STARBUCKS CORP - Quarter Report: 2024 March (Form 10-Q)

) ) ) )) ) ) ))) ) )))))

See Notes to Consolidated Financial Statements.

Table of Contents

STARBUCKS CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

For the Quarter Ended March 31, 2024 and April 2, 2023

(in millions, except per share data, unaudited)

Common Stock

Additional Paid-in Capital

Retained
Earnings/(Deficit)

Accumulated
Other
Comprehensive
Income/(Loss)

Shareholders’
Equity/(Deficit)

Noncontrolling
Interests

Total

Amount

Balance, December 31, 2023

()

Net earnings

—

Other comprehensive loss

—

()

Stock-based compensation expense

—

Exercise of stock options/vesting of RSUs

Sale of common stock

Repurchase of common stock (1)

Cash dividends declared, $0.57 per share

—

()

Other

—

()

Balance, March 31, 2024

()

Balance, January 1, 2023

()

Net earnings

—

Other comprehensive income

—

Stock-based compensation expense

—

Exercise of stock options/vesting of RSUs

Sale of common stock

Repurchase of common stock

()

Cash dividends declared, $0.53 per share

—

()

Purchase of noncontrolling interests

—

()

Balance, April 2, 2023

()

(1)Includes excise tax on share repurchases.

See Notes to Consolidated Financial Statements.

Table of Contents

STARBUCKS CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

For the Two Quarters Ended March 31, 2024 and April 2, 2023

(in millions, except per share data, unaudited)

Common Stock

Additional Paid-in Capital

Retained
Earnings/(Deficit)

Accumulated
Other
Comprehensive
Income/(Loss)

Shareholders’
Equity/(Deficit)

Noncontrolling
Interests

Total

Amount

Balance, October 1, 2023

()

Net earnings

—

Other comprehensive income

—

Stock-based compensation expense

—

Exercise of stock options/vesting of RSUs

()

Sale of common stock

Repurchase of common stock (1)

()

Cash dividends declared, $1.14 per share

—

()

Other

—

Balance, March 31, 2024

()

Balance, October 2, 2022

()

()$()$()$ Product and distribution costs )()()()Product and distribution costs Product and distribution costs () Interest expense () Interest expense )()()()Product and distribution costs ()()Interest expense () Interest expense )()

(1) Gains and losses recognized in earnings relate to components excluded from the assessment of effectiveness.

Table of Contents

$ $ $()CoffeeInterest income and other, net ()Diesel fuel and other commoditiesInterest income and other, net ()()()Fair Value Hedges:

Interest rate swaps

Interest expense() Long-term debt (hedged item)Interest expense ()()() $ Cross-currency swaps Dairy Diesel fuel and other commodities Foreign currency - other Interest rate swaps

Table of Contents

$ Other long-term assets DairyPrepaid expenses and other current assets Foreign currency - otherPrepaid expenses and other current assets Other long-term assets

Interest rate swaps

Prepaid expenses and other current assets

Non-designated Derivative Instruments:DairyPrepaid expenses and other current assets Diesel fuel and other commoditiesPrepaid expenses and other current assets Foreign currencyPrepaid expenses and other current assets Derivative LiabilitiesBalance Sheet LocationMar 31, 2024Oct 1, 2023Designated Derivative Instruments:DairyAccrued liabilities$ $ Foreign currency - otherAccrued liabilities Other long-term liabilities Interest rate swapsOther long-term liabilities Non-designated Derivative Instruments:DairyAccrued liabilities Diesel fuel and other commoditiesAccrued liabilities Foreign currencyAccrued liabilities Other long-term liabilities $ $()$()

(1) Balance as of October 1, 2023 includes $750 million in senior notes that matured on October 1, 2023 but remained in current portion of long-term debt on the consolidated balance sheet as the debt repayment was not made until the first day of fiscal 2024.

Additional disclosures related to cash flow gains and losses included in AOCI, as well as subsequent reclassifications to earnings, are included in Note 1 1, Equity.

Table of Contents

Note 4:

$ $ $ Short-term investments:Available-for-sale debt securitiesCorporate debt securities

Foreign corporate bonds

Mortgage and other asset-backed securities State and local government obligations U.S. government treasury securities Total available-for-sale debt securities Structured deposits Marketable equity securities Total short-term investments Prepaid expenses and other current assets:Derivative assets Long-term investments:Available-for-sale debt securitiesCorporate debt securities Mortgage and other asset-backed securities State and local government obligations U.S. government treasury securities Total available-for-sale debt securities Structured deposits Total long-term investments280.4 97.5 172.4 10.5 Other long-term assets:Derivative assets Total assets$ $ $ $ Liabilities:Accrued liabilities:Derivative liabilities$ $ $ $ Other long-term liabilities:Derivative liabilities Total liabilities$ $ $ $

Table of Contents

$ $ $ Short-term investments:Available-for-sale debt securitiesCorporate debt securities U.S. government treasury securities Foreign government obligations Total available-for-sale debt securities Structured deposits Marketable equity securities Total short-term investments Prepaid expenses and other current assets:Derivative assets Long-term investments:Available-for-sale debt securitiesCorporate debt securities Mortgage and other asset-backed securities State and local government obligations U.S. government treasury securities Total long-term investments Other long-term assets:Derivative assets Total assets$ $ $ $ Liabilities:Accrued liabilities:Derivative liabilities$ $ $ $ Other long-term liabilities:Derivative liabilities Total liabilities$ $ $ $

There were no material transfers between levels, and there was no significant activity within Level 3 instruments during the periods presented. The fair values of any financial instruments presented above exclude the impact of netting assets and liabilities when a legally enforceable master netting agreement exists.

Gross unrealized holding gains and losses on available-for-sale debt securities, structured deposits, and marketable equity securities were not material as of March 31, 2024 and October 1, 2023.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Assets and liabilities recognized or disclosed at fair value on the consolidated financial statements on a nonrecurring basis include items such as property, plant and equipment, ROU assets, goodwill and other intangible assets, equity and other investments, and other assets. These assets are measured at fair value if determined to be impaired.

The estimated fair value of our long-term debt based on the quoted market price (Level 2) is included at Note 8, Debt. There were no material fair value adjustments during the two quarters ended March 31, 2024 and April 2, 2023.

Table of Contents

Note 5: $ Roasted Other merchandise held for sale Packaging and other supplies Total$ $

million under fixed-price contracts and an estimated $ million under price-to-be-fixed contracts. A portion of our price-to-be-fixed contracts are effectively fixed through the use of futures. See Note 3, Derivative Financial Instruments, for further discussion. Price-to-be-fixed contracts are purchase commitments whereby the quality, quantity, delivery period, and other negotiated terms are agreed upon, but the date, and therefore the price, at which the base “C” coffee commodity price component will be fixed has not yet been established. For most contracts, either Starbucks or the seller has the option to “fix” the base “C” coffee commodity price prior to the delivery date. For other contracts, Starbucks and the seller may agree upon pricing parameters determined by the base “C” coffee commodity price. Until prices are fixed, we estimate the total cost of these purchase commitments. We believe, based on established relationships with our suppliers and continuous monitoring, the risk of non-delivery on these purchase commitments is remote.

Note 6:

$ Buildings Leasehold improvements Store equipment Roasting equipment Furniture, fixtures and other Work in progress Property, plant and equipment, gross Accumulated depreciation()()Property, plant and equipment, net$ $ $ Accrued dividends payable Accrued capital and other operating expenditures

Insurance reserves

Income taxes payable Accrued business taxes Total accrued liabilities$ $

Table of Contents

$ $ $ Occupancy costs Other expenses Total store operating expenses$ $ $ $

Note 7:

Finite-Lived Intangible Assets $()$ $ $()$ Acquired trade secrets and processes () () Trade names, trademarks and patents () () Licensing agreements () () Other finite-lived intangible assets () () Total finite-lived intangible assets$ $()$ $ $()$

Amortization expense for finite-lived intangible assets was $ million and $ million for the quarter and two quarters ended March 31, 2024, respectively, and $ million and $ million for the quarter and two quarters ended April 2, 2023, respectively.

