased 23%, driven by a 20% decline in comparable transactions and a 4% decline in average ticket.
- International and China comparable store sales include the unfavorable impact of approximately 3% and 4%, respectively, from lapping prior-year value-added tax (“VAT”) exemptions in China.
- The company opened 313 net new stores in Q2, ending the period with 34,630 stores globally: 51% company-operated and 49% licensed.
- At the end of Q2, stores in the U.S. and China comprised 61% of the company’s global portfolio, with 15,544 stores in the U.S and 5,654 stores in China.
- Consolidated net revenues up 15% to a Q2 record $7.6 billion.
- GAAP operating margin of 12.4% decreased 240 basis points from 14.8% in the prior year, primarily driven by inflationary pressures, mobility restrictions and lockdowns in China and investments in retail store partner wages and benefits, partially offset by pricing in North America and lapping restructuring costs in the prior year.
- Non-GAAP operating margin of 13.0% decreased from 16.0% in the prior year.
- GAAP earnings per share of $0.58 grew 4% over the prior year.
- Non-GAAP earnings per share of $0.59, down from $0.61 in the prior year.
“We are single-mindedly focused on enhancing our core U.S. business through our partner, customer and store experiences," Howard Schultz, interim chief executive officer, said in the announcement. "Given record demand and changes in customer behavior we are accelerating our store growth plans, primarily adding high-returning drive-thrus, and accelerating renovation programs so we can better meet demand and serve our customers where they are. The investments we are making in our people and the company will add the capacity we need in our U.S. stores today and position us ahead of the coming growth curve ahead."
Rachel Ruggeri, chief financial officer, added: “We are confident that the investments in our partners, our stores and our brand that we announced today will deliver returns in excess of historic levels and accelerate our growth long into the future."
Q2 North America segment results
Net revenues for the North America segment grew 17% over Q2 FY21 to $5.4 billion in Q2 FY22, primarily driven by a 12% increase in company-operated comparable store sales, driven by a 7% increase in average ticket and a 5% increase in transactions, performance of new stores over the past 12 months and strength in our licensed store sales.
Operating income increased to $931.5 million in Q2 FY22, up from $896.4 million in Q2 FY21. Operating margin of 17.1% contracted from 19.3% in the prior year, primarily driven by higher supply chain costs due to inflationary pressure, investments in labor including enhanced store partner wages and higher spend on new partner training, onboarding and support costs to address labor market conditions, as well as lapping prior year government subsidies. This contraction was partially offset by pricing, sales leverage and lower restructuring expenses primarily associated with the North America Trade Area Transformation.
Q2 channel development segment results
Net revenues for the channel development segment of $463.1 million in Q2 FY22 were 25% higher relative to Q2 FY21. The increase was primarily driven by growth in the Global Coffee Alliance and the International ready-to-drink businesses.
Operating income increased to $197.9 million in Q2 FY22, up from $172.6 million in Q2 FY21. Operating margin of 42.7% decreased from 46.7% in the prior year, primarily due to business mix shift driven by growth in the Global Coffee Alliance.