Starbucks (SBUX) Q3 2024 earnings summary

Executive summary

• Q3 FY24 consolidated net revenues were $9.1B, down 1% year-over-year but up 1% in constant currency and 6% sequentially, with results in line with guidance despite international challenges, especially in China.

• Global comparable store sales declined 3%, with North America down 2% and China down 14%, partially offset by strong performance in Japan.

• Operational improvements, supply chain efficiencies, and targeted product innovation are driving early positive momentum, with efficiency initiatives outpacing expectations.

• Starbucks Rewards membership grew to 33.8M in the U.S. (up 7% year-over-year) and 22M in China, with increased engagement and frequency.

• Management remains focused on disciplined capital allocation, maintaining a strong balance sheet, and pursuing high-return store investments amid challenging macroeconomic conditions.

Financial highlights

• Q3 consolidated revenue was $9.1B, down 1% year-over-year, driven by 8% net new company-operated store growth, partially offset by a 3% decline in comparable store sales.

• Q3 consolidated operating margin contracted 60–70 bps to 16.7%, primarily due to increased promotions, wage investments, and deleverage.

• Q3 EPS was $0.93, down 6% year-over-year, impacted by higher promotions, a cautious consumer environment, and a higher effective tax rate.

• Store count grew 6% year-over-year to 39,477, with 526 net new stores opened in Q3.

• Cash and investments totaled $3.18B at quarter end, with net cash from operations for nine months at $4.56B.

Outlook and guidance

• Full-year 2024 guidance reaffirmed for all metrics, with comp guidance range of low single-digit decline to flat.

• Efficiency efforts are expected to drive $4B in savings over the next four years, supporting margin expansion and reinvestment.

• Global new store growth forecast at ~6%, with U.S. at ~4% and China at ~12%; capital expenditures expected to be approximately $3B.

• Starbucks Delivery with Grubhub is expected to approach $1B in U.S. revenue this fiscal year.

• Liquidity is expected to remain strong, with sufficient cash flows and borrowing capacity to fund operations and shareholder returns.