2025 2026 2027 2028 Thereafter Total estimated future amortization expense$

Goodwill

$ $ $ $

Other(1)

()

Goodwill balance at March 31, 2024

$ $ $ $ $

(1)

Table of Contents

Note 8:

billion unsecured five-year revolving credit facility (the “2021 credit facility”), of which $ million may be used for issuances of letters of credit, is currently set to mature on . The 2021 credit facility is available for working capital, capital expenditures, and other corporate purposes, including acquisitions and share repurchases. We have the option, subject to negotiation and agreement with the related banks, to increase the maximum commitment amount by an additional $ billion.

Borrowings under the 2021 credit facility, which was most recently amended in April 2023, will bear interest at a variable rate based on Term SOFR, and, for U.S. dollar-denominated loans under certain circumstances, a Base Rate (as defined in the 2021 credit facility), in each case plus an applicable margin. The applicable margin is based on the Company’s long-term credit ratings assigned by the Moody’s and Standard & Poor’s rating agencies. The “Base Rate” is the highest of (i) the Federal Funds Rate (as defined in the 2021 credit facility) plus %, (ii) Bank of America’s prime rate, and (iii) Term SOFR plus %. Term SOFR means the forward-looking SOFR term rate administrated by the Chicago Mercantile Exchange plus a SOFR Adjustment of %.

The 2021 credit facility contains provisions requiring us to maintain compliance with certain covenants, including a minimum fixed charge coverage ratio, which measures our ability to cover financing expenses. As of March 31, 2024, we were in compliance with all applicable covenants. amounts were outstanding under our 2021 credit facility as of March 31, 2024 or October 1, 2023.

Short-term Debt

Under our commercial paper program, we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time of $ billion, with individual maturities that may vary but not exceed days from the date of issue. Amounts outstanding under the commercial paper program are required to be backstopped by available commitments under our 2021 credit facility. The proceeds from borrowings under our commercial paper program may be used for working capital needs, capital expenditures, and other corporate purposes, including, but not limited to, business expansion, payment of cash dividends on our common stock, and share repurchases. amounts were outstanding under our commercial paper program as of March 31, 2024 and October 1, 2023.

Additionally, we hold the following Japanese yen-denominated credit facilities that are available for working capital needs and capital expenditures within our Japanese market:

•A ¥ billion, or $ million, credit facility is currently set to mature on . Borrowings under this credit facility are subject to terms defined within the facility and will bear interest at a variable rate based on Tokyo Interbank Offered Rate (“TIBOR”) plus an applicable margin of %.

As of March 31, 2024, we had ¥ billion, or $ million, of borrowings outstanding under these credit facilities. As of October 1, 2023, we had ¥ billion, or $ million, of borrowings outstanding under these credit facilities.

Table of Contents

2025 2026 2027 2028 Thereafter Total$

Note 9:

$ $ $ Variable lease costs Short-term lease costs Total lease costs$ $ $ $

(1)

Operating lease liabilities arising from obtaining right-of-use assets

Mar 31, 2024Apr 2, 2023Weighted-average remaining operating lease term years yearsWeighted-average operating lease discount rate % %

Finance lease assets are recorded in property, plant and equipment, net with the corresponding lease liabilities included in accrued liabilities and other long-term liabilities on the consolidated balance sheet. There were no material finance leases as of March 31, 2024 and October 1, 2023.

2025 2026 2027 2028 Thereafter Total lease payments Less imputed interest()Total$

As of March 31, 2024, we have entered into operating leases that have not yet commenced of $ billion, primarily related to real estate leases. These leases will commence between fiscal year 2024 and fiscal year 2027 with lease terms ranging from two to twenty years.

Table of Contents

Note 10:

million and $ billion, respectively. As of October 1, 2023, the current and long-term deferred revenue related to the Nestlé up-front payment was $ million and $ billion, respectively. During each of the quarters ended March 31, 2024 and April 2, 2023, we recognized $ million of prepaid royalty revenue related to Nestlé. During each of the two quarters ended March 31, 2024 and April 2, 2023, we recognized $ million of prepaid royalty revenue related to Nestlé. Revenue deferred - card activations, card reloads and Stars earned Revenue recognized - card and Stars redemptions and breakage()

Other(1)

()

Stored value cards and loyalty program at March 31, 2024(2)

Quarter Ended April 2, 2023

Total

Stored value cards and loyalty program at January 1, 2023

$ Revenue deferred - card activations, card reloads and Stars earned Revenue recognized - card and Stars redemptions and breakage()

Other(1)

Stored value cards and loyalty program at April 2, 2023(2)

Two Quarters Ended March 31, 2024

Total

Stored value cards and loyalty program at October 1, 2023

$ Revenue deferred - card activations, card reloads and Stars earned Revenue recognized - card and Stars redemptions and breakage()

Other(1)

()

Stored value cards and loyalty program at March 31, 2024(2)

Two Quarters Ended April 2, 2023

Total

Stored value cards and loyalty program at October 2, 2022

$ Revenue deferred - card activations, card reloads and Stars earned Revenue recognized - card and Stars redemptions and breakage()

Other(1)

Stored value cards and loyalty program at April 2, 2023(2)

(1)

(2) billion and $ billion, respectively, of these amounts were current.

Table of Contents

Note 11:

)$ $ $()$()Net gains/(losses) recognized in OCI before reclassifications() ()()Net (gains)/losses reclassified from AOCI to earnings ()() ()Other comprehensive income/(loss) attributable to Starbucks ()()Other comprehensive income/(loss) attributable to NCI ()()Net gains/(losses) in AOCI, end of period$()$ $ $()$()April 2, 2023Net gains/(losses) in AOCI, beginning of period$()$()$ $()$()Net gains/(losses) recognized in OCI before reclassifications ()() Net (gains)/losses reclassified from AOCI to earnings ()() ()Other comprehensive income/(loss) attributable to Starbucks ()() Net gains/(losses) in AOCI, end of period$()$()$ $()$()Two Quarters EndedAvailable-for-Sale Debt SecuritiesCash Flow HedgesNet Investment HedgesTranslation Adjustment and OtherTotalMarch 31, 2024Net gains/(losses) in AOCI, beginning of period$()$()$ $()$()Net gains/(losses) recognized in OCI before reclassifications Net (gains)/losses reclassified from AOCI to earnings () Other comprehensive income/(loss) attributable to Starbucks Other comprehensive income/(loss) attributable to NCI Net gains/(losses) in AOCI, end of period$()$ $ $()$()April 2, 2023Net gains/(losses) in AOCI, beginning of period$()$ $ $()$()Net gains/(losses) recognized in OCI before reclassifications ()() Net (gains)/losses reclassified from AOCI to earnings ()() ()Other comprehensive income/(loss) attributable to Starbucks ()() ()Net gains/(losses) in AOCI, end of period$()$()$ $()$()

Table of Contents

)$()Interest income and other, netGains/(losses) on cash flow hedges

Please refer to Note 3, Derivative Financial Instruments for additional information.

Gains/(losses) on net investment hedges Interest expenseTwo Quarters EndedAOCI
ComponentsAmounts Reclassified from AOCIAffected Line Item in
the Statements of EarningsMar 31, 2024Apr 2, 2023Gains/(losses) on available-for-sale debt securities$()$()Interest income and other, netGains/(losses) on cash flow hedges()

Please refer to Note 3, Derivative Financial Instruments for additional information.

Gains/(losses) on net investment hedges Interest expense

In addition to billion shares of authorized common stock with $ par value per share, we have million shares of authorized preferred stock, of which was outstanding as of March 31, 2024.

During the two quarters ended March 31, 2024 and April 2, 2023, we repurchased million and million shares of common stock on the open market for $ million and $ million, respectively. As of March 31, 2024, million shares remained available for repurchase under current authorizations.

During the second quarter of fiscal 2024, our Board of Directors approved a quarterly cash dividend to shareholders of $ per share to be paid on May 31, 2024 to shareholders of record as of the close of business on May 17, 2024.

