sbux-20220403

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended April 3, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission File Number: 000-20322

Starbucks Corporation

(Exact Name of Registrant as Specified in its Charter)


Washington			91-1325671
(State or Other Jurisdiction of Incorporation or Organization)			(IRS Employer Identification No.)

2401 Utah Avenue South, Seattle, Washington 98134

(Address of principal executive offices)

(206) 447-1575

(Registrant’s Telephone Number, including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.001 per share	SBUX	Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Shares Outstanding as of April 27, 2022
1,146.9 million

Table of Contents

STARBUCKS CORPORATION

FORM 10-Q

For the Quarterly Period Ended April 3, 2022

Table of Contents



PART I. FINANCIAL INFORMATION

Item 1	Financial Statements (Unaudited)	3
	Consolidated Statements of Earnings	3
	Consolidated Statements of Comprehensive Income	4
	Consolidated Balance Sheets	5
	Consolidated Statements of Cash Flows	6
	Consolidated Statements of Equity	7
	Index for Notes to Consolidated Financial Statements	9
	Notes to Consolidated Financial Statements	10
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4	Controls and Procedures	43

PART II. OTHER INFORMATION

Item 1	Legal Proceedings	45
Item 1A	Risk Factors	45
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 3	Defaults Upon Senior Securities	45
Item 4	Mine Safety Disclosures	45
Item 5	Other Information	45
Item 6	Exhibits	46
Signatures		47

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1.Financial Statements

STARBUCKS CORPORATION

CONSOLIDATED STATEMENTS OF EARNINGS

(in millions, except per share data)

(unaudited)


	Quarter Ended				Two Quarters Ended
	Apr 3, 2022		Mar 28, 2021		Apr 3, 2022		Mar 28, 2021
Net revenues:
Company-operated stores	$	6,276.7	$	5,653.1	$	12,999.1	$	11,379.6
Licensed stores	849.5		595.0		1,700.3		1,208.8
Other	509.4		419.9		986.6		829.1
Total net revenues	7,635.6		6,668.0		15,686.0		13,417.5
Product and distribution costs	2,465.8		1,992.4		4,992.7		4,041.5
Store operating expenses	3,314.7		2,823.3		6,714.6		5,690.7
Other operating expenses	101.7		87.7		203.4		179.5
Depreciation and amortization expenses	367.7		366.7		733.8		732.6
General and administrative expenses	481.5		464.4		1,007.3		936.5
Restructuring and impairments	4.4		23.0		(3.1)		95.2
Total operating expenses	6,735.8		5,757.5		13,648.7		11,676.0
Income from equity investees	49.1		77.1		89.4		159.7
Operating income	948.9		987.6		2,126.7		1,901.2


Interest income and other, net	46.3		17.3		46.2		32.7
Interest expense	(119.1)		(115.0)		(234.4)		(235.8)
Earnings before income taxes	876.1		889.9		1,938.5		1,698.1
Income tax expense	201.1		230.5		447.4		416.5
Net earnings including noncontrolling interests	675.0		659.4		1,491.1		1,281.6
Net earnings attributable to noncontrolling interests	0.5		—		0.7		—
Net earnings attributable to Starbucks	$	674.5	$	659.4	$	1,490.4	$	1,281.6
Earnings per share - basic	$	0.59	$	0.56	$	1.29	$	1.09
Earnings per share - diluted	$	0.58	$	0.56	$	1.28	$	1.08
Weighted average shares outstanding:
Basic	1,149.2		1,177.5		1,159.4		1,176.3
Diluted	1,153.9		1,184.8		1,165.2		1,183.9

See Notes to Consolidated Financial Statements.

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STARBUCKS CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions, unaudited)


	Quarter Ended				Two Quarters Ended
	Apr 3, 2022		Mar 28, 2021		Apr 3, 2022		Mar 28, 2021
Net earnings including noncontrolling interests	$	675.0	$	659.4	$	1,491.1	$	1,281.6
Other comprehensive income/(loss), net of tax:
Unrealized holding gains/(losses) on available-for-sale debt securities	(10.5)		(2.5)		(13.9)		(3.0)
Tax (expense)/benefit	2.6		0.5		3.4		0.6
Unrealized gains/(losses) on cash flow hedging instruments	67.1		97.2		155.8		104.9
Tax (expense)/benefit	(14.2)		(23.9)		(26.0)		(26.8)
Unrealized gains/(losses) on net investment hedging instruments	38.1		47.7		79.6		17.5
Tax (expense)/benefit	(9.6)		(12.1)		(20.1)		(4.5)
Translation adjustment and other	(38.5)		(83.4)		(24.3)		155.3
Tax (expense)/benefit	—		2.2		—		2.2
Reclassification adjustment for net (gains)/losses realized in net earnings for available-for-sale debt securities, hedging instruments, and translation adjustment	(34.2)		(7.9)		(50.3)		(11.5)
Tax expense/(benefit)	6.0		1.8		8.9		3.6
Other comprehensive income	6.8		19.6		113.1		238.3
Comprehensive income including noncontrolling interests	681.8		679.0		1,604.2		1,519.9
Comprehensive income attributable to noncontrolling interests	0.5		—		0.7		—
Comprehensive income attributable to Starbucks	$	681.3	$	679.0	$	1,603.5	$	1,519.9

