SBUX Financial Analysis

Analysis Date: 1/28/2025

Business Model

Starbucks generates revenue primarily through company-operated stores, licensed stores, and other channels including consumer packaged goods

Revenue Sources

• Company-operated stores (82.8% of revenue)
• Licensed stores (12.1% of revenue)
• Other (5.1% of revenue)

Revenue Distribution by Channel

• Company-operated stores: $7,785.3M (82.8% of total revenue)
• Licensed stores: $1,135.7M (12.1% of total revenue)

Income Statement Analysis

• Global comparable store sales declined 4% driven by 6% decline in transactions
• Operating margin contracted 390 basis points to 11.9% due to investments in wages and benefits
• EPS declined 23% to $0.69 reflecting lower operating income

Balance Sheet Analysis

• Cash position strengthened with 11.7% increase to $3.67B
• Balance sheet remains leveraged with negative shareholders' equity

Cash Flow Analysis

• Operating cash flow declined 13% but remained strong at $2.07B
• Higher capital expenditures with $693M spent on property, plant and equipment

Capital Allocation

Company maintains focus on shareholder returns through dividends ($0.61 per share declared) while investing in store growth and renovation. Capital expenditures increased year-over-year with focus on store portfolio optimization.

Management Commentary

Early progress on 'Back to Starbucks' strategy showing positive customer response

Sequential improvement in comparable store sales throughout quarter

Operating margin pressure from investments in labor and benefits

Overall Sentiment: Cautiously optimistic about turnaround progress while acknowledging significant work ahead

Recommendation

Rating: Hold

Reason for Rating: While turnaround initiatives show early promise, near-term margin pressure and execution risks warrant caution

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/28/2025, 11:08:56 PM