Note 12:

million shares of common stock available for issuance pursuant to future equity-based compensation awards and million shares available for issuance under our employee stock purchase plan. $ $ $ Options() () Total stock-based compensation expense$ $ $ $ Granted Options exercised/RSUs vested()()Forfeited/expired ()

Options outstanding/Nonvested RSUs, March 31, 2024

Total unrecognized stock-based compensation expense, net of estimated forfeitures, as of March 31, 2024

$ $

Table of Contents

Note 13:

$ $ $ Weighted average common shares outstanding (for basic calculation) Dilutive effect of outstanding common stock options and RSUs Weighted average common and common equivalent shares outstanding (for diluted calculation) EPS — basic$ $ $ $ EPS — diluted$ $ $ $

Potential dilutive shares consist of the incremental common shares issuable upon the exercise of outstanding stock options (both vested and non-vested) and unvested RSUs, calculated using the treasury stock method. The calculation of dilutive shares outstanding excludes anti-dilutive stock options or unvested RSUs, which were immaterial in the periods presented.

Note 14:

Note 15:

%$ %$ %$ %

Food(2)

% % % %

Other(3)

% % % %Total$ %$ %$ %$ %

(1)“

(2)“

(3)“

Table of Contents

$ $ $ $ Depreciation and amortization expenses Income from equity investees Operating income/(loss)$ $ $ $()$ April 2, 2023Total net revenues$ $ $ $ $ Depreciation and amortization expenses Income from equity investees Operating income/(loss)$ $ $ $()$ Two Quarters EndedNorth AmericaInternationalChannel DevelopmentCorporate and OtherTotalMarch 31, 2024Total net revenues$ $ $ $ $ Depreciation and amortization expenses Income from equity investees Operating income/(loss)$ $ $ $()$ April 2, 2023Total net revenues$ $ $ $ $ Depreciation and amortization expenses Income from equity investees Operating income/(loss)$ $ $ $()$

Table of Contents

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Certain statements contained herein are “forward-looking” statements within the meaning of applicable securities laws and regulations. Generally, these statements can be identified by the use of words such as “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “feel,” “forecast,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “will,” “would,” and similar expressions intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. By their nature, forward-looking statements involve risks, uncertainties, and other factors (many beyond our control) that could cause our actual results to differ materially from our historical experience or from our current expectations or projections. Our forward-looking statements, and the risks and uncertainties related thereto, include, but are not limited to, those described under the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of our most recently filed 10-K and 10-Q and in other filings with the SEC, as well as:

•our ability to preserve, grow, and leverage our brands, including the risk of negative responses by consumers (such as boycotts or negative publicity campaigns) or governmental actors (such as retaliatory legislative treatment) who object to certain actions taken or not taken by the Company, which responses could adversely affect our brand value;

•the acceptance of the Company’s products and changes in consumer preferences, consumption, or spending behavior and our ability to anticipate or react to them; shifts in demographic or health and wellness trends; or unfavorable consumer reaction to new products, platforms, reformulations, or other innovations;

•our anticipated operating expenses, including our anticipated total capital expenditures;

•the costs associated with, and the successful execution and effects of, our existing and any future business opportunities, expansions, initiatives, strategies, investments, and plans, including our Triple Shot Reinvention with Two Pumps Plan (“Reinvention”);

•the impacts of partner investments and changes in the availability and cost of labor including any union organizing efforts and our responses to such efforts;

•the ability of our business partners, suppliers, and third-party providers to fulfill their responsibilities and commitments;

•higher costs, lower quality, or unavailability of coffee, dairy, cocoa, energy, water, raw materials, or product ingredients;

•the impact of significant increases in logistics costs;

•a worsening in the terms and conditions upon which we engage with our manufacturers and source suppliers, whether resulting from broader local or global conditions, or dynamics specific to our relationships with such parties;

•unfavorable global or regional economic conditions and related economic slowdowns or recessions, low consumer confidence, high unemployment, weak credit or capital markets, budget deficits, burdensome government debt, austerity measures, higher interest rates, higher taxes, political instability, higher inflation, or deflation;

•inherent risks of operating a global business including geopolitical instability;

•failure to attract or retain key executive or partner talent or successfully transition executives;

•the potential negative effects of incidents involving food or beverage-borne illnesses, tampering, adulteration, contamination, or mislabeling;

•negative publicity related to our Company, products, brands, marketing, executive leadership, partners, Board of Directors, founder, operations, business performance, expansions, initiatives, strategies, investments, plans, or prospects;

•potential negative effects of a material breach, failure, or corruption of our information technology systems or those of our direct and indirect business partners, suppliers, or third-party providers, or failure to comply with data protection laws;

•our environmental, social, and governance (“ESG”) efforts and any reaction related thereto, such as the rise in opposition to ESG and inclusion and diversity efforts;

•risks associated with acquisitions, dispositions, business partnerships, or investments – such as acquisition integration, termination difficulties or costs, or impairment in recorded value;

•the impact of foreign currency translation, particularly a stronger U.S. dollar;

•the impact of substantial competition from new entrants, consolidations by competitors, and other competitive activities, such as pricing actions (including price reductions, promotions, discounting, couponing, or free goods), marketing, category expansion, product introductions, or entry or expansion in our geographic markets;

•the impact of changes in U.S. tax law and related guidance and regulations that may be implemented, including on tax rates;

•the impact of health epidemics, pandemics, or other public health events on our business and financial results, and the risk of negative economic impacts and related regulatory measures or voluntary actions that may be put in place, including restrictions on business operations or social distancing requirements, and the duration and efficacy of such restrictions;

•failure to comply with anti-corruption laws, trade sanctions, and restrictions, or similar laws or regulations; and

•the impact of significant legal disputes and proceedings, or government investigations.

In addition, many of the foregoing risks and uncertainties are, or could be, exacerbated by any worsening of the global business and economic environment. A forward-looking statement is neither a prediction nor a guarantee of future events or

Table of Contents

circumstances, and those future events or circumstances may not occur. You should not place undue reliance on the forward-looking statements, which speak only as of the date of this report. We are under no obligation to update or alter any forward-looking statements, whether as a result of new information, future events, or otherwise.

This information should be read in conjunction with the unaudited consolidated financial statements and the notes included in Item 1 of Part I of this 10-Q and the audited consolidated financial statements and notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contained in the 10-K filed with the SEC on November 17, 2023.

Table of Contents

Introduction and Overview

Starbucks is the premier roaster, marketer, and retailer of specialty coffee in the world, operating in 86 markets. As of March 31, 2024, Starbucks had more than 38,900 company-operated and licensed stores, an increase of 6% from the prior year. Additionally, we sell a variety of consumer-packaged goods, primarily through the Global Coffee Alliance established with Nestlé and other partnerships and joint ventures.

We have three reportable operating segments: 1) North America, which is inclusive of the U.S. and Canada; 2) International, which is inclusive of China, Japan, Asia Pacific, Europe, Middle East, Africa, Latin America, and the Caribbean; and 3) Channel Development. Unallocated corporate expenses are reported within Corporate and Other.

We believe our financial results and long-term growth model will continue to be driven by new store openings, comparable store sales growth, and operating margin management, underpinned by disciplined capital allocation. We believe these key operating metrics are useful to investors because management uses these metrics to assess the growth of our business and the effectiveness of our marketing and operational strategies. Throughout this MD&A, we commonly discuss the following key operating metrics:

•New store openings and store count

•Comparable store sales growth

•Operating margin

Comparable store sales growth represents the percentage change in sales in one period from the same prior year period for company-operated stores open for 13 months or longer and excludes the impact of foreign currency translation. We analyze comparable store sales growth on a constant currency basis as this helps identify underlying business trends, without distortion from the effects of currency movements. Stores that are temporarily closed or operating at reduced hours remain in comparable store sales while stores identified for permanent closure have been removed.

Our fiscal year ends on the Sunday closest to September 30. Fiscal 2024 and 2023 include 52 weeks. All references to store counts, including data for new store openings, are reported net of store closures, unless otherwise noted.