See Notes to Consolidated Financial Statements.

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STARBUCKS CORPORATION

CONSOLIDATED BALANCE SHEETS

(in millions, except per share data)

(unaudited)


	Apr 3, 2022		Oct 3, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	3,913.4	$	6,455.7
Short-term investments	82.1		162.2
Accounts receivable, net	1,001.9		940.0
Inventories	1,920.0		1,603.9
Prepaid expenses and other current assets	623.7		594.6
Total current assets	7,541.1		9,756.4
Long-term investments	285.6		281.7
Equity investments	270.8		268.5
Property, plant and equipment, net	6,460.8		6,369.5
Operating lease, right-of-use asset	8,170.2		8,236.0
Deferred income taxes, net	1,809.4		1,874.8
Other long-term assets	582.8		578.5
Other intangible assets	254.7		349.9
Goodwill	3,646.1		3,677.3
TOTAL ASSETS	$	29,021.5	$	31,392.6
LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)
Current liabilities:
Accounts payable	$	1,329.5	$	1,211.6
Accrued liabilities	2,092.4		2,321.2
Accrued payroll and benefits	665.9		772.3
Current portion of operating lease liability	1,236.3		1,251.3
Stored value card liability and current portion of deferred revenue	1,781.6		1,596.1

Current portion of long-term debt	1,998.6		998.9
Total current liabilities	9,104.3		8,151.4
Long-term debt	14,014.4		13,616.9
Operating lease liability	7,668.5		7,738.0
Deferred revenue	6,381.9		6,463.0
Other long-term liabilities	613.6		737.8
Total liabilities	37,782.7		36,707.1
Shareholders' deficit:
Common stock ($0.001 par value) — authorized, 2,400.0 shares; issued and outstanding, 1,146.9 and 1,180.0 shares, respectively	1.1		1.2
Additional paid-in capital	41.1		846.1
Retained deficit	(9,070.5)		(6,315.7)
Accumulated other comprehensive income	260.3		147.2
Total shareholders’ deficit	(8,768.0)		(5,321.2)
Noncontrolling interests	6.8		6.7
Total deficit	(8,761.2)		(5,314.5)
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY/(DEFICIT)	$	29,021.5	$	31,392.6

See Notes to Consolidated Financial Statements.

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STARBUCKS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions, unaudited)


	Two Quarters Ended
	Apr 3, 2022		Mar 28, 2021
OPERATING ACTIVITIES:
Net earnings including noncontrolling interests	$	1,491.1	$	1,281.6
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	777.7		772.9
Deferred income taxes, net	28.4		(25.2)
Income earned from equity method investees	(118.7)		(131.3)
Distributions received from equity method investees	100.8		130.2


Stock-based compensation	149.2		175.3

Non-cash lease costs	670.7		617.9
Loss on retirement and impairment of assets	77.3		175.4
Other	(17.9)		(15.4)
Cash provided by/(used in) changes in operating assets and liabilities:
Accounts receivable	(62.1)		12.8
Inventories	(324.9)		51.3
Prepaid expenses and other current assets	(120.7)		139.7

Accounts payable	133.0		21.3
Deferred revenue	110.2		89.8
Operating lease liability	(766.3)		(676.3)
Other operating assets and liabilities	(95.0)		99.5
Net cash provided by operating activities	2,032.8		2,719.5
INVESTING ACTIVITIES:
Purchases of investments	(67.5)		(321.7)
Sales of investments	72.6		121.7
Maturities and calls of investments	55.7		289.0

Additions to property, plant and equipment	(871.9)		(647.9)


Other	(69.8)		(20.1)
Net cash used in investing activities	(880.9)		(579.0)
FINANCING ACTIVITIES:
Net proceeds/(payments) from issuance of commercial paper	—		(296.5)
Net proceeds from issuance of short-term debt	17.4		203.3
Repayments of short-term debt	(12.6)		(320.5)
Proceeds from issuance of long-term debt	1,498.1		—
Repayments of long-term debt	—		(1,250.0)

