SEATTLE — Starbucks Corp. has reported financial results for its second quarter ended March 29, 2009.
For the second quarter of fiscal 2009, consolidated revenues were $2.3 billion compared with $2.5 billion for the second fiscal quarter of 2008, primarily driven by an 8 percent decline in same-store sales due to a 5 percent decline in the number of customer transactions and a 3 percent decrease in the average value per transaction.
Net earnings for the second quarter were $25.0 million compared with $108.7 million for the same period a year ago.
"During the second quarter, we began to see signs of traction from the cost reduction and customer-facing initiatives we've undertaken over the past year," said Howard Schultz, chairman, president and CEO. "Our focus on delivering value while staying true to the premium quality and values of the brand is paying off. Our recent introduction of Starbucks VIA Ready Brew is a notable case in point and is showing significant promise in multiple channels."
U.S. segment results
For the second quarter of fiscal 2009, U.S. total net revenues were $1.8 billion, a decline of $131.5 million, or 6.8 percent, due to decreased revenues from company-operated retail stores.
U.S. comparable-store sales declined 8 percent, due to a 5 percent decline in the number of transactions and a 3 percent decrease in the average value per transaction. Specialty revenues declined 3.9 percent to $202.6 million, driven by softer foodservice revenues.
For the second quarter, the U.S. segment produced operating income of $90.6 million, compared with $193.9 million for the same period a year ago. The decrease was driven by restructuring charges of $106.8 million recorded in the period, which had a 590 basis point impact.
International segment results
International total net revenues were $433.7 million for the 13 weeks ended March 29, 2009, down $59.7 million, or 12.1 percent, compared with the same period last year. The decrease was primarily due to the impact of a stronger U.S. dollar relative to the British pound and Canadian dollar. Also contributing to the decrease in international revenues was a 3 percent decline in comparable store sales, due to a 2 percent decline in the number of transactions and a 1 percent decrease in the average value per transaction. The U.K. and Canadian markets reported negative comparable-store sales for the quarter.
International operating income decreased to $6.0 million for the second quarter of fiscal 2009 versus $17.8 million for the same period a year ago. The decrease was driven by restructuring charges of $14.9 million recorded in the period, which had a 340 basis point impact.
Cost reduction initiatives
Starbucks said it continues to make progress on its fiscal 2009 target to reduce costs by $500 million. In the second quarter of fiscal 2009, the company delivered $120 million in cost savings, exceeding the targeted $100 million for the second quarter, and resulting in year-to-date cost savings of approximately $195 million. Starbucks expects to deliver cost savings of approximately $150 million in the third quarter, and approximately $175 million in the fourth quarter of fiscal 2009.
YTD financial results
For the 26-week period ended March 29, 2009, consolidated net revenues declined 6.5 percent to $4.9 billion, compared with $5.3 billion for the first half of fiscal 2008.
Net earnings totaled $89.3 million, versus $316.8 million for the same period a year ago.
Fiscal 2009 targets
Starbucks now expects to add approximately 20 net new stores to its global store base in fiscal 2009. The revised target includes a net reduction of approximately 425 company-operated stores in the United States and the net addition of approximately 60 company-operated stores internationally. The company expects to open approximately 65 net new licensed stores in the United States and approximately 320 net new licensed stores internationally.
Capital expenditures for fiscal 2009 remain at approximately $600 million. Additionally, as announced in March, Starbucks fiscal year 2009 cash from operations is expected to exceed $1 billion, with resulting free cash flow in excess of $500 million.