Starbucks results for the second quarter of fiscal 2024 reflect a complex operating environment globally, including softening consumer sentiment, a pervasive inflationary environment, and disruptions due to multiple international conflicts. However, efficiencies continue to be realized from the strategies underpinning Reinvention, leading to tangible financial benefits, which counterbalance broader headwinds. During the second quarter of fiscal 2024, consolidated net revenues decreased 2% to $8.6 billion compared to $8.7 billion in the second quarter of fiscal 2023, primarily driven by a decline in global comparable store sales and unfavorable foreign currency fluctuations, partially offset by incremental revenues from net new company-operated store openings over the past 12 months. During the quarter ended March 31, 2024, our global comparable store sales declined 4%, primarily driven by a 3% decline in the U.S. market and a 6% decline internationally. Consolidated operating margin decreased 240 basis points from the prior year to 12.8%, primarily driven by deleverage, increased investments in store partner wages and benefits, increased promotional activity, lapping the gain from the sale of our Seattle’s Best Coffee brand in the second quarter of fiscal 2023, and higher general and administrative expenses, primarily in support of Reinvention. These decreases were partially offset by strategic pricing and in-store operational efficiencies.

We anticipate the complex global operating environment and the related headwinds we experienced in the first half of fiscal 2024 may continue to impact the balance of our fiscal year. Despite these challenges, we have many strengths to build upon, including our global brand, our loyal global customer base, strong new store performance, an innovative pipeline of products, and our continued execution against Reinvention-related operational efficiencies. Our Triple Shot Reinvention strategy is progressing, enhancing our capabilities and giving us continued confidence in our long-term growth and durable business model.

Results of Operations (in millions)

Revenues


	Quarter Ended								Two Quarters Ended
	Mar 31, 2024		Apr 2, 2023		$ Change		% Change		Mar 31, 2024		Apr 2, 2023		$ Change		% Change
Company-operated stores	$	7,052.6	$	7,142.3	$	(89.7)	(1.3)	%	$	14,807.9	$	14,225.7	$	582.2	4.1	%
Licensed stores	1,054.5		1,069.5		(15.0)		(1.4)		2,246.6		2,189.0		57.6		2.6
Other	455.9		508.0		(52.1)		(10.3)		933.8		1,019.1		(85.3)		(8.4)
Total net revenues	$	8,563.0	$	8,719.8	$	(156.8)	(1.8)	%	$	17,988.3	$	17,433.8	$	554.5	3.2	%

For the quarter ended March 31, 2024 compared with the quarter ended April 2, 2023

Table of Contents

Total net revenues for the second quarter of fiscal 2024 decreased $157 million, primarily due to lower revenues from company-operated stores ($90 million). The decrease in revenues from company-operated stores was driven by a 4% decrease in comparable store sales ($253 million), attributable to a 6% decrease in comparable transactions and a 2% increase in average ticket. Also contributing to company-operated stores revenue were unfavorable foreign currency translation impacts ($91 million). Partially offsetting these decreases were incremental revenues from 1,454 net new company-operated stores, or an 8% increase, over the past 12 months ($255 million).

Licensed stores revenue decreased $15 million, primarily driven by lower product and equipment sales to and royalty revenues from our licensees ($11 million) and unfavorable foreign currency translation impacts ($7 million).

Other revenues decreased $52 million, primarily due to a decline in revenue in the Global Coffee Alliance ($59 million) following the sale of our Seattle’s Best Coffee brand to Nestlé in the second quarter of fiscal 2023 as well as product SKU optimization.

For the two quarters ended March 31, 2024 compared with the two quarters ended April 2, 2023

Total net revenues for the first two quarters of fiscal 2024 increased $555 million, primarily due to higher revenues from company-operated stores ($582 million). The growth of company-operated stores revenue was driven by incremental revenues from 1,454 net new company-operated stores, or an 8% increase, over the past 12 months ($582 million). Also contributing to the growth of company-operated stores revenue was a 1% increase in comparable store sales ($117 million), attributable to a 2% increase in average ticket, partially offset by a 1% decrease in comparable transactions. Partially offsetting these increases to company-operated stores revenue were unfavorable foreign currency translation impacts ($121 million).

Licensed stores revenue increased $58 million, driven by higher product and equipment sales to, and royalty revenues from, our licensees ($51 million), primarily driven by revenues from 863 net new licensed store openings, or a 5% increase, over the past 12 months.

Other revenues decreased $85 million, primarily due to a decline in revenue in the Global Coffee Alliance ($78 million) following the sale of our Seattle’s Best Coffee brand to Nestlé in the second quarter of fiscal 2023 as well as product SKU optimization.

Operating Expenses


	Quarter Ended										Two Quarters Ended
	Mar 31, 2024		Apr 2, 2023		$ Change		Mar 31, 2024		Apr 2, 2023		Mar 31, 2024		Apr 2, 2023		$ Change		Mar 31, 2024		Apr 2, 2023
							As a % of Total Net Revenues										As a % of Total Net Revenues
Product and distribution costs	$	2,648.7	$	2,801.7	$	(153.0)	30.9	%	32.1	%	$	5,629.2	$	5,611.9	$	17.3	31.3	%	32.2	%
Store operating expenses	3,724.1		3,636.0		88.1		43.5		41.7		7,575.6		7,301.3		274.3		42.1		41.9
Other operating expenses	132.8		126.2		6.6		1.6		1.4		283.2		255.4		27.8		1.6		1.5
Depreciation and amortization expenses	371.9		341.9		30.0		4.3		3.9		737.2		669.0		68.2		4.1		3.8
General and administrative expenses	654.6		620.4		34.2		7.6		7.1		1,302.6		1,201.3		101.3		7.2		6.9
Restructuring and impairments	—		8.8		(8.8)		—		0.1		—		14.7		(14.7)		—		0.1

Total operating expenses	7,532.1		7,535.0		(2.9)		88.0		86.4		15,527.8		15,053.6		474.2		86.3		86.3
Income from equity investees	68.0		51.4		16.6		0.8		0.6		123.8		109.2		14.6		0.7		0.6
Gain from sale of assets	—		91.3		(91.3)		—		1.0		—		91.3		(91.3)		—		0.5
Operating income	$	1,098.9	$	1,327.5	$	(228.6)	12.8	%	15.2	%	$	2,584.3	$	2,580.7	$	3.6	14.4	%	14.8	%
Store operating expenses as a % of company-operated stores revenue							52.8	%	50.9	%							51.2	%	51.3	%

For the quarter ended March 31, 2024 compared with the quarter ended April 2, 2023

Table of Contents

Product and distribution costs as a percentage of total net revenues decreased 120 basis points for the second quarter of fiscal 2024, primarily due to the impact of increased sales from pricing (approximately 60 basis points) and a reduction in supply chain costs (approximately 50 basis points).

Store operating expenses as a percentage of total net revenues increased 180 basis points for the second quarter of fiscal 2024. Store operating expenses as a percentage of company-operated stores revenue increased 190 basis points, primarily due to increased investments in store partner wages and benefits (approximately 160 basis points), deleverage (approximately 110 basis points), and increased promotional activity (approximately 60 basis points). These increases were partially offset by in-store operational efficiencies (approximately 180 basis points).

Other operating expenses increased $7 million, primarily due to support costs for our growing licensed markets.

Depreciation and amortization expenses as a percentage of total net revenues increased 40 basis points, primarily due to deleverage.

General and administrative expenses increased $34 million, primarily due to certain proxy solicitation and advisory services costs ($30 million) and incremental investments in technology ($22 million). These increases were partially offset by the lapping of a donation to the Starbucks Foundation made in the second quarter of fiscal 2023 ($15 million).

Gain from sale of assets includes the sale of our Seattle’s Best Coffee Brand to Nestlé in the second quarter of fiscal 2023.

Income from equity investees increased $17 million, primarily due to higher income from our North American Coffee Partnership joint venture.

The combination of these changes resulted in an overall decrease in operating margin of 240 basis points for the second quarter of fiscal 2024.

For the two quarters ended March 31, 2024 compared with the two quarters ended April 2, 2023

Product and distribution costs as a percentage of total net revenues decreased 90 basis points for the first two quarters of fiscal 2024, primarily due to the impact of increased sales from pricing (approximately 60 basis points).

Store operating expenses as a percentage of total net revenues increased 20 basis points for the first two quarters of fiscal 2024. Store operating expenses as a percentage of company-operated stores revenue decreased 10 basis points, primarily due to in-store operational efficiencies (approximately 210 basis points), partially offset by increased investments in store partner wages and benefits (approximately 150 basis points), and increased promotional activity (approximately 50 basis points).

