Starbucks(US:SBUX)2024-07-30 20:10Asset Sales and Gains - The company sold assets related to the Seattle's Best Coffee brand to Nestlé for $110.0 million, resulting in a pre-tax gain of $91.3 million[25]. Segment Disclosure and Tax Guidance - The company expects to adopt new segment disclosure requirements for the fiscal year ending September 28, 2025, which may not have a material impact on consolidated financial statements[24]. - The company anticipates significant impacts on annual income tax disclosures due to new guidance effective for the fiscal year ending September 27, 2026[24]. Hedging Activities - The company entered into cash flow hedges for coffee, with gains of $33.6 million recorded in AOCI as of October 1, 2023[30]. - The company reported a net investment hedge with cross-currency swaps showing gains of $202.5 million as of October 1, 2023[30]. - The company recorded a pre-tax loss of $4.3 million related to interest rate hedges as of June 30, 2024[30]. - The company has forward contracts to hedge anticipated cash flows under dairy purchase contracts, with gains recorded in AOCI[29]. - The company reported a gain of $10.6 million from cash flow hedges related to coffee for the quarter ended June 30, 2024[32]. - As of June 30, 2024, the notional amounts of outstanding derivative contracts include $73 million in coffee and $1,730 million in cross-currency swaps[35]. - The fair value of outstanding derivative contracts on the balance sheet includes $3,179.1 million in cash and cash equivalents and $70.5 million in total available-for-sale debt securities[39]. - The company has $36.9 million in derivative liabilities recorded as of June 30, 2024[39]. - Interest income from foreign currency derivatives was reported at $3.4 million for the quarter ended June 30, 2024, compared to a loss of $(10.0) million in the previous quarter[34]. - The company’s interest expense from fair value hedges was $(2.7) million for the quarter ended June 30, 2024[34]. - The total liabilities related to derivatives are $40.1 million as of June 30, 2024[39]. Financial Position and Assets - Total assets as of October 1, 2023, were $4,394.3 million, with cash and cash equivalents at $3,551.5 million[41]. - Total liabilities amounted to $46.8 million, with derivative liabilities at $43.2 million[41]. - Inventory levels as of June 30, 2024, reached $1,854.7 million, an increase from $1,806.4 million on October 1, 2023[44]. - Goodwill balance as of June 30, 2024, was $3,183.6 million, down from $3,218.3 million on October 1, 2023[51]. - Total long-term investments as of June 30, 2024, were valued at $142.6 million, with U.S. government treasury securities at $104.7 million[41]. - Total short-term investments amount to $212.3 million, with marketable equity securities valued at $86.6 million[39]. Revenue and Earnings - Total net revenues for the quarter ended June 30, 2024, were $9,113.9 million, a slight decrease from $9,168.3 million in the same quarter last year[75]. - Net earnings attributable to Starbucks for the quarter were $1,054.8 million, compared to $1,141.7 million in the prior year, reflecting a decrease of approximately 7.6%[72]. - Basic EPS for the quarter was $0.93, down from $1.00 in the same quarter last year, indicating a decline of 7%[72]. - Operating income for the quarter was $1,517.5 million, compared to $1,583.9 million in the prior year, representing a decrease of about 4.2%[75]. Store Operations and Expenses - Store operating expenses for the quarter ended June 30, 2024, were $3,829.1 million, compared to $3,697.6 million for the same quarter in the previous year[47]. - Total store operating expenses for the three quarters ended June 30, 2024, were $11,404.7 million, compared to $10,998.9 million for the same period in the previous year[47]. - Operating lease costs for the quarter ended June 30, 2024, were $431.3 million, compared to $401.6 million for the same quarter in the previous year[59]. - Total lease costs for the three quarters ended June 30, 2024, were $2.1 billion, an increase from $1.96 billion in the prior year[59]. Shareholder Returns and Stock Activity - The company repurchased 12.8 million shares of common stock for $1,250.1 million during the three quarters ended June 30, 2024, compared to 6.9 million shares for $699.3 million in the same period last year[68]. - A quarterly cash dividend of $0.57 per share was approved by the Board of Directors, to be paid on August 30, 2024[68]. - The stock-based compensation expense for the quarter ended June 30, 2024, was $63.5 million, compared to $69.2 million for the same quarter in 2023, reflecting a decrease of approximately 2.5%[68]. Operational Challenges and Market Conditions - The company is closely monitoring the operational and financial impacts of labor union organizing efforts, with management believing the risk of material contingent loss is remote[71]. - Starbucks reported a 1% decrease in consolidated net revenues to $9.1 billion for Q3 fiscal 2024, down from $9.2 billion in Q3 fiscal 2023, primarily due to a decline in global comparable store sales and unfavorable foreign currency fluctuations[82]. - Global comparable store sales declined by 3% in Q3 fiscal 2024, with a 2% decline in the U.S. market and a 7% decline internationally[82]. - The operating margin decreased by 60 basis points to 16.7%, driven by increased promotional activity and investments in partner wages and benefits[82]. Future Outlook and Strategic Initiatives - The company anticipates continued progress on action plans to increase demand through innovative beverage and food offerings while expanding efficiency efforts[82]. - The company operates over 39,400 stores globally, reflecting a 6% increase from the prior year[82].