Proceeds from issuance of common stock	56.3		134.4
Cash dividends paid	(1,139.2)		(1,058.0)
Repurchase of common stock	(3,997.5)		—
Minimum tax withholdings on share-based awards	(122.1)		(90.1)
Other	(9.2)		—
Net cash used in financing activities	(3,708.8)		(2,677.4)
Effect of exchange rate changes on cash and cash equivalents	14.6		66.7
Net increase/(decrease) in cash and cash equivalents	(2,542.3)		(470.2)
CASH AND CASH EQUIVALENTS:
Beginning of period	6,455.7		4,350.9
End of period	$	3,913.4	$	3,880.7
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest, net of capitalized interest	$	236.0	$	250.8
Income taxes	$	783.2	$	236.2

See Notes to Consolidated Financial Statements.

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STARBUCKS CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

For the Quarters Ended April 3, 2022 and March 28, 2021

(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
	Shares	Amount
Balance, January 2, 2022	1,151.6	$	1.2	$	41.1	$	(8,753.0)	$	253.5	$	(8,457.2)	$	6.9	$	(8,450.3)

Net earnings	—	—		—		674.5		—		674.5		0.5		675.0
Other comprehensive income	—	—		—		—		6.8		6.8		—		6.8
Stock-based compensation expense	—	—		54.4		—		—		54.4		—		54.4
Exercise of stock options/vesting of RSUs	0.4	(0.1)		(4.4)		—		—		(4.5)		—		(4.5)
Sale of common stock	0.1	—		11.0		—		—		11.0		—		11.0
Repurchase of common stock	(5.2)	—		(61.0)		(431.1)		—		(492.1)		—		(492.1)
Cash dividends declared, $0.49 per share	—	—		—		(560.9)		—		(560.9)		—		(560.9)
Net distributions to noncontrolling interests	—	—		—		—		—		—		(0.6)		(0.6)
Balance, April 3, 2022	1,146.9	$	1.1	$	41.1	$	(9,070.5)	$	260.3	$	(8,768.0)	$	6.8	$	(8,761.2)

Balance, December 27, 2020	1,177.2	$	1.2	$	488.6	$	(8,253.6)	$	(145.9)	$	(7,909.7)	$	5.7	$	(7,904.0)

Net earnings	—	—		—		659.4		—		659.4		—		659.4
Other comprehensive income	—	—		—		—		19.6		19.6		—		19.6
Stock-based compensation expense	—	—		76.7		—		—		76.7		—		76.7
Exercise of stock options/vesting of RSUs	0.6	—		20.0		—		—		20.0		—		20.0
Sale of common stock	0.1	—		10.1		—		—		10.1		—		10.1

Cash dividends declared, $0.45 per share	—	—		—		(530.1)		—		(530.1)		—		(530.1)

Balance, March 28, 2021	1,177.9	$	1.2	$	595.4	$	(8,124.3)	$	(126.3)	$	(7,654.0)	$	5.7	$	(7,648.3)

See Notes to Consolidated Financial Statements.

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STARBUCKS CORPORATION

CONSOLIDATED STATEMENTS OF EQUITY

For the Two Quarters Ended April 03, 2022 and March 28, 2021

(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
	Shares	Amount
Balance, October 3, 2021	1,180.0	$	1.2	$	846.1	$	(6,315.7)	$	147.2	$	(5,321.2)	$	6.7	$	(5,314.5)

Net earnings	—	—		—		1,490.4		—		1,490.4		0.7		1,491.1
Other comprehensive income/(loss)	—	—		—		—		113.1		113.1		—		113.1
Stock-based compensation expense	—	—		151.5		—		—		151.5		—		151.5
Exercise of stock options/vesting of RSUs	3.0	(0.1)		(88.5)		—		—		(88.6)		—		(88.6)
Sale of common stock	0.2	—		22.8		—		—		22.8		—		22.8
Repurchase of common stock	(36.3)	—		(890.8)		(3,122.2)		—		(4,013.0)		—		(4,013.0)
Cash dividends declared, $0.98 per share	—	—		—		(1,123.0)		—		(1,123.0)		—		(1,123.0)
Net distributions to noncontrolling interests	—	—		—		—		—		—		(0.6)		(0.6)
Balance, April 3, 2022	1,146.9	$	1.1	$	41.1	$	(9,070.5)	$	260.3	$	(8,768.0)	$	6.8	$	(8,761.2)

Balance, September 27, 2020	1,173.3	$	1.2	$	373.9	$	(7,815.6)	$	(364.6)	$	(