Other operating expenses increased $28 million, primarily due to support costs for our growing licensed markets.

Depreciation and amortization expenses as a percentage of total net revenues increased 30 basis points, primarily due to deleverage.

General and administrative expenses increased $101 million, primarily due to incremental investments in technology ($52 million), investments in partner wages and benefits ($48 million), and certain proxy solicitation and advisory services costs ($30 million). These increases were partially offset by the lapping of a donation to the Starbucks Foundation made in the second quarter of fiscal 2023 ($15 million).

Gain from sale of assets includes the sale of our Seattle’s Best Coffee Brand to Nestlé in the second quarter of fiscal 2023.

Income from equity investees increased $15 million, primarily due to higher income from our North American Coffee Partnership joint venture.

The combination of these changes resulted in an overall decrease in operating margin of 40 basis points for the first two quarters of fiscal 2024.

Table of Contents

Other Income and Expenses


	Quarter Ended										Two Quarters Ended
	Mar 31, 2024		Apr 2, 2023		$ Change		Mar 31, 2024		Apr 2, 2023		Mar 31, 2024		Apr 2, 2023		$ Change		Mar 31, 2024		Apr 2, 2023
							As a % of Total Net Revenues										As a % of Total Net Revenues
Operating income	$	1,098.9	$	1,327.5	$	(228.6)	12.8	%	15.2	%	$	2,584.3	$	2,580.7	$	3.6	14.4	%	14.8	%


Interest income and other, net	34.1		18.4		15.7		0.4		0.2		67.9		30.0		37.9		0.4		0.2
Interest expense	(140.6)		(136.3)		(4.3)		(1.6)		(1.6)		(280.7)		(266.0)		(14.7)		(1.6)		(1.5)
Earnings before income taxes	992.4		1,209.6		(217.2)		11.6		13.9		2,371.5		2,344.7		26.8		13.2		13.4
Income tax expense	219.9		301.3		(81.4)		2.6		3.5		574.6		581.1		(6.5)		3.2		3.3
Net earnings including noncontrolling interests	772.5		908.3		(135.8)		9.0		10.4		1,796.9		1,763.6		33.3		10.0		10.1
Net earnings attributable to noncontrolling interests	0.1		—		0.1		0.0		—		0.1		—		0.1		0.0		—
Net earnings attributable to Starbucks	$	772.4	$	908.3	$	(135.9)	9.0	%	10.4	%	$	1,796.8	$	1,763.6	$	33.2	10.0	%	10.1	%
Effective tax rate including noncontrolling interests							22.2	%	24.9	%							24.2	%	24.8	%

For the quarter ended March 31, 2024 compared with the quarter ended April 2, 2023

Interest income and other, net increased $16 million and interest expense increased $4 million, both primarily due to higher interest rates in the current year.

The effective tax rate for the quarter ended March 31, 2024 was 22.2% compared to 24.9% for the same period in fiscal 2023. The decrease was primarily due to electing an alternative tax approach in a certain foreign jurisdiction that resulted in a tax benefit in the second quarter of fiscal 2024 (approximately 300 basis points).

For the two quarters ended March 31, 2024 compared with the two quarters ended April 2, 2023

Interest income and other, net increased $38 million and interest expense increased $15 million, both primarily due to higher interest rates in the current year.

The effective tax rate for the first two quarters ended March 31, 2024 was 24.2% compared to 24.8% for the same period in fiscal 2023. The decrease was due to electing an alternative tax approach in a certain foreign jurisdiction that resulted in a tax benefit in the second quarter of fiscal 2024 (approximately 130 basis points), partially offset by the accrual of foreign withholding taxes related to the current year earnings of certain foreign subsidiaries (approximately 60 basis points).

Table of Contents

Segment Information

Results of operations by segment (in millions):

North America


	Quarter Ended										Two Quarters Ended
	Mar 31, 2024		Apr 2, 2023		$ Change		Mar 31, 2024		Apr 2, 2023		Mar 31, 2024		Apr 2, 2023		$ Change		Mar 31, 2024		Apr 2, 2023
							As a % of North America Total Net Revenues										As a % of North America Total Net Revenues
Net revenues:
Company-operated stores	$	5,724.5	$	5,742.7	$	(18.2)	89.7	%	90.0	%	$	12,105.7	$	11,613.2	$	492.5	89.7	%	89.8	%
Licensed stores	654.8		637.4		17.4		10.3		10.0		1,392.7		1,317.4		75.3		10.3		10.2
Other	0.7		0.5		0.2		0.0		0.0		2.3		1.2		1.1		0.0		0.0
Total net revenues	6,380.0		6,380.6		(0.6)		100.0		100.0		13,500.7		12,931.8		568.9		100.0		100.0
Product and distribution costs	1,767.7		1,821.7		(54.0)		27.7		28.6		3,791.6		3,739.3		52.3		28.1		28.9
Store operating expenses	3,037.4		2,951.6		85.8		47.6		46.3		6,185.1		5,983.0		202.1		45.8		46.3
Other operating expenses	67.1		63.4		3.7		1.1		1.0		144.5		128.9		15.6		1.1		1.0
Depreciation and amortization expenses	257.1		226.3		30.8		4.0		3.5		507.5		443.1		64.4		3.8		3.4
General and administrative expenses	102.4		91.2		11.2		1.6		1.4		202.9		193.5		9.4		1.5		1.5
Restructuring and impairments	—		8.5		(8.5)		—		0.1		—		13.6		(13.6)		—		0.1
Total operating expenses	5,231.7		5,162.7		69.0		82.0		80.9		10,831.6		10,501.4		330.2		80.2		81.2

Operating income	$	1,148.3	$	1,217.9	$	(69.6)	18.0	%	19.1	%	$	2,669.1	$	2,430.4	$	238.7	19.8	%	18.8	%
Store operating expenses as a % of company-operated stores revenue							53.1	%	51.4	%							51.1	%	51.5	%

For the quarter ended March 31, 2024 compared with the quarter ended April 2, 2023

Revenues

North America total net revenues for the second quarter of fiscal 2024 were nearly flat when compared to the prior year period, primarily due to a 3% decrease in comparable store sales ($178 million) driven by a 7% decrease in comparable transactions, partially offset by a 4% increase in average ticket, primarily due to annualization of pricing and a mix shift to cold beverages. This comparable store sales decrease was partially offset by performance of net new company-operated store openings over the past 12 months ($160 million), as well as higher product and equipment sales to, and royalty revenues from, our licensees ($14 million).

Operating Margin

North America operating income for the second quarter of fiscal 2024 decreased 6% to $1.1 billion, compared to $1.2 billion in the second quarter of fiscal 2023. Operating margin decreased 110 basis points to 18.0%, primarily due to deleverage (approximately 190 basis points), increased investments in store partner wages and benefits (approximately 140 basis points), and increased promotional activity (approximately 90 basis points), partially offset by strategic pricing (approximately 200 basis points) and in-store operational efficiencies (approximately 180 basis points).

Table of Contents

For the two quarters ended March 31, 2024 compared with the two quarters ended April 2, 2023

Revenues

North America total net revenues for the first two quarters of fiscal 2024 increased $569 million, or 4%, primarily due to net new company-operated store openings over the past 12 months ($382 million) and a 1% increase in comparable store sales ($110 million) driven by a 4% increase in average ticket, primarily due to annualization of pricing. This was partially offset by a 3% decrease in comparable transactions. Also contributing to these increases were higher product and equipment sales to, and royalty revenues from, our licensees ($63 million).

Operating Margin

North America operating income for the first two quarters of fiscal 2024 increased 10% to $2.7 billion, compared to $2.4 billion in the first two quarters of fiscal 2023. Operating margin increased 100 basis points to 19.8%, primarily driven by in-store operational efficiencies (approximately 220 basis points) and strategic pricing (approximately 180 basis points), partially offset by increased investments in store partner wages and benefits (approximately 130 basis points) and increased promotional activity (approximately 70 basis points).

