Starbucks(SBUX) - 2025 Q2 - Quarterly Report

Financial Performance - Total net revenues for the quarter ended March 30, 2025, were $8,761.6 million, an increase of 2.3$8,563.0 million for the same quarter in 2024[10]. - Net earnings attributable to Starbucks for the quarter were $384.2 million, down 50.2$772.4 million in the same quarter last year[10]. - Earnings per share (EPS) - diluted for the quarter was $0.34, a decrease of 50$0.68 in the prior year[10]. - Operating income for the quarter was $601.0 million, a decline of 45.3$1,098.9 million in the same quarter of 2024[10]. - Total operating expenses increased to $8,219.7 million, up 9.2$7,532.1 million in the same quarter last year[10]. - Comprehensive income attributable to Starbucks for the quarter was $438.8 million, down from$708.8 million in the same quarter last year[13]. - Cash provided by operating activities was $2,364.0 million, down from$2,889.9 million year-over-year, reflecting a decrease of 18.2%[17]. - Net earnings for the quarter ended March 30, 2025, were $1,165.1 million, a decrease of 35.0$1,796.9 million for the same period in 2024[17]. - Store operating expenses for the quarter ended March 30, 2025, totaled $4,176.0 million, up from$3,724.1 million in the same quarter of the previous year[55]. - The effective tax rate for Q2 fiscal 2025 was 23.5%, up from 22.2% in the same period of fiscal 2024, primarily due to the lapping of a prior tax benefit[118]. Assets and Liabilities - Current liabilities as of March 30, 2025, totaled $10,429.3 million, an increase from$9,070.0 million as of September 29, 2024[15]. - Total assets as of March 30, 2025, were $31,633.1 million, compared to$31,339.3 million as of September 29, 2024[15]. - Cash and cash equivalents decreased to $2,671.4 million from$3,286.2 million as of September 29, 2024[15]. - The balance of retained earnings as of March 30, 2025, was $(7,565.5) million, compared to$(7,970.7) million as of March 31, 2024, indicating an improvement in retained earnings[20]. - Total long-term debt amounted to $15.7 billion, with an estimated fair value of$14.2 billion as of March 30, 2025[67]. Cash Flow and Investments - Net cash used in investing activities was $1,499.2 million, an increase of 18.6$1,264.0 million in the prior year[17]. - Net cash used in financing activities decreased to $1,421.3 million from$2,423.6 million in the same quarter last year, a reduction of 41.4%[17]. - Cash dividends paid during the quarter totaled $1,384.9 million, compared to$1,293.5 million in the same quarter last year, marking an increase of 7.1%[17]. - Cash and investments were $3.2 billion as of March 30, 2025, down from$3.8 billion as of September 29, 2024[145]. - Approximately $2.0 billion of cash and short-term investments were held in foreign subsidiaries as of March 30, 2025[145]. Store Operations and Market Performance - Starbucks operated over 40,700 stores as of March 30, 2025, representing a 5$5,293.6 million, while food sales contributed 19% with $1,691.9 million[83]. - North America total net revenues for Q2 fiscal 2025 increased by$93 million, or 1%, driven by a 5% growth in company-operated stores (504 stores) and partially offset by a 1% decrease in comparable store sales ($70 million)[123]. - International total net revenues for Q2 fiscal 2025 increased by$110 million, or 6%, primarily due to an 8% growth in company-operated stores (779 stores) and higher product sales and royalty revenues[128]. Strategic Initiatives and Future Outlook - Starbucks plans to adopt new segment disclosure requirements for the fiscal year ending September 28, 2025, which may enhance transparency in segment performance[31]. - The company plans to focus on new store returns and enhancing the coffeehouse experience while reducing new store build costs[97]. - Starbucks aims to navigate challenges in the macroeconomic environment, including tariffs and volatile coffee prices, while continuing to invest in its "Back to Starbucks" strategy[97]. - The company expects to utilize available cash and investments, including potential future borrowings, to support core businesses, repay debts, and return cash to shareholders through dividends and share repurchases[154]. - The company is currently not aware of any trends or uncertainties that would materially impact liquidity or capital needs over the next 12 months[155]. Restructuring and Expenses - The company reported a restructuring expense of $116.2 million for the quarter, which was not present in the same quarter of the previous year[10]. - The company recognized stock-based compensation expenses of$178.3 million, slightly up from $173.0 million year-over-year[17]. - The company recognized pre-tax restructuring charges of$116.2 million during the quarter, primarily related to partner severance costs[86]. - Corporate and Other operating loss increased 12% to $558 million for the second quarter of fiscal 2025, largely due to restructuring costs associated with the "Back to Starbucks" strategy[143]. Derivative Financial Instruments - The company has entered into various derivative financial instruments to hedge against interest rate and foreign currency fluctuations, impacting cash flow management[36]. - As of March 30, 2025, the company reported net losses of$2.1 million from interest rate hedges, reflecting market volatility[45]. - The fair value of derivative assets totaled $271.7 million, with$51.2 million classified as prepaid expenses and other current assets as of March 30, 2025[48]. - The company recognized losses of $2.8 million from non-designated derivatives related to foreign currency for the quarter ended March 30, 2025[46].