Operations

Starbucks percolates solid Q2

Starbucks CEO Laxman Narasimhan said the chain was focused on advancing technology, enhancing equipment, and streamlining operations.

Provided

May 3, 2023

Starbucks Corporation reported Tuesday that it beat analyst predictions for its 13-week fiscal second quarter ending April 2, 2023. Earnings per share were 74 cents adjusted, compared to the 65 cents expected, and revenue was $8.72 billion vs. the $8.4 billion predicted.

CFO Rachel Ruggeri said a strong global performance and better-than-expected recovery in China helped fuel the numbers.

"China posted comp growth of 3% in Q2, meaningfully exceeding our expectations, including 30% comp growth in March as we began lapping heightened mobility restrictions in the prior year," she said during Tuesday's investors call. "From the early weeks of January, when China emerged from peak infections and mobility restrictions were lifted in different cities, we saw a broad-based recovery across all trade zones, dayparts, and city tiers."

Momentum was also made possible by the chain's investments in stores and partners, which allowed for the continual of unlocking capital to further reinvest in the business, Ruggeri said.

Starbucks CEO Laxman Narasimhan, who took over in March 2023, said the leadership team has a clear line of sight into opportunities to enhance margins and modernize the business, brand, partner experience and culture of Starbucks.

"Our performance is strong, but our health could be stronger," he told investors. "I've worked side by side with our partners in our stores and have experienced firsthand how our stores and our operations are still evolving to meet the demands of our customers.

"There is more work to do to tailor our stores on the demand that we see, advance our technology, enhance how we innovate our equipment, and also more fundamentally, how we get back to focusing on fundamental operations and executing better, a priority that is evident with my deep engagement over the last several months across supply chain, technology, reinvention, store development, store operations, marketing and product."

Q2 fiscal 2023 highlights include:

• Consolidated net revenues up 14% to $8.7 billion.
• Q2 comparable store sales up 11% globally; Up 12% in North America; Up 7% in international.
• Active U.S. Starbucks Rewards membership reaches 30.8 million, up 15%.
• Global comparable store sales increased 11%, primarily driven by a 6% increase in comparable transactions and 4% increase in average tickets.
• North American comparable store sales increased 12%, driven by a 6% increase in comparable transactions and a 5% increase in average ticket; U.S. comparable store sales increased 12%, driven by a 6% increase in comparable transactions and a 6% increase in average ticket
• International comparable store sales increased 7%, driven by a 7% increase in comparable transactions; China comparable store sales increased 3%, driven by a 4% increase in comparable transactions and a 1% decline in average ticket
• Opened 464 stores in Q2, inclusive of closures across North America and international as part of ongoing efforts to strengthen the portfolio,
• Ended the period with 36,634 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 16,044 and 6,243 stores in the U.S. and China, respectively
• Consolidated net revenues up 14% to $8.7 billion, inclusive of approximately 2% unfavorable impact from foreign currency translation.