International


	Quarter Ended										Two Quarters Ended
	Mar 31, 2024		Apr 2, 2023		$ Change		Mar 31, 2024		Apr 2, 2023		Mar 31, 2024		Apr 2, 2023		$ Change		Mar 31, 2024		Apr 2, 2023
							As a % of International Total Net Revenues										As a % of International Total Net Revenues
Net revenues:
Company-operated stores	$	1,328.1	$	1,399.6	$	(71.5)	75.6	%	75.5	%	$	2,702.2	$	2,612.5	$	89.7	75.0	%	73.9	%
Licensed stores	399.7		432.1		(32.4)		22.7		23.3		853.9		871.6		(17.7)		23.7		24.7
Other	29.5		23.1		6.4		1.7		1.2		47.5		50.8		(3.3)		1.3		1.4
Total net revenues	1,757.3		1,854.8		(97.5)		100.0		100.0		3,603.6		3,534.9		68.7		100.0		100.0
Product and distribution costs	619.8		632.9		(13.1)		35.3		34.1		1,286.4		1,226.5		59.9		35.7		34.7
Store operating expenses	686.7		684.4		2.3		39.1		36.9		1,390.5		1,318.3		72.2		38.6		37.3
Other operating expenses	50.0		49.9		0.1		2.8		2.7		110.1		100.6		9.5		3.1		2.8
Depreciation and amortization expenses	84.3		86.3		(2.0)		4.8		4.7		168.3		167.7		0.6		4.7		4.7
General and administrative expenses	82.9		87.4		(4.5)		4.7		4.7		173.3		167.9		5.4		4.8		4.7

Total operating expenses	1,523.7		1,540.9		(17.2)		86.7		83.1		3,128.6		2,981.0		147.6		86.8		84.3
Income from equity investees	0.2		0.8		(0.6)		0.0		0.0		0.3		1.2		(0.9)		0.0		0.0
Operating income	$	233.8	$	314.7	$	(80.9)	13.3	%	17.0	%	$	475.3	$	555.1	$	(79.8)	13.2	%	15.7	%
Store operating expenses as a % of company-operated stores revenue							51.7	%	48.9	%							51.5	%	50.5	%

For the quarter ended March 31, 2024 compared with the quarter ended April 2, 2023

Revenues

International total net revenues for the second quarter of fiscal 2024 decreased $98 million, or 5%, primarily due to unfavorable foreign currency translation impacts ($102 million), as well as a 6% decline in comparable store sales ($75 million), driven by a 3% decline in comparable transactions and a 3% decline in average ticket. Also contributing to the decline in international total net revenues were lower product and equipment sales to, and royalty revenues from, our licensees ($25 million), largely driven

Table of Contents

by disruptions due to multiple international conflicts. These decreases were partially offset by 974 net new company-operated store openings, or a 12% increase, over the past 12 months ($95 million).

Operating Margin

International operating income for the second quarter of fiscal 2024 decreased to $234 million, compared to $315 million in the second quarter of fiscal 2023. Operating margin decreased 370 basis points to 13.3%, primarily due to increased promotional activity (approximately 220 basis points), increased investments in store partner wages and benefits (approximately 130 basis points), and sales mix shift (approximately 90 basis points), partially offset by pricing in certain markets (approximately 100 basis points).

For the two quarters ended March 31, 2024 compared with the two quarters ended April 2, 2023

Revenues

International total net revenues for the first two quarters of fiscal 2024 increased $69 million, or 2%, primarily due to 974 net new company-operated store openings, or a 12% increase, over the past 12 months ($199 million). This increase was partially offset by unfavorable foreign currency translation impacts ($130 million).

Operating Margin

International operating income for the first two quarters of fiscal 2024 decreased to $475 million, compared to $555 million for the same period in fiscal 2023. Operating margin decreased 250 basis points to 13.2%, primarily due to increased promotional activity (approximately 190 basis points), increased investments in store partner wages and benefits (approximately 120 basis points), and sales mix shift (approximately 80 basis points). These decreases were partially offset by leverage (approximately 120 basis points) and pricing in certain markets (approximately 70 basis points).

Channel Development


	Quarter Ended										Two Quarters Ended
	Mar 31, 2024		Apr 2, 2023		$ Change		Mar 31, 2024		Apr 2, 2023		Mar 31, 2024		Apr 2, 2023		$ Change		Mar 31, 2024		Apr 2, 2023
							As a % of Channel Development Total Net Revenues										As a % of Channel Development Total Net Revenues
Net revenues	$	418.2	$	480.7	$	(62.5)					$	866.2	$	958.9	$	(92.7)
Product and distribution costs	252.6		345.6		(93.0)		60.4	%	71.9	%	531.5		639.8		(108.3)		61.4	%	66.7	%
Other operating expenses	15.2		12.8		2.4		3.6		2.7		28.0		25.8		2.2		3.2		2.7
Depreciation and amortization expenses	—		—		—		—		—		—		0.1		(0.1)		—		0.0
General and administrative expenses	1.9		2.1		(0.2)		0.5		0.4		4.2		4.1		0.1		0.5		0.4
Total operating expenses	269.7		360.5		(90.8)		64.5		75.0		563.7		669.8		(106.1)		65.1		69.9
Income from equity investees	67.8		50.6		17.2		16.2		10.5		123.5		108.0		15.5		14.3		11.3
Gain from sale of assets	—		91.3		(91.3)		—		19.0		—		91.3		(91.3)		—		9.5
Operating income	$	216.3	$	262.1	$	(45.8)	51.7	%	54.5	%	$	426.0	$	488.4	$	(62.4)	49.2	%	50.9	%

For the quarter ended March 31, 2024 compared with the quarter ended April 2, 2023

Revenues

Channel Development total net revenues for the second quarter of fiscal 2024 decreased $63 million, or 13%, primarily due to a decline in revenue in the Global Coffee Alliance ($59 million), following the sale of our Seattle’s Best Coffee brand to Nestlé in the second quarter of fiscal 2023 as well as product SKU optimization.

Table of Contents

Operating Margin

Channel Development operating income for the second quarter of fiscal 2024 decreased 17% to $216 million, compared to $262 million in the second quarter of fiscal 2023. Operating margin decreased 280 basis points to 51.7%, primarily driven by lapping the gain from the sale of our Seattle’s Best Coffee brand in the second quarter of fiscal 2023 (approximately 1,900 basis points), partially offset by growth in our North American Coffee Partnership joint venture income (approximately 570 basis points), mix shift (approximately 510 basis points), lapping impairment charges against certain manufacturing assets in the second quarter of fiscal 2023 (approximately 350 basis points), and lower product costs related to the Global Coffee Alliance (approximately 240 basis points).

For the two quarters ended March 31, 2024 compared with the two quarters ended April 2, 2023

Revenues

Channel Development total net revenues for the first two quarters of fiscal 2024 decreased $93 million, or 10%, primarily due to a decline in revenue in the Global Coffee Alliance ($78 million), primarily following the sale of our Seattle’s Best Coffee brand to Nestlé in the second quarter of fiscal 2023 as well as product SKU optimization, and lower revenue in our global ready-to-drink business ($21 million).

Operating Margin

Channel Development operating income for the first two quarters of fiscal 2024 decreased 13% to $426 million, compared to $488 million for the same period in fiscal 2023. Operating margin decreased 170 basis points to 49.2%, primarily due to lapping the gain from the sale of our Seattle’s Best Coffee brand in the second quarter of fiscal 2023 (approximately 950 basis points), partially offset by mix shift (approximately 440 basis points) and growth in our North American Coffee Partnership joint venture income (approximately 300 basis points).

Corporate and Other


	Quarter Ended								Two Quarters Ended
	Mar 31, 2024		Apr 2, 2023		$ Change		% Change		Mar 31, 2024		Apr 2, 2023		$ Change		% Change
Net revenues:


Other	$	7.5	$	3.7	$	3.8	102.7	%	$	17.8	$	8.2	$	9.6	117.1	%
Total net revenues	7.5		3.7		3.8		102.7		17.8		8.2		9.6		117.1
Product and distribution costs	8.6		1.5		7.1		473.3		19.7		6.3		13.4		212.7

Other operating expenses	0.5		0.1		0.4		400.0		0.6		0.1		0.5		500.0
Depreciation and amortization expenses	30.5		29.3		1.2		4.1		61.4		58.1		3.3		5.7
General and administrative expenses	467.4		439.7		27.7		6.3		922.2		835.8		86.4		10.3
Restructuring and impairments	—		0.3		(0.3)		nm		—		1.1		(1.1)		nm
Total operating expenses	507.0		470.9		36.1		7.7		1,003.9		901.4		102.5		11.4

Operating loss	$	(499.5)	$	(467.2)	$	(32.3)	6.9	%	$	(986.1)	$	(893.2)	$	(92.9)	10.4	%

Corporate and Other primarily consists of our unallocated corporate expenses. Unallocated corporate expenses include corporate administrative functions that support the operating segments but are not specifically attributable to or managed by any segment and are not included in the reported financial results of the operating segments.

