Starbucks Reports Q1 Fiscal 2020 Results

Q1 Comparable Store Sales Up 5% Globally, Led by 6% Comp Growth in the U.S. and 3% Comp Growth in China

Global Net Store Growth of 6% Versus Prior Year, Led by 16% Net Store Growth in China

GAAP EPS of $0.74; Non-GAAP EPS of $0.79

Active Starbucks^® Rewards Membership in the U.S. Up 16% Year-Over-Year to 18.9 Million

Starbucks Corporation (NASDAQ: SBUX) today reported financial results for its 13-week fiscal first quarter ended December 29, 2019. GAAP results in fiscal 2020 and fiscal 2019 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.

“Building on solid business momentum from fiscal 2019, Starbucks performed very well throughout the first quarter, including one of the strongest holiday seasons in the history of our company. As a result, we are off to a strong start in fiscal 2020,” said Kevin Johnson, president and ceo. “Our growth was fueled by a healthy balance of comparable sales growth and new store development, as well as continued expansion of our Global Coffee Alliance with Nestlé.  Investments in our partners, beverage innovation and digital customer relationships contributed not only to strong topline growth, but also significant margin expansion in the quarter.”

“Our partners are the center of creating a special Starbucks Experience for each and every customer we serve, and I am very grateful for their extraordinary efforts through this holiday quarter. As we begin our fiscal second quarter, I want to acknowledge the dynamic situation our partners in China are navigating as health officials respond to the coronavirus. As events unfold, we will be transparent with all stakeholders in communicating how we are responding to these extraordinary circumstances and the implications for our near-term business results. We remain optimistic and committed to the long-term opportunity in China, building on our brand heritage and 20-year legacy of profitable growth,” concluded Johnson.

PDF: Detailed financial data

Q1 Fiscal 2020 Highlights

• Global comparable store sales up 5%, driven by a 3% increase in average ticket and a 2% increase in comparable transactions

-Americas comparable store sales up 6%, driven by a 3% increase in average ticket and a 2% increase in comparable transactions; U.S. comparable store sales up 6%, with comparable transactions up 3%
-International comparable store sales up 1%, driven by a 2% increase in average ticket and a 1% decrease in comparable transactions; China comparable store sales up 3%, with comparable transactions up 1%

• The company opened 539 net new stores in Q1, yielding 31,795 stores at the end of the quarter, a 6% increase over the prior year
• Consolidated net revenues of $7.1 billion grew 7% over the prior year

-Consolidated net revenues grew 9% over the prior year adjusted for unfavorable impacts of approximately 2% from Streamline-driven activities
-Streamline-driven activities primarily included the conversion of certain international retail operations from company-operated to licensed models

• GAAP operating margin expanded 190 basis points year-over-year to 17.2%, primarily due to sales leverage, supply chain efficiencies and lower restructuring and impairment charges, partially offset by growth in wages and benefits, as well as investments in store labor hours

-Non-GAAP operating margin of 18.2% expanded 80 basis points compared to the prior year

• GAAP Earnings Per Share of $0.74, up 21% over the prior year

Non-GAAP EPS of $0.79, up 5% over the prior year. Excluding an 11% headwind from income tax rate favorability related to fiscal year 2019, non-GAAP EPS increased 16%

• The company returned $1.6 billion to shareholders through a combination of share repurchases and dividends
• Starbucks^® Rewards loyalty program grew to 18.9 million active members in the U.S., up 16% year-over-year
• The company adopted the new lease accounting guidance and recognized right-of-use assets of $8.4 billion with corresponding lease obligations of $9.0 billion. Adoption of the new guidance did not have a material impact on our consolidated statement of earnings