Starbucks(US:SBUX)2024-04-30 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]. Cash Flow and Hedging - As of October 1, 2023, the company reported cash flow hedges for coffee with a net gain of $16.2 million, while dairy hedges showed a loss of $1.3 million[29]. - The company has cross-currency swaps with a net investment hedge showing a gain of $127.9 million as of March 31, 2024[29]. - The company reported a loss of $5.1 million from interest rate hedges as of March 31, 2024[29]. - The company recorded gains from foreign currency hedges amounting to $30.6 million as of March 31, 2024[29]. - The company reported a total of $135.3 million in gains from foreign currency debt hedges as of March 31, 2024[29]. - The notional amount of outstanding derivative contracts for cross-currency swaps increased to $1,746 million from $1,076 million since October 1, 2023[34]. - The fair value of outstanding derivative contracts on the balance sheet included $13.0 million in cross-currency swaps as of March 31, 2024[36]. - The company recorded a cumulative amount of fair value hedging adjustment of $(31.4) million related to long-term debt as of March 31, 2024[36]. - The fair value of dairy-related derivative instruments on the balance sheet was $0.5 million as of March 31, 2024[36]. Financial Performance - Total net revenues for the quarter ended March 31, 2024, were $8,563.0 million, a decrease from $8,719.8 million in the same quarter of the previous year[69]. - Operating income for the quarter was $1,098.9 million, compared to $1,327.5 million in the same quarter of the previous year, reflecting a decrease of approximately 17.2%[74]. - Net earnings attributable to Starbucks for the quarter were $772.4 million, down from $908.3 million, a decrease of $135.9 million or 15%[88]. - The effective tax rate for the quarter ended March 31, 2024, was 22.2%, a decrease from 24.9% in the same period of fiscal 2023, primarily due to an alternative tax approach in a foreign jurisdiction[88]. Revenue and Sales Trends - Beverage sales accounted for 60% of total revenues, amounting to $5,160.6 million for the quarter ended March 31, 2024[69]. - Global comparable store sales declined 4%, with a 3% decline in the U.S. market and a 6% decline internationally[80]. - Revenues from company-operated stores decreased by $90 million, primarily due to a $253 million decline in comparable store sales[83]. - Incremental revenues from 1,454 net new company-operated stores contributed $255 million, representing an 8% increase over the past 12 months[83]. Store Operations and Expenses - Store operating expenses for the quarter ended March 31, 2024, were $3,724.1 million, compared to $3,636.0 million for the same quarter in 2023, reflecting an increase of 2.4%[46]. - Total operating expenses for the quarter were $7,532.1 million, slightly down from $7,535.0 million, reflecting a decrease of $2.9 million[88]. - Store operating expenses as a percentage of total net revenues increased by 180 basis points for the second quarter of fiscal 2024, driven by increased investments in store partner wages and benefits (approximately 160 basis points) and increased promotional activity (approximately 60 basis points)[86]. Debt and Financing - Total long-term debt amounts to $15.7 billion as of March 31, 2024, with maturities extending to 2050[57]. - The company has a $3.0 billion unsecured five-year revolving credit facility, maturing on September 16, 2026, with no amounts outstanding as of March 31, 2024[52]. - The company has the option to increase its revolving credit facility by an additional $1.0 billion, subject to negotiation[52]. - The company had no amounts outstanding under its commercial paper program as of March 31, 2024[53]. Shareholder Returns - The company repurchased 12.8 million shares of common stock for $1,250.1 million during the two quarters ended March 31, 2024, compared to 4.9 million shares for $495.3 million during the same period in the previous year[67]. - A quarterly cash dividend of $0.57 per share was approved by the Board of Directors, to be paid on May 31, 2024, to shareholders of record as of May 17, 2024[67]. Future Outlook and Strategic Initiatives - The company anticipates significant impacts from new FASB guidance on income tax disclosures effective for the fiscal year ending September 27, 2026[24]. - The company is evaluating the impact of SEC climate disclosure rules, with phased-in requirements starting January 1, 2025[24]. - The company expects to adopt new segment disclosure requirements for the fiscal year ending September 28, 2025, with no material impact anticipated on consolidated financial statements[24]. - The company anticipates that the complex global operating environment may continue to impact results for the remainder of fiscal 2024[80]. - The Triple Shot Reinvention strategy is progressing, enhancing capabilities and supporting long-term growth[80].