For the quarter ended March 31, 2024 compared with the quarter ended April 2, 2023

Corporate and Other operating loss increased by 7% to $500 million for the second quarter of fiscal 2024 compared to $467 million for the second quarter of fiscal 2023. This increase was primarily driven by certain proxy solicitation and advisory services costs ($30 million) and incremental investments in technology in support of Reinvention ($22 million). These increases were partially offset by the lapping of a donation to the Starbucks Foundation made in the second quarter of fiscal 2023 ($15 million).

For the two quarters ended March 31, 2024 compared with the two quarters ended April 2, 2023

Corporate and Other operating loss increased to $986 million for the first two quarters of fiscal 2024, or 10%, compared to $893 million for the same period in fiscal 2023. This increase was primarily driven by incremental investments in technology in support of Reinvention ($52 million), certain proxy solicitation and advisory services costs ($30 million), and investments in partner wages and benefits ($28 million). These increases were partially offset by the lapping of a donation to the Starbucks Foundation made in the second quarter of fiscal 2023 ($15 million).

Table of Contents

Quarterly Store Data

Our store data for the periods presented is as follows:


	Net stores opened/(closed) and transferred during the period
	Quarter Ended		Two Quarters Ended		Stores open as of
	Mar 31, 2024	Apr 2, 2023	Mar 31, 2024	Apr 2, 2023	Mar 31, 2024	Apr 2, 2023
North America
Company-operated stores	112	91	199	131	10,827	10,347
Licensed stores	22	10	56	56	7,238	7,135
Total North America	134	101	255	187	18,065	17,482
International
Company-operated stores	132	174	318	271	9,282	8,308
Licensed stores	98	189	340	465	11,604	10,844
Total International	230	363	658	736	20,886	19,152

Financial Condition, Liquidity and Capital Resources

Cash and Investment Overview

Our cash and investments were $3.4 billion as of March 31, 2024 and $4.2 billion as of October 1, 2023. We actively manage our cash and investments in order to internally fund operating needs, make scheduled interest and principal payments on our borrowings, fund acquisitions, and return cash to shareholders through common stock cash dividend payments and share repurchases. Our investment portfolio primarily includes highly liquid available-for-sale securities, including corporate debt securities, government treasury securities (domestic and foreign), and commercial paper, as well as principal-protected structured deposits. As of March 31, 2024, approximately $2.0 billion of cash and short-term investments were held in foreign subsidiaries.

Borrowing Capacity

Revolving Credit Facility

Our $3.0 billion unsecured five-year revolving credit facility (the “2021 credit facility”), of which $150.0 million may be used for issuances of letters of credit, is currently set to mature on September 16, 2026. The 2021 credit facility is available for working capital, capital expenditures, and other corporate purposes, including acquisitions and share repurchases. We have the option, subject to negotiation and agreement with the related banks, to increase the maximum commitment amount by an additional $1.0 billion.

Borrowings under the 2021 credit facility, which was most recently amended in April 2023, will bear interest at a variable rate based on Term SOFR, and, for U.S. dollar-denominated loans under certain circumstances, a Base Rate (as defined in the 2021 credit facility), in each case plus an applicable margin. The applicable margin is based on the Company’s long-term credit ratings assigned by the Moody’s and Standard & Poor’s rating agencies. The “Base Rate” is the highest of (i) the Federal Funds Rate (as defined in the 2021 credit facility) plus 0.500%, (ii) Bank of America’s prime rate, and (iii) Term SOFR plus 1.000%. Term SOFR means the forward-looking SOFR term rate administrated by the Chicago Mercantile Exchange plus a SOFR Adjustment of 0.100%.

The 2021 credit facility contains provisions requiring us to maintain compliance with certain covenants, including a minimum fixed charge coverage ratio, which measures our ability to cover financing expenses. As of March 31, 2024, we were in compliance with all applicable covenants. No amounts were outstanding under our 2021 credit facility as of March 31, 2024 or October 1, 2023.

Commercial Paper

Under our commercial paper program, we may issue unsecured commercial paper notes up to a maximum aggregate amount outstanding at any time of $3.0 billion, with individual maturities that may vary but not exceed 397 days from the date of issue. Amounts outstanding under the commercial paper program are required to be backstopped by available commitments under our 2021 credit facility. The proceeds from borrowings under our commercial paper program may be used for working capital needs, capital expenditures, and other corporate purposes, including, but not limited to, business expansion, payment of cash dividends on our common stock, and share repurchases. No amounts were outstanding under our commercial paper program as

Table of Contents

of March 31, 2024 and October 1, 2023. Our total available contractual borrowing capacity for general corporate purposes was $3.0 billion as of the end of our second quarter of fiscal 2024.

Credit Facilities in Japan

Additionally, we hold the following Japanese yen-denominated credit facilities that are available for working capital needs and capital expenditures within our Japanese market.

•A ¥5.0 billion, or $33.0 million, credit facility is currently set to mature on December 30, 2024. Borrowings under this credit facility are subject to terms defined within the facility and will bear interest at a variable rate based on TIBOR plus an applicable margin of 0.400%.

•A ¥10.0 billion, or $66.1 million, credit facility is currently set to mature on March 27, 2025. Borrowings under this credit facility are subject to terms defined within the facility and will bear interest at a variable rate based on TIBOR plus an applicable margin of 0.300%.

As of March 31, 2024, we had ¥5.0 billion, or $33.0 million, of borrowings outstanding under these credit facilities. As of October 1, 2023, we had ¥5.0 billion, or $33.5 million, of borrowings outstanding under these credit facilities.

See Note 8 , Debt, to the consolidated financial statements included in Item 1 of Part I of this 10-Q for details of the components of our long-term debt.

Our ability to incur new liens and conduct sale and leaseback transactions on certain material properties is subject to compliance with terms of the indentures under which the long-term notes were issued. As of March 31, 2024, we were in compliance with all applicable covenants.

Use of Cash

We expect to use our available cash and investments, including, but not limited to, additional potential future borrowings under the credit facilities, commercial paper program, and the issuance of debt to support and invest in our core businesses, including investing in new ways to serve our customers and supporting our store partners, repaying maturing debts, returning cash to shareholders through common stock cash dividend payments and discretionary share repurchases, and investing in new business opportunities related to our core and developing businesses. Furthermore, we may use our available cash resources to make proportionate capital contributions to our investees. We may also seek strategic acquisitions to leverage existing capabilities and further build our business. Acquisitions may include increasing our ownership interests in our investees. Any decisions to increase such ownership interests will be driven by valuation and fit with our ownership strategy.

We believe that net future cash flows generated from operations and existing cash and investments both domestically and internationally, combined with our ability to leverage our balance sheet through the issuance of debt, will be sufficient to finance capital requirements for our core businesses as well as shareholder distributions for at least the next 12 months. We are currently not aware of any trends or demands, commitments, events, or uncertainties that will result in, or that are reasonably likely to result in, our liquidity increasing or decreasing in any material way that will impact our capital needs during or beyond the next 12 months. We have borrowed funds and continue to believe we have the ability to do so at reasonable interest rates; however, additional borrowings would result in increased interest expense in the future. In this regard, we may incur additional debt, within targeted levels, as part of our plans to fund our capital programs, including cash returns to shareholders through future dividends and discretionary share repurchases, refinancing debt maturities, as well as investing in new business opportunities. If necessary, we may pursue additional sources of financing, including both short-term and long-term borrowings and debt issuances.

We regularly review our cash positions and our determination of partial indefinite reinvestment of foreign earnings. In the event we determine that all or another portion of such foreign earnings are no longer indefinitely reinvested, we may be subject to additional foreign withholding taxes, which could be material. Any foreign earnings that are not indefinitely reinvested may be repatriated at management’s discretion. In anticipation of repatriation of current year earnings of certain foreign subsidiaries, we accrued approximately $11 million for foreign withholding taxes during the first two quarters of fiscal year 2024.

During the second quarter of fiscal 2024, our Board of Directors approved a quarterly cash dividend to shareholders of $0.57 per share to be paid on May 31, 2024 to shareholders of record as of the close of business on May 17, 2024.

During the two quarters ended March 31, 2024, we repurchased 12.8 million shares of common stock for $1,250.1 million on the open market. As of March 31, 2024, 29.8 million shares remained available for repurchase under current authorizations.

Other than normal operating expenses, cash requirements for the remainder of fiscal 2024 are expected to consist primarily of capital expenditures for investments in our new and existing stores, our supply chain, and corporate facilities. Total capital expenditures for fiscal 2024 are expected to be approximately $3.0 billion.

Table of Contents

In the MD&A included in the 10-K, we disclosed that we had $33.9 billion of current and long-term material cash requirements as of October 1, 2023. There have been no material changes to our material cash requirements during the period covered by this 10-Q outside of the normal course of our business.

Cash Flows

Net cash provided by operating activities was $2.9 billion for the first two quarters of fiscal 2024, compared to $2.4 billion for the same period in fiscal 2023. The change was primarily due to an increase in net cash provided by changes in operating assets and liabilities, an increase in non-cash lease costs, and lapping the gain on sale of assets from the prior year sale of Seattle’s Best Coffee brand to Nestlé.

Net cash used in investing activities totaled $1.3 billion for the first two quarters of fiscal 2024, compared to $907.0 million for the same period in fiscal 2023. The change was primarily due to an increase in capital expenditures, purchases of investments, and lapping the proceeds from sale of assets from the prior year sale of Seattle’s Best Coffee brand to Nestlé, partially offset by an increase in maturities and calls of investments.

Net cash used in financing activities for the first two quarters of fiscal 2024 totaled $2.4 billion, compared to $1.3 billion for the same period in fiscal 2023. The change was primarily due to an increase in repayments of debt and an increase in share repurchase activities, partially offset by net proceeds from issuances of debt.

Commodity Prices, Availability and General Risk Conditions

Commodity price risk represents our primary market risk, generated by our purchases of green coffee and dairy products, among other items. We purchase, roast, and sell high-quality arabica coffee and related products, and risk arises from the price volatility of green coffee. In addition to coffee, we also purchase significant amounts of dairy products to support the needs of our company-operated stores. The price and availability of these commodities directly impact our results of operations, and we expect commodity prices, particularly coffee, to impact future results of operations. For additional details, see Product Supply in Item 1 of the 10-K, as well as Risk Factors in Part I, Item 1A of the 10-K.

Seasonality and Quarterly Results

Our business is subject to moderate seasonal fluctuations, of which our fiscal second quarter typically experiences lower revenues and operating income. Additionally, as our stored value cards (“Starbucks Cards”) are issued to, and loaded by, customers during the holiday season, we tend to have higher cash flows from operations during the first quarter of the fiscal year. However, since revenues from Starbucks Cards are recognized upon redemption and not when cash is loaded onto the Starbucks Cards, the impact of seasonal fluctuations on the consolidated statements of earnings is much less pronounced. As a result of moderate seasonal fluctuations, results for any quarter are not necessarily indicative of the results that may be achieved for the full fiscal year.

Critical Accounting Estimates

The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles and the Company’s discussion and analysis of its financial condition and operating results require the Company’s management to make judgments, assumptions, and estimates that affect the amounts reported. Note 1, Summary of Significant Accounting Policies and Estimates, to the consolidated financial statements included in Item 1 of Part I of this 10-Q and in the Notes to Consolidated Financial Statements in Part II, Item 8 of the 10-K describe the significant accounting policies and methods used in the preparation of the Company’s consolidated financial statements. There have been no material changes to the Company’s critical accounting estimates since the 10-K.

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 1, Summary of Significant Accounting Policies and Estimates, to the consolidated financial statements included in Item 1 of Part I of this 10-Q, for a detailed description of recent accounting pronouncements.

Item 3.Quantitative and Qualitative Disclosures About Market Risk

There has been no material change in the commodity price risk, foreign currency exchange risk, equity security price risk, or interest rate risk discussed in Item 7A of the 10-K.

Table of Contents

Item 4. Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that material information required to be disclosed in our periodic reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms. Our disclosure controls and procedures are also designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer as appropriate, to allow timely decisions regarding required disclosure.

During the second quarter of fiscal 2024, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon that evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective, as of the end of the period covered by this report (March 31, 2024).

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during our most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

PART II — OTHER INFORMATION

Item 1.Legal Proceedings

See Note 1 4, Commitments and Contingencies, to the consolidated financial statements included in Item 1 of Part I of this 10-Q for information regarding certain legal proceedings in which we are involved.

Item 1A.Risk Factors

In addition to the other information set forth in this 10-Q, you should carefully consider the risks and uncertainties discussed in Part I, Item 1A. Risk Factors in our 10-K and Part II, Item 1A of this 10-Q. There have been no material changes to the risk factors disclosed in our 10-K.

Item 2.Unregistered Sales of Equity Securities and Use of Proceeds

Shares under our ongoing share repurchase program may be repurchased in open market transactions, including pursuant to a trading plan adopted in accordance with Rule 10b5-1 of the Exchange Act, or through privately negotiated transactions. The timing, manner, price, and amount of repurchases will be determined at our discretion and the share repurchase program may be suspended, terminated, or modified at any time for any reason. During the second fiscal quarter ended March 31, 2024, there was no share repurchase activity.

Item 3.Defaults upon Senior Securities

None.

Item 4.Mine Safety Disclosures

Not applicable.

Item 5.Other Information

Insider Adoption or Termination of Trading Arrangements:

During the fiscal quarter ended March 31, 2024, none of our directors or officers informed us of the or of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408.

Table of Contents

Item 6.Exhibits


		Incorporated by Reference
Exhibit No.	Exhibit Description	Form	File No.	Date of Filing	Exhibit Number	Filed Herewith
3.1	Restated Articles of Incorporation of Starbucks Corporation	10-Q	000-20322	4/28/2015	3.1
3.2	Amended and Restated Bylaws of Starbucks Corporation (As amended and restated through March 17, 2021)	8-K	000-20322	3/19/2021	3.1
4.1	Tenth Supplemental Indenture, dated as of February 8, 2024, by and between Starbucks Corporation and U.S. Bank Trust Company, National Association, as trustee and successor in interest to U.S. Bank National Association	8-K	000-20322	2/8/2024	4.2
4.2	Form of 4.850% Senior Notes due 2027 (included as Exhibit A to Exhibit 4.1 )	8-K	000-20322	2/8/2024	4.3
4.3	Form of 4.900% Senior Notes due 2031 (included as Exhibit B to Exhibit 4.1 )	8-K	000-20322	2/8/2024	4.4
4.4	Form of 5.000% Senior Notes due 2034 (included as Exhibit C to Exhibit 4.1 )	8-K	000-20322	2/8/2024	4.5
31.1	Certification of Principal Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	—	—	—	—	X
31.2	Certification of Principal Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	—	—	—	—	X
32*	Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	—	—	—	—	—
101	The following financial statements from the Company’s 10-Q for the fiscal quarter ended March 31, 2024, formatted in iXBRL: (i) Consolidated Statements of Earnings, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Equity, and (vi) Notes to Consolidated Financial Statements	—	—	—	—	X
104	Cover Page Interactive Data File (formatted in iXBRL and contained in Exhibit 101)	—	—	—	—	X

* Furnished herewith.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

April 30, 2024


			STARBUCKS CORPORATION

			By:						/s/ Rachel Ruggeri
									Rachel Ruggeri
									executive vice president, chief financial officer
									Signing on behalf of the registrant and as principal financial officer

STARBUCKS CORP - Quarter Report: 2024 March (Form 10-Q)